Law Practice Management Asked and Answered Blog

Category: Committee

Apr 25, 2018

Law Firm Management Committee vs Full Partnership

Question: 

I am a partner in a fourteen attorney firm in San Antonio, Texas. We have eight partners and six associates working in the firm. The firm was founded twenty years ago, so we are a first-generation firm. Two of the partners were the founders of the firm and the other six were made partners in later years. Currently our method of governing the firm is handled by the full partnership. While each partner has one vote, we try to manage by consensus. We do not have a managing partner or any committees. We have an office manager that primarily handles the accounting and the staff oversight. The partners meet weekly to discuss issues and make decisions. We are beginning to have issues with our management structure. Partners are not showing up for the weekly meetings and complaining about the amount of time it is taking away from servicing their clients. Should we consider a different approach? We would appreciate your thoughts.

Response: 

You are at a difficult size, still a small partnership but big enough that management by all may no longer be working for you. I believe that you should consider either a managing partner or a management committee of three partners elected by the partnership. For this to work all of the partners must agree to surrender some degree of independence to a managing partner or a management committee. I would start with putting together a list, or job description, for the managing partner or management committee. Partnership agreements often outline management decisions (powers) reserved for the partnership with all decisions handled by the managing partner or management committee. If your partners are unwilling to  surrender some degree of independence then changing to a managing partner or management committee may prove to be wasted effort.

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

Oct 19, 2016

Law Firm Governance – Executive Committee – Non-Equity Member and Procedures

Question:

Our firm is a fourteen attorney firm in Orlando, Florida. We have Two equity members, five non-equity members, and seven associates. We are currently managed by the managing member. In order to be more inclusive we are thinking about eliminating the managing member position and moving to a three member executive committee with one of the three members being a non-equity member. I would appreciate your thoughts?

Response:

I have several client law firms that have taken this approach. Here are a few suggestions:

  1. Draft a charter (position descriptions) for the equity membership and the executive committee outlining the specific responsibility and authority for each.
  2. If the firm has a firm administrator draft a job description for that position outlining his/her responsibilities and authority.
  3. Since there are only two equity members there will be no election for those members on the executive committee until such time in the future when there are more equity members. At that time the two equity members should stand for election by the equity membership for staggered three year terms.
  4. Have the non-equity members elect a representative non-equity member annually for a one-year term on the executive committee. 
  5. Suggest that each member have one vote including the non-equity member. The goal of the executive committee should be to manage by consensus but when they can't a vote should be taken.
  6. Have the non-equity member sign a non-disclosure agreement and advise him/her as to the content that can be shared with the non-equity members and content that cannot be shared.
  7. Elect a chair of the executive committee.
  8. Have regularly scheduled meetings.
  9. Use agendas and prepare minutes or notes after each meeting.

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

Jun 07, 2016

Law Firm Executive Committee – Setting it Up

Question:

I am a partner in a twelve attorney firm in Downers Grove, Illinois. We have 8 partners and four associates. We are managed by committee of the hole – all partners are involved in all decisions. We have been considering moving to an executive committee. How do we set it up?

Response:

How you setup your executive committee will be key to the success of the management plan. How you setup and constitute your executive will be crucial. Selecting the right partners is paramount. How the partners are selected, who serves on the committee, how the committee operates, and other matters must be spelled out and communicated to all partners. Here are a few ideas:

  1. Consider a three member executive committee.
  2. Elect members to staggered three-year terms. On the initial election elect the individual with the most votes to a three- year term, the individual with the second most votes to a two-year term, and the individual with the least votes to a one- year term.
  3. Hold elections annually to fill vacancies for the upcoming year.
  4. Consider adopting a policy of requiring a partner whose term has expired to remain off the committee for one year before being able to run for another term.
  5. Incorporate procedures for removal of members by majority vote of the partners. Specify the voting requirements.
  6. Outline the decisions that are reserved for full partnership vote, decisions to be made by the executive committee, and decisions to be made by the office administrator.
  7. Develop a job description for the partnership, the executive committee, and the office administrator incorporating the above. 
  8. The committee should elect a chair annually, meet monthly with a prepared agenda, and have written published minutes or notes of what transpired at the meeting, action items to be taken, and who is responsible.
  9. The firm administrator should attend all meetings except when his or her performance is being discussed.

The key ingredient of a successful executive committee is that partners perceive the committee as competent, fair and without personal agendas, and that it gets things done in a timely and efficient manner. The process is as important as the outcome.

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

Apr 01, 2014

Law Firm Governance – Firm Administrator With Managing Partner or Management Committee

Question:

I am a partner in a 9 attorney firm in Topeka, Kansas. There are three active partners in the firm. For years day to day management has been the responsibility of a managing partner that we appoint from time to time. We have just hired our first firm administrator - starts in two weeks – who is experienced and has worked in other law firms. Should we continue to have a managing partner or consider a different structure?

Response:

Typically firms your size that have professional firm administrators empower the firm administrator to manage the business side of the law firm and have either a managing partner, management/executive committee, or all partners manage the client service side of the practice. The firm administrator typically reports to the managing partner, management/executive committee, or all partners. In essence there are three levels of management – the partnership which services like a board of directors, the managing partner or management/executive committee that oversees the professional side of the practice, and the firm administrator that manages the business side of the firm.

I find that in firms your size with firm administrators a three member management/executive committee is more common. Since your firm only has three partners – initially your management/executive committee would be all three partners. As you add more partners you would move toward electing your management/executive committee.

While either form would work in your situation – I suggest you consider eliminating the managing partner position and having the three partners serve as the management committee and have the firm administrator report to that group.

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

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