Best Practice: Forming a law firm management committee

By John W. Olmstead, MBA, Ph.D, CMC Q. I am a partner in a 14 attorney firm. We have 9 partners and 5 associates. Currently, the firm is governed by all of the partners voting, usually just consensus, on all management decisions. We are thinking about going to a management committee. What suggestions do you have? A. You have reached a size where it is counterproductive for all of the partners to be involved in every management decision. In a recent posting I discussed the difference between management and administration. There should be a role for all partners in the management affairs of the firm (the partnership) but they do not need to be immersed in the day-to-day administrative concerns. Also, to what extent should a management committee be involved in administrivia. Successful firms have a good governance and management structure in place and effectively manage the firm. A major problem facing many law firms is the lack of long range focus and the amount of partner time that is being spent on administrivia issues as opposed to higher level management. A management committee may be the right direction if properly integrated with a governance/management plan for the firm. There is no "best approach" for structuring a law firm. However, keep in mind that there is still a role for the partnership at large and for your office manager or administrator as well. Here are a few ideas to get you started:

1. Consider developing a governance plan. You should start by adopting a list of decisions which require a vote of the partners. Boundaries and roles should be established for the partners, the management committee, and the administrator or office manager.
2. Develop a charter (job description) for the partnership, the management committee, and the administrator or office manager.
3. While partnership consenses should rule the day in most situations for matters for which are on the partnership's charter (job description), there will be times when a formal vote is required. Determine how voting rights will be handled. Each partner one vote or vote by partnership  interests? Different decisions - different voting requirements? Incorporate the list of decisions requiring a vote of the partners into your governance plan and into your firm agreements. Decisions on all other items can be made by the management committee and administrator/office manager.
4. What constitutes a majority vote? Simple majority, two-thirds, three-fourths, unanimous vote, etc. Some firms have different requirements for different types of decisions.
5. Who are the partners that get to vote - equity only or non-equity as well? Non-equity partners voting on certain decisions and not others?
6. Once you create the charter for the management committee determine how many members will be on the committee, length of time, how members will be selected (elected or appointed), etc. I suggest that the firm elect a three member Management Committee for one-year terms initially and allow partners to serve successive terms. After the firm has been able to evaluate the success of the new structure, it may want to elect partners to the committee for staggered terms.
7. One of the partners should be designated to chair the committee. Each of the other members may be assigned authority, responsibility and accountability for coordinating and/or performing specific functions.
8. The management committee should meet weekly, or if that isn't convenient, as frequently as required. To keep all of the partners apprised of issues before the management committee meeting is held, it is recommended that the meeting agenda be distributed to all partners within 48 hours prior to the scheduled meeting. Partners should be encouraged to discuss, with members of the executive committee, any items listed on the agenda or recommend subjects for discussion. Following this meeting, minutes should be prepared and distributed to all of the partners for information purposes.
9. To keep all partners in the loop suggest quarterly partner meetings.

Getting your governance structure right from the start will save a lot of frustration and stress in the long term. Click here for articles on other topics Click here for our blog postings on partnership and governance John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.