Law Practice Management Asked and Answered Blog

Category: Having

Jan 17, 2017

Law Firm Structure – Sole Owner vs Having Partners

Question:

I am the owner of an eight attorney insurance defense firm in San Antonio, Texas. I have been practicing fifteen years. I am forty-five years old. Many of my peers in firms my size are in partnerships. Is my situation unusual? Should I consider having partners?

Response:

Years ago I would have said that a firm such as yours would be a partnership or other organizational form with multiple equity owners. This has changed. I am working with more firms your size and larger with sole owners and no other equity owners. One such firm has twenty-five lawyers and seventy-five support staff.

I am assuming that this has worked well for you. You have the benefit of financial leverage and not having to share the pie with other equity owners. You call the shots and don’t have to share decision making with others. You probably are earning a nice income.

At your present age there is nothing wrong with continuing this for awhile. However, eventually you will have to consider your succession strategy, how you will exit the practice, and to whom you will pass the baton. The other issue is a career advancement strategy for your existing associates. Some may expect to eventually have an ownership stake in the firm. Your associates need to progress in their careers – not just as technicians – but also as business men and women and managers.

Don’t wait to long to begin this process. However, resist the temptation to make everyone an equity owner. In a insurance defense firm with eight attorneys I would try to maintain a ratio of four associates to each equity owner – thus no more than two – maybe three equity owners.

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

Dec 15, 2015

Law Firm Retreat – Suggestion for a Firm Having Their First Retreat

Question:

I am a senior partner in a fourteen attorney intellectual property firm in Memphis. We are planning on having a firm retreat in January 2016. We have never had a retreat before. Our plan is to have a one day retreat facilitated by a consultant with specific focus on competitive strategy and marketing. We have just decided this week that we would like to do this and are just beginning the planning process. I would like to hear your thoughts and suggestions.

Response:

Here are my thoughts:

First of all it is now December and January is just around the corner and I believe that you need to have at least 60 days to properly prepare and plan for the retreat. Most management consultants that facilitate retreats, including myself, will want to get to know the firm and will want to conduct attorney interviews, (face to face or via telephone depending upon whether they are local), review financial reports and other documents, and prepare the retreat program. Participants (your people) may need time to prepare as well. Off-site facilities will need to be booked as well.
Decide in advance the outcomes that you would like to achieve. Is it to entertain, inform, educate, or to develop specific solutions or action plans.
Keep the retreat's focus narrow and concentrate on just a couple of topics – it sounds like you are doing this.
Establish ground rules upfront – example – off agenda items, day to day operations issues, etc. are off limits.
Building follow-up action plans into the program and identify who will be responsible for following up after the retreat is over.

Law firms frequently have what at the time seems to be a successful retreat but after the retreat is over and time passes it becomes apparent that no change has taken place, action items were not completed, and partners believe there was little return on the retreat investment.

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