Passive Management in Small Firms: Is Anyone Actually Steering the Ship?

I have worked with over one thousand law firms over the years and it certainly seems to me that a number of smaller law firms around the country are being passively managed. Is this a problem? Well yes, it very well could be.

Now I define passive management as reactive decision making or making decisions only when absolutely necessary. Often in such firms the managing partner is serving on a part-time basis without compensation and their primary responsibility is to address staff related issues and administrative functions when deemed necessary. The reality is that in a firm that is being passively managed, no true firm leadership exists. From a business perspective, no one is steering the ship.

This seems to be particularly true in smaller firms for any number of reasons. The managing partner may have concerns over how his or her actions may be perceived by the other partners. Such concerns might be a fear of be perceived as playing favorites, as being overly protective, or unduly harsh. Other managers avoid tough decisions altogether perhaps with the naïve hope that the problem will eventually go away if it is ignored long enough. Heaven forbid anyone ever question the propriety of a decision! Sometimes the underlying problem may be as simple as a fear of jeopardizing the partner-to-partner friendships that originally brought the group together. Of course there will always be those few who simply have no idea what to do with the problem at hand. Worse yet are those situations where the entire group of attorneys decides to manage by consensus. This is the ultimate when it comes to the lack of a ship’s captain because in these firms decisions are made at the speed of molasses if they are made at all.

There is a downside to passive management due to associated malpractice concerns and this is where the problem lies. Consider a situation where a partner is seriously depressed as a result of going through a difficult divorce. As this divorce drags on financial pressures mount and the attorney begins to demonstrate a growing reliance on alcohol. Now personal friendships and even loyalty come into play and this attorney, who may be developing a true impairment, receives support from his peers at the firm. Although personally supporting this attorney through a personal crisis is admirable and quite appropriate, if the professional side of this personal crisis is not also responsibly managed malpractice claims can and will arise. For example, should this attorney’s files be reviewed or his calendar checked once any warning signs start to appear? That would seem prudent given that impaired attorneys often end up neglecting client matters; but this often won’t happen in a passively managed firm.

As the above demonstrates, one real risk of passive management is in a firm often failing to proactively address the professional side of any developing crisis. Yes, when faced with a malpractice claim most of these firms respond by having management in whatever form it exists step in; however it is often too little, too late. The unfortunate outcome ends up being a change in the makeup of the firm and this change is not always limited to the firm divorcing itself from the problem attorney. Accountability for the situation naturally falls on the managing partner, which can result in a firm split or dissolution.

In contrast to this, actively managed firms are proactive and they take additional steps in an attempt to prevent possible claims from arising. In response to the situation described above an actively managed firm might conduct file review at the first sign of trouble, perhaps assign a mentor, or the attorney of concern could be granted a temporary reduction in workload until he gets his life back on track. These ideas are reflective of methods that would professionally support an attorney who is struggling. If substance abuse, as an example of a full-blown impairment, becomes a known and legitimate concern, additional steps such as requiring successful completion of an addiction treatment program as a necessary condition of remaining with the firm become essential. Certainly this is a more difficult road to go down; however the hoped for outcome would be to maintain the overall integrity of the firm coupled with the eventual recovery and retention of a valuable firm asset, the subject attorney himself.

If certain aspects of a passive management style exist at your firm, consider strengthening your firm’s management and leadership capabilities. Steps that might be taken include formalizing a management position by creating a job description and having an open and honest discussion about the degree of authority that will be given to this individual. As part of this process also make certain everyone agrees to respect that authority whenever it is exercised. A firm should always recognize the importance and value of the management position, whether full time or part time, with an appropriate level of compensation. Consider management training if no one at the firm has a complete set of management skills. There are resources available at a variety of price ranges from well-written books to intensive off site courses that last several weeks. If no attorney at the firm has an interest in managing the firm, consider hiring an experienced manager and, again, make certain to give this individual the necessary level of authority to fulfill his or her duties, otherwise it’s just going to be wasted time, energy, and money.

I am a firm believer in having strong leadership and effective management within organizations. Within the law firm setting not only will this contribute in lowering exposure to malpractice claims, but I also believe that it will significantly impact any firm’s financial bottom line in the most positive of ways. That said, remember this. According to our ethical rules we are our partner’s keepers and when it comes to the success or failure of the business, firm attorneys will sink or swim together. Isn’t the better option to have someone actually in charge of steering the ship if for no other reason than to try and avoid ever having to sink or swim together? Personally, I’d rather be on the ocean than in it. How about you?

Related Posts:

Become Your Partner's Keeper

Malpractice and Fear of the Public Eye

The Opportunity that Comes with a Malpractice Claim

Resource:

ABA Commission on Lawyer Assistance Programs 

Comments for Passive Management in Small Firms: Is Anyone Actually Steering the Ship?


Name: Russ Fletcher
Time: Wednesday, November 13, 2013

Decisions made in the absence of data are just assumptions. Most firms don't know what they don't know. Modern data analysis provides an as close to real time as possible view of the firm across all departments and gives everyone the ability to ask those questions that can help illuminate problems as well as opportunities. Data analysis is no longer the purview of the largest firms. Any firm that doesn't proactively use it's data will fall further behind the competition and find it harder to attract clients, hire the best talent available and ultimately, survive.

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