THE LAW FIRM MODEL IS NOT HIERARCHICAL
Private law firms are generally built on a leverage model. The law firm owners (the “equity” or “capital” partners) are typically those partners who are rewarded for generating the most revenue for the firm with leadership roles. This usually results from generating new clients, servicing an existing base of loyal clients or servicing institutional clients that have been passed down over time to key relationship managers.
The lawyers who are leveraged are the other equity partners and salaried lawyers (ranging from non-equity (or income or contract) partners to counsel to associates).
Given the highly personal nature of law firm practice (e.g., lawyers must independently and zealously represent their clients and the mistakes of a subordinate lawyer may be imputed to the supervising partner), a large law firm often resembles an agglomeration of small firms (e.g., departments or specialty practice groups) operating under a cost and risk sharing umbrella. And the general inability to impose or enforce noncompetition agreements means that individual lawyers and groups of lawyers can freely move to competitor firms if they are not pleased with their current firms.
That reality frustrates the implementation of a strong top down model in virtually all law firms. Law firm partners are an independent-minded bunch, and that is how legislators, regulators, clients, and the profession tend to want it. For all of the analogs to big corporate business, law remains a regulated profession. Law firms are unable to adopt the strict hierarchical structure of a large corporation. Seemingly, they cannot have a strong, centralized management structure no matter how hard they try. In fact, the harder that law firms try to impose that type on structure on their most productive partners (i.e., the partners with good billing metrics and reputations that give them the latitude to move easily to peer law firms), the larger the stress fractures within those firms will be.
In fact, large law firms tend to have rather flat organizational structures. They typically have a Chairman (the visionary, the conciliator, the revenue grower, the big picture person – the roles vary depending upon the needs and structure of the firm), a Chief Operating Officer and/or Chief Financial Officer (the revenue collector, budget generator and expense overseer), a Management or Executive Committee that functions like a corporate Board of Directors, Department Heads, committees aplenty, practice groups, industry groups and client groups, and partners (like corporate shareholders) who have ultimate ownership but cede day to day decision-making responsibility to these other individuals, whom this article will refer to as law firm leaders.
Put another way, law firms have more leaders than corporations of comparable size by revenue and number of employees. That makes leadership skills even more important for the success of law firms, which operate in perhaps the most highly competitive environment, than for those comparable corporations.
LEADERSHIP SKILLS AND COMPETENCIES
Partners who aspire to be law firm leaders must possess the skills and competencies of leaders. Skills are specific learned activities that enable one to perform a given task, such as drafting tax opinions. Competencies are broader; they characteristics (e.g., effective communication) required to perform a given job. The skills and competencies involved in law firm practice can be very different from those involved in law firm leadership.
The Center for Creative Leadership, a nonprofit educational institution that studies leadership worldwide, has identified nine competencies of leaders in their publication The Campbell Leadership Descriptor. These competencies are as follows:
- Vision – Establish the general tone and direction of the organization.
- Management – Set specific goals and focus organizational resources for achieving them.
- Empowerment – Select and develop direct reports committed to the organization’s goals.
- Diplomacy – Forge coalitions with important internal and external constituencies.
- Feedback – Observe and listen carefully to people and share the resulting information in a manner that those affected can accept as beneficial.
- Entrepreneurialism – Find opportunities for increasing revenue, expanding markets, or implementing new projects, programs, or policies.
- Personal Style – Set an overall organizational tone of competence, optimism, integrity and inspiration.
- Personal Energy – Handle long workdays, stressful decisions, conflicts and their resolutions, and tiring travel.
- Multicultural Awareness – Comfort working with individuals from different cultures, and managing organizations across different geographic borders, and with different demographic and cultural profiles.
HOW SOME LAW FIRMS ARE DEVELOPING LEADERS
Law firms are increasingly training their lawyers in a wide range of skills and competencies that extend beyond the practice of law. These skills and competencies include: key business skills (e.g., understanding financial reporting), communication, listening, influencing, team performance, delegating, conflict resolution, stress reduction, time management, effective feedback, handling difficult conversations, and business development.
While much of this training occurs in a group setting, some of it is executed one-on-one with a “coach” because of the individualized nature of the task (e.g., business development). For instance, while key principals of business development can be taught in a group, their execution is highly individualized in nature. Similarly, leadership/executive coaching is both individualized and personal in nature and is best implemented one-on-one.
Some law firms offer modest stipends for business development coaching to a select few or all of their partners. Those law firms that do not offer these stipends to their partners should at least provide these partners with a list of recommended resources to secure this coaching privately.
The technical legal skills and competencies that enabled associates to make partner remain essential, but partners must also be master an additional range of skills and competencies, i.e., they must demonstrate the ability to lead and manage teams, to generate business, to build business relationships, to show firm citizenship, to mentor associates, and to create solid reputations for themselves and their groups/departments. Partners who do not demonstrate these skills and competencies are likely to stall in their career advancement. Law firms are becoming ever larger, more global and more complex in structure. At the same time, they are incapable of adopting a purely hierarchical, top down organizational decision-making structure. That is why all partners will, to differing degrees, need to possess leadership skills. Leadership will be required at multiple levels, in multiple practice areas and in multiple geographies throughout the firms.
By Sheryl Odentz, Founder and President, of Progress in Work. This article was published in the March 2017 issue of the NALP Bulletin. For more information, Sheryl can be reached at 212-532-6670 or firstname.lastname@example.org.