Best Practice Tips: Law Firm Structure and Growth

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the administrator with a firm in Buffalo, New York. We have 14 attorneys – seven partners and seven associates. We are an eat-what-you-kill law firm. All the partners have to weigh in and agree on any and all management decisions. Our management team consists of “all partners.” While I have been hired as the administrator for management the firm, I have very little authority to do anything. The partners all have the freedom to do as they please, and there is very little accountability to each other. Recently we have been discussing the pros and cons of why we might want to change our governance and overall structure. I would be interested in your thoughts.

A. I believe that law firms that are “firm-first,” team-based firms that are organized along these lines have or will have a competitive advantage with respect to clients, legal talent, and merger partners. As law firms grow, the “lone-ranger” confederation approach no longer works. Decision-making is too time consuming, partner time is wasted, and opportunities are missed. Synergy (where one plus one equals three or four) is not achieved and the firm achieves little more than any one of the attorneys could achieve in a solo practice.

Recently I was working with a similar firm in Chicago that was looking for a merger partner. When the other firm learned that my client was a “lone-ranger” firm, they discontinued discussions. Larger firms that are “team-based” are not interested in merging with “long-ranger” firms – they tend to cherry-pick key talent from these firms rather than pursuing mergers or combinations.

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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 and author of The Lawyers Guide to Succession Planning published by the ABA. 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.