Reviewing Your Firm’s Governance Structure

Volume 39 Number 3

By

About the Author

Karen MacKay is president of the consultancy Phoenix Legal Inc., focusing her work on leadership and strategy execution for law firms. 

Law Practice Magazine | May/June 2013 | The Professional Development IssueWHEN WAS THE LAST TIME you reviewed the governance structure of your firm? How long has the status quo existed? Do you have a structure in place that provides the right blend of security so that the firm is well organized, and the freedom to keep your partners actively engaged as owners? Finally, how do you review your structure without it feeling like a performance review of the incumbents?

SIGNS OF DISCONTENT

When your governance structure is not meeting your firm’s needs, the signs can be everywhere, but you need to notice them. Meetings may be poorly attended, and conversations may instead happen in small, informal groups rather than at the meetings designed to address the business of the firm. Leaders feel lack of support, while partners feel as if they aren’t being informed and heard. People disengage, issues are not raised or discussed, and inertia sets in. Any debate carries the risk of feeling like criticism, and those in leadership and management roles feel like it just isn’t worth the personal sacrifice. If this sounds familiar, it might be time to take a look at your governance structure—the transparency, alignment and mechanics of getting things done at your firm.

STRUCTURE: HOW MUCH IS ENOUGH?

When was the last time you asked your partners what they need to feel informed, engaged and enfranchised? What are your assumptions about the current structure in place at your firm? How much and what form of structure do you feel is the right balance going forward?

Just as you align decisions, you should align communication appropriate to the issues. For what types of issues do partners simply want a heads-up—a weekly email, perhaps, with the highlights of the life and work of the firm beyond any specific practice or group? What is enough for them to feel informed, to not be blindsided by a member of the staff (or someone outside the firm) in a conversation over lunch?

Alternatively, what are the issues worthy of discussion, debate and decision? These will range based on the size, structure and culture of your firm.

TRANSPARENCY

Nothing frustrates partners more than a lack of transparency. A decision-making structure that clearly sets out the decisions that specifically need to be put to the partnership is a good start. From there, map out the scope of decisions that can and should be made by the managing partner, and those that can be made by the firm’s administrator. For example, small decisions, such as an unbudgeted expense, might be made by the administrator if less than $2,000, or less than $5,000 if approved by the managing partner, but anything greater than $5,000 would need the approval of the partners at their regular monthly meetings. Partners tend not to be bothered by small items and recognize that the business of the firm needs to keep moving, but at some threshold appropriate for the firm, the partners want input and approval. What is the right threshold for your firm?

ALIGNING RESPONSIBILITY AND AUTHORITY

Perhaps the culture that your firm began with, and thrived under, was one where staff were hired by, and aligned with, particular individual attorneys. This practice is still alive and well in many small firms and boutiques today. As these firms trend toward professional management, it is important to review and align the decision-making authority with the responsibilities and expectations of that management. If, for example, you want to pull your staff together as a team to gain efficiency and cost savings, you need to get out of the way and let the professional managers do their jobs. You should certainly participate fully in the discussions, cross-examine them on their proposals and debate the implications of change. But once you make a decision as a partnership, support your managers and have their back. Don’t engage in side conversations with associates and staff; as a partner you represent the partnership, and side conversations negatively impact your credibility—and the security and structure of the firm as a whole. What decisions need to be made, and what is getting in the way from making them?

AFFECTING THE AGENDA

When was the last time your colleagues were asked what they need at the firm, and what gets in the way? For example, during a recent firm visit several partners told me that practice group meetings have had the same agenda for as long as anyone could recall. Partners expressed boredom, and it was fairly easy to ignore the meetings if something else came up. The leaders, frustrated with a lack of participation, simply cancelled meetings due to lack of interest.

If, for example, developing your associates is important, is it on the agenda? What files are coming into the firm or the group, and how should they be staffed? What associates need exposure to what work, and how are they progressing? If these are important, you should ensure they’re on the agenda.

What are your strategic objectives for the coming year, and how does the structure of your firm support those objectives? Are important topics on the regular agenda so that partners will be engaged in discussion and debate? Where are you getting bogged down or frustrated with inertia, and what is getting in the way of progress?

Has your governance and management structure evolved to meet the needs of your firm and its people? It’s an important question to ask.

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