Most professional law firm managers are not subject matter experts in all functional areas they touch. Rather, they are utility players competent in each of the areas, allowing them to manage and make decisions consistent with the firm’s goals.
A law firm manager is also not a replacement for practice management software. Likewise, practice management software does not replace the need for a firm manager.
What Do They Do?
Managing the business of a law firm involves the oversight of diverse functional areas. Managing partners tasked with this oversight are likely doing so at the expense of their practice and, by extension, their profitability. By ceding managerial responsibility for the following areas to professional business managers, managing partners have time to focus on the practice of law and to ensure that the firm is moving in its desired strategic direction:
Human Resources. Even in small firms, managing staff can be a full-time job. The professional manager takes this responsibility squarely off the shoulders of the managing partner and consults with him or her on staffing decisions only as needed. Hiring, onboarding, salary and benefits administration, payroll, requests for time off, scheduling and employee discipline are a few of the areas where law firm managers are involved on a daily basis.
Financial Analytics. This is perhaps one of the biggest responsibilities of a law firm manager, both because of the amount of time involved and because of the importance to the firm in receiving useful performance metrics. In an increasingly data-driven industry, managing partners have come to expect information they can use to assess the business and make decisions. Accurate and timely analytics can identify productivity issues before they become problems or collections issues requiring follow-up with clients. Good reporting can also flag expense problems that could affect margins. Since bottom-line profitability is the primary goal of nearly every private practice law firm, financial analytics is a critical component of the law firm manager’s work.
Marketing and Business Development. Marketing is a priority for most law firms. Although traditional marketing channels are still used, firms without a solid online and social media presence are missing out. Most law firms will hire outside marketing firms to develop websites and implement a digital marketing strategy. The law firm manager’s role is often to work with firm leadership to identify marketing strategies and liaise with the outside marketing firms to execute on those priorities.
Information Technology. Unless a firm is big enough to justify an in-house IT professional, most firms outsource this job. As a cost savings measure, however, many firms instruct their lawyers and staff to attempt to resolve issues before calling the IT vendor. Front-line responsibility for this function usually falls to the managing partner or another designated lawyer. A firm manager eliminates the need for any attorney involvement by troubleshooting internally and coordinating with the IT vendor when necessary. In fact, the managing partner should only be involved with issues related to equipment upgrades, new application implementation or other IT investment projects.
Other Areas. Facilities management, policy development, disaster preparedness, recruiting and risk management are just a few other areas in which law firm managers play an important role to relieve a managing partner’s administrative burden.
How Do They Help?
By their own admission, many lawyers are not good business managers. A qualified professional law firm manager will be familiar with law firm economics and how to manage it. They will drill down on the metrics that drive profitability, report deficiencies and develop plans to correct them. In fact, nearly everything the professional manager does is related to improving profitability. This is fitting because, according to the 2019 State of U.S. Small Law Firms Report, a majority of firms listed overall profits as a primary measure of success. Staffing decisions,
marketing and business development planning, technology investments, monitoring productivity, and managing accounts receivable and work in progress are just a few areas that when executed properly will lead to increased bottom-line profitability.
Evolving competitive dynamics in law firms also argue for the use of professional management. Robust technological capabilities have begun to shape how and where law is practiced. Cloud-based computing platforms and mobile technology allow lawyers to do client work regardless of their brick-and-mortar office location. Of course, this sort of mobility can be a great benefit on a snow day, but it also allows attorneys with portable business to leave a firm more easily. Gone are the days of partner-for-life law firms when defections were rare. However, the financial constraints that lead to law firm defections are mitigated when attorneys are adequately compensated, which is made possible when profitability is managed correctly.
Is It Time?
The question of whether to hire a professional law firm manager can be difficult for small firms, which may hesitate to add a significant non-timekeeper expense. But firms should view professional managers as drivers of efficiency and indirect revenue generators, not just an addition to overhead. These managers add value by using aggressive expense analysis, closely monitoring attorney productivity, ensuring timely billing and collections and, of course, allowing the managing partner and other lawyers to focus on practicing law.
With the help of competent management professionals, managing partners do not need to spend all their time focused on boosting productivity, efficiency and profitability. On the other hand, firms that need professional managers but choose not to employ them likely will be limited in their ability to increase profitability as it will be almost entirely subject to the bandwidth of the managing partner.