How do you know if your firm is being managed properly? Maybe we should take a step even further back and ask a question that surprisingly doesn’t have an easy answer … What IS law firm management?
On the one hand, management seems daunting. After all, people get MBAs and large corporations have entire management structures in place. But of course, we don’t want something that heavy.
On the other hand, law practice owners have (often through pain and suffering!) managed their own firms or hired an office manager or administrator to do the same. Though, as we’ve learned over the years, most partners correctly believe that their business could be significantly improved, if they only knew how.
So what is law firm management, and how should we approach it in a law firm context?
The most simple way to define firm management is “a set of business processes for driving an organization to its desired outcomes”.
In other words, management shouldn’t be for its own sake. Nor does it mean that hiring a manager is always the right answer. That’s because before we put in place a management structure, we need to understand the desired outcomes of the firm.
And that, alone, isn’t straightforward because there isn’t just one - especially in a law firm. For example:
- We want to increase revenue per partner
- We have an obligation to our clients
- We want to build asset value in the firm so it can be sold or partners can have an ongoing income in retirement
- We want to make sure we’re not running around like chickens with our heads cut off trying to make all the above happen.
Of course, each firm may have different objectives depending on their lifecycle. Newer firms or those in expansion mode may want to add practice areas. Closely-held firms with more senior partners may be planning for retirement.
In other words, there isn’t a one-size-fits-all objective.
After determining those objectives, we then need to understand how we’re measuring them. What KPIs (key performance indicators) will tell we’re on track? How will we measure them? How often?
Then (and only then) can we think about management. If we try to jump the gun and hire a manager, or read some book that gets us inspired about some new framework to apply to our law firm … All we’re doing is adding operational weight to the firm without having it move the firm to our desired outcomes.
So the important thing is to NOT put in place management structures or processes before knowing your objectives, your KPIs, and how to track them.
Unfortunately, most law firm owners don’t do this all the time. We weren’t trained to think this way in law school, and don’t have many examples to draw from.
Now that you know the process, don’t get stuck implementing. The day to day of running a firm and not having done this before will slow you down. Consider getting input from someone who has helped law firms refine their objectives, know they’re on track and build business systems that let you manage your firm to your goals.