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Law Firm Management

We are Too Small to Spend Money on That

I have been known to be critical of large law firms. Not today. Say what you will about Big Law, at least large law firms are smart enough to hire professionals to manage their businesses. For that reason, I am going to leave them out of today’s rant.

Instead, let me turn my wrath on small and medium sized legal practices. You know, the ones typically headed by a few brilliant legal minds who are way too intelligent to need help from people with real business expertise.

Oh, how these lawyers run their businesses poorly. Let me count the ways:

  1. Too often, they choose their leaders based on the size of their client base and the amount of their billable hours. Vision? Leadership? Team building? Financial acumen? All secondary when it comes to choosing the managing partner.
  2. When occasionally someone with real management skills is put in charge, it is often because those people do not generate a great deal of revenue. So, the firm underpays them until they quit. As a senior partner once said in the presence of the managing partners, “managing the firm is not as valuable as bringing in clients and producing billings. It may be a dirty job but so is collecting garbage and we pay minimum wage for that.” (I know someone who actually said that. You have no idea just how inspiring that was for the management team.)
  3. Since they are too small to be able to afford proper human resources expertise, they use their own hiring criteria such as: (i) does the candidate look and sound like me? (ii) do they know the people who I know? (iii) do they say that they want to work hard and bill a lot of hours? (iv)  do they have a “great” business development plan consisting of taking people to lunch and speaking at the chamber of commerce?
  4. Since they are not profitable enough to hire marketing expertise, they do not learn how to create and promote a brand, make their expertise known, organize and follow up after marketing events, track the success of marketing initiatives, establish criteria for clients and work to upgrade the quality of their client base.
  5. Since only the big firms can afford to pay for an operations manager with real qualifications, they promote a legal assistant or accounting clerk to keep the ship floating exactly as it has for many years. If that does not include tendering the phone and network support contracts every two years, shopping the benefits contract, establishing a disaster recovery plan (after all, what is the likelihood of a pandemic happening?), obtaining data on competitive salaries, establishing good relationships with recruiters, and anything else that a properly qualified, experienced and yes, expensive, person would handle, that is just too bad, so sad.
  6. The list can go on and one. Real expertise in I.T., accounts receivable collection, knowledge management, records retention, leadership, training, mentoring, all too expensive for so many of the small and medium-sized firms.
  7. The final excuse? We only need (or can afford) 30% of a full time equivalent, but the people available on that basis are second rate so there is nobody available even if we wanted to pay for it (which, using their inside voice would translate to “we really don’t want to pay for it.”) 

I don’t believe that last one. I think that there are many retired professionals with a wealth of experience who would be happy to take on part-time gigs, as well as many consultants who work on a contract basis.

Before our firm was ready to hire a full-time senior accountant to head our accounting department, we obtained the services of the retired managing partner of the local BDO office on a part-time basis. Before we were big enough to have a full-time network administrator, we hired an excellent computer consultant on an outsourced basis. Our marketing consultant played a major role in branding our firm and helping us to develop a marketing mindset, also under contract.

The skills that small firms need to succeed are all out there to be had. But in many small firms the powers that be think that it makes more sense to have lawyers give up billable hours to do a crappy job of management instead.

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