Management Concepts Relevant to Law Firms

There are a number of basic management concepts that have relevance to professional organizations. They also apply to the management of law firms. They are planning, organization, communication, delegation, direction, leadership and many such factors are responsible for healthy law firms or law practicing.

Planning: Planning for tomorrow, next year, and the next decade is one of the basic principles of management. When lawyers find that they cannot keep up with their workloads, or that there is no office for the new young lawyer, or that the brief was due yesterday, they have failed to heed this first principle.

Short-range planning must be an ongoing activity of every individual with management responsibilities. Long-range planning may be assigned to a special group or committee, or it may be reserved for occasional meetings and discussions.

Organization: Organization means defining the responsibility of each person or job in a group of people working together, at each level of work. Organization means an assigned responsibility for trying the case, answering the telephone, negotiating a new lease, and cleaning the ashtrays in the conference room. Organization is the deployment of human resources as well as those of machines, space, capital, and other assets. Organization insures that planning is implemented.

Communication: Letting others know what is happening may be a problem even for a single lawyer with one secretary; it is much more of a problem for a larger organization. Communication difficulties grow geometrically. It is a prime function of management to make possible the flow of information, upward and downward, throughout the organization.

Staffing and Delegation: The development of human resources is a prime management responsibility of special importance in a labor-intensive area of endeavor, such as the law. Delegation of duties downward to the lowest competent level and the determination of competence of each person as each learns and grows are important responsibilities.

Direction: Direction of the work and affairs of the enterprise is a continuing management responsibility. Coupled with direction is coordination of the efforts of many individuals to insure that all tasks are performed and performed correctly. The manager must control people sufficiently to receive feedback when problems arise or corrective actions are needed.

Review and Evaluation: The efforts of people and the use of other resources must be periodically reviewed and an evaluation made. It is only through such a process that improvements can be accomplished.

Leadership: Leadership is a somewhat vague term used in management to describe a mutually agreeable preeminence given by subordinates to some superiors, or freely given by equals to a peer. Good managers earn leadership status; without it, managers eventually fail.

Control: Control, especially as used by accountants, is a systematic review of information to enable management to detect trends and problems as they emerge and to enable it to take corrective action. Control, also, is that part of systems, or checks, which prevents undesired occurrences, such as missing a calendar date or the loss of funds.

In the smaller legal organization, almost everybody is involved in management. As the organization grows in size, many
aspects of management, like the law itself, may increasingly be assigned to the specialists. Partners in small firms generally tend to double as workers and managers and, of course, as owners of the enterprise. In large firms, some partners do not perform a management function but act only as professional workers and as owners.

Management Divisions

In the practice of law, two aspects of management can be readily separated, so that some partners may be involved in one but not the other.

The business management of a firm deals with staff personnel matters, billing and cash, accounting, space, purchasing, and similar business subjects. Business management enables the practicing lawyer to practice law effectively and to be as productive as possible. It supports the professional effort of the organization and enables it to function smoothly. Business management provides the comfortable office, the efficient secretary, the capital investment, the well-kept library with its stock of up-to-date books, and, not the least important, the paycheck.

The management of legal matters is a different aspect of management. A senior lawyer may be responsible for a large number of files and for the other lawyers handling these files under supervision, and yet may have little or no responsibility in the general business matters of the organization. An overlapping area is the recruiting and training of young lawyers and legal assistants, requiring careful coordination between business management and the management of legal work.
Levels of Decision-Making: Some law firms fail to distinguish between different levels of decision-making. For example, it is observed that the five partners in a middle-sized firm discuss pay increases for two secretaries for two hours. The annual costs of the increases were $1,000, once the decision was reached. The five partners, at $100 per hour each, lost $2,000 in deciding.

Policy Matters: Policy matters are generally reserved for the ownership structure of private firms and often involve the chief executive when they pertain to corporate law departments or public agencies. Policy matters are those decisions which have a significant long-range effect upon the organization. Typically, these include (1) admission of new partners, (2) adoption of a hiring plan, (3) review and adoption of budgets, (4) acceptance of major cases in which compensation is uncertain, (5) relocation of the office, and (6) major investments.

Management Decisions: Decisions converting an organization's policies into specific commitments or acts may be delegated to an individual or a small committee. These may include hiring a specific individual (rather than creating a new job), selection of a type of machinery for purchase (if funds are available in the budget), granting a salary increase (within the budget), and discharge of an hourly employee.

Administrative and Supervisory Decisions: Administrative decisions are those that carry out a regular plan. Examples include fixing a fee within defined policies of the firm, accepting a case in which payment is at a regular hourly rate, authorizing payment of a client disbursement, assigning work, and scheduling overtime hours.

Detail Work: Finally, there are the job-implementing decisions that are not managerial in nature. These may include (1) which index to search in a legal matter, (2) where to file a folder, (3) whether to use a messenger or the mails, and (4) for the lawyer, how to plead a case.

Management Techniques: American industry is known the world over for its management ingenuity. Many techniques have been developed to make use of management principles. Some, not all, of these techniques have a place in a law office.

The extent of development will depend on the personality of the organization, its management sophistication, and its size.
Written Procedures and Manuals: Written procedures are necessary because, having taken the time to develop a good way to accomplish an end, only a written procedure can preserve the knowledge. This principle applies equally to the methods developed in the handling of a specific legal problem and to the filing system of the organization. In the absence of written procedures, different persons will perform the same assignment in different ways. Even the same individual may, at times, use different methods. Hence, results may not be uniform and the efficiency of performance may vary considerably.

Written policies differ in some respects from written procedures. They tell what to do rather than how to do something. Consistent and understood policies work to improve morale and effectiveness. Policies, incorporated into manuals, describe the "rules" of the organization and its structure.

To be useful, both procedures and policy manuals must be reviewed and updated.

Systems Analysis: There is always a system, a way of getting things done. In the absence of managerial leadership, systems of work simply grow at the will of those performing various tasks. Systems analysis is a thoughtful review of how things are accomplished, seeking to improve operating methods. Systems analysis leads to written procedures and to training of the individuals who must implement the system.

Record-Keeping: The bane of many a smaller law office is the keeping of records. Good records tell the firm the pertinent aspects of its history, which is important at the time of billing a client and when preparing a tax return. Also important are records of when each secretary received his or her last pay increase and how often he or she is late for work, if that interesting book offered by Matthew Bender is in the library, or whether the other party in the litigation has already retained the firm.

Financial Controls: Financial controls revolve around good accounting records, and also financial goals or budgets. The firm that sets financial goals and then measures its performance against them will generally perform better than the firm that simply accepts bookkeeping as a nuisance.

Budgeting: Budgeting for expenses is not only a method of goal-setting but also an important method for delegation of authority. A partnership may adopt a budget. One partner or an employee may have authority to spend some or all of the budget. In the public and corporate sectors of the profession, budgeting is a technique required for survival.

Delegation and Structure: A structure of authority and responsibility is a basic management assumption. Management techniques define and refine the "pecking order" into recognized patterns. A well-managed organization has charted and analyzed its structure so that the pattern will be clear. Each member of the society will know how he or she relates to the other members, what actions and decisions are expected and when to seek guidance from a higher level. Written position descriptions may be used to define authority and responsibility, just as written procedures are used to establish a system. The structure will provide for orderly methods of communication between different parts of the whole society and up and down the structure.

Span of Control: There is a limit to the number of persons one supervisor can effectively control. Although the maximum number of such reporting relationships is often said to be between four and eight, these are not definitive figures. The number of subordinates any one manager can actually guide depends on the manager's other (i.e., professional) responsibilities, and on the personal characteristics of the manager, as well as those of the subordinates involved.

When the span of control is exceeded, subordinates will be unable to obtain guidance, to report at desired intervals, or to communicate effectively with the superior. Since this is not an uncommon situation in lawyers' offices, the span-of-control concept is one which some readers may wish particularly to examine.

Unity of Command: A recognized management principle involves unity of command. This means that an individual should report to only one immediate supervisor, a principle frequently ignored in law firms. Law firm administrators are often asked to report to three-person management committees, and associate lawyers are often at the mercy of all of the partners. Many serious law firm problems can be traced to the failure to observe the principle of unity of command.