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Leadership and Ownership: The Essential Law Firm Dynamic

By Edward Poll, November 2009

In a down economy, lawyers tend to focus on their own clients and their own business interests, but putting the interests of the firm first is the essence of true leadership.

Law firms are no strangers to the boom-and-bust mode of operation, and the “bust” phase has been in place for nearly two years. Disdain about “The Business of Law®” (a phrase I registered well over a decade ago because so few firms cared about it) may have been dealt a fatal blow by the current legal recession, which has driven home lessons about over-expansion of offices, over-reliance on a limited number of clients, and over-compensation of partners and associates. Yet these are firm-wide issues, and accepting personal leadership responsibility for cutting expenses and enhancing revenue in a down economy are concepts that too many lawyers still resist. 

All organizations, large and small, law firms and non-law firms, have one thing in common:  a finite limit to financial resources. What is unique to law firms is the impact so many individuals have directly on operations.
 
In many law firms, individual partners, even lawyers generally, still have the ability to direct discretionary resource consumption, from purchasing new office furniture to charging the firm for personal expenses. And too often lawyers believe that having personal control over such spending is a prerogative of their status within the firm. This, however, is the opposite of a true leadership perspective.

Defining Ownership

Partners in particular should accept leadership responsibility in their firms. The essence of that responsibility comes in a single word: “ownership.” This means being the last person to receive financial benefit from the firm. Staff and associates come first. Vendors and suppliers come next, and then owners.

It means personal responsibility for debts and liabilities. It means lying awake at night wondering how to improve the efficiency and growth and profitability of the law firm. This concept of ownership responsibility is the practical evidence of law firm leadership.

The recession may have caused lawyers to worry about whether their own business is disappearing or clients cannot pay. But how often does this concern translate itself into a true leadership commitment for personal efforts to make the firm’s situation better?  What is the normal state of affairs in your law office? Piled on top of the anxiety of your clients and the pressures of seeking the best results, how much do you contribute overall to the firm? Do you make an affirmative effort to be financially responsible, to support a workplace where everyone is committed to clients and respects one another?

OR:

Do you make an affirmative contribution by being financially responsible, and supporting a workplace where everyone is committed to clients and respects one another? 

Inclusive Concern

The question is valid because lawyers primarily focus on the task at hand and getting results, leaving too little room for camaraderie and support. Expressing personal leadership by showing an inclusive concern for the firm as a whole is the best route to a healthy firm. 

But studies have shown that inclusiveness is difficult for lawyers, who tend to be more skeptical, impatient and intense, and less interactive and able to take criticism, than people in general.  When a lawyer’s connection with the rest of the firm is positive, it creates a shared work ethic and belief that the firm’s work is worthwhile. Lack of such leadership will create disharmony in the firm, and ultimately poor performance. It is the opposite of professionalism.

Leadership expressed as a sense of personal ownership means contributing to the law firm as a whole in a businesslike way, one that improves the professionalism of the practice of law. The purpose is not simply to get more money for the lawyer; it also benefits the client.

Understanding the operation of the firm as a business and a team, and how each lawyer has an impact on firm profitability, are the key elements to this. To the extent that lawyers are committed to leadership, they will be committed to making each element work for everyone in the firm. Such a law firm will be financially stronger and will also approach client service more efficiently, avoiding the service lapses that often contribute to a worsening financial situation.

All law firms must provide value to their clients. And they must be profitable in order to open their doors the following day. The firms whose lawyers provide leadership through their own action to support these two truths will be able to manage in a down economy successfully, while ensuring their long-term future and success.

Leaders are open and honest about what a firm needs to achieve, have no personal agendas, and support using sufficient resources to achieve firm-wide goals. Everyone in a law firm – lawyers, staff and support personnel – should be committed to such a team effort. 

Clients ultimately get their understanding of a firm by the way in which all persons, lawyers and staff, conduct themselves. A successful law office or law firm should be a team that creates quality service and work product for the benefit of clients. Improving the client service skills of everyone in the office involves them in the financial and organizational life of the firm so that they understand and appreciate their role and look forward to the future. The result will be a better firm.

Stars vs. Teams

Unfortunately, such leadership through ownership is too often lacking in the formal management of law firms, which generally operate by consensus among partners while splitting management effort. There may be a COO (usually a non-lawyer), a CEO-managing partner (and chair of the management committee), and then sometimes a chairman of the board (usually a former CEO-managing partner). If there are ego-generated conflicts among them, the firm can only have chaos and difficulty. 

Law firm leaders, like leaders in any organization, must connect effectively with every member of the organization through shared values and shared effort. Failure of leadership to create such shared values will cause inefficiencies, create disharmony within the firm and result in financial difficulties for, and perhaps even the failure of, the firm.  

Legend has it that, at the signing of the American Declaration of Independence, Benjamin Franklin exhorted the signers (who represented self-centred, independent states): “We must all hang together, or surely we will all be hung separately.” In modern parlance, one can use a sports metaphor, comparing teams with one or two self-centred, freelancing stars to those teams with no stars, but great co-operative skills. While it is possible for the former to have a good season (often followed by a collapse), the latter model is the more satisfying and longer lasting, and one that ultimately provides most personal satisfaction.

Accepting Leadership

So what does the combination of leadership and ownership mean as a practical matter? For lawyers who accept ownership responsibility of their contributions to firm performance, it means an intensification of affirmative efforts that are essential to any successful business organization: 

• Win the business (the sales and marketing function) by searching out new opportunities on behalf of your firm, to identify who potentially needs your services as well as those of your colleagues. 
   
• Do the work as effectively and efficiently as possible (the production function), working as part of a team wherever possible in order to reinforce to the client that service is provided by the entire firm and not just one lawyer.
   
• Get paid (the collections function), keeping a close eye on outstanding bills and reminding clients of the need to pay instead of having to resort to last minute year-end discounts.

To some lawyers, approaching sales, production and collections from the standpoint of what is best for the firm may seem contrary to their individual self-interest, but the opposite is actually the case. Ultimately, clients belong to the firm and not to the lawyer, and that benefits firm, lawyer and client alike. When any of the three functions promotes the good of the law firm, it validates the firm as an institution that will be seen as the centrepiece in the lawyer-client relationship.  

Lawyers who hold themselves apart from the firms in which they work are actually putting themselves at a disadvantage. Most clients presume each lawyer is as competent as the next. If clients place primary reliance on the firm, the lawyer benefits as the firm itself maintains relationships and generates new ones. 

Paying closer attention to all of the three essentials outlined here, and to how they contribute to the overall good of the firm, can be done by any lawyer, at any time, at any point in an economic cycle. Lawyers need not and should not wait until problems develop before focusing on them to improve the firm’s performance. Too many lawyers equate success with their own billable hours, but a lawyer who focuses on these three functions in ways that benefit the firm overall is displaying the essence of leadership.

Edward Poll (edpoll@lawbiz.com) is a certified management consultant and coach in Los Angeles who coaches attorneys and law firms on how to deliver their services more profitably. He is the author of Attorney and Law Firm Guide to the Business of Law: Planning and Operating for Survival and Growth, 2nd ed. (ABA, 2002), Collecting Your Fee: Getting Paid from Intake to Invoice (ABA, 2003) and, most recently, Selling Your Law Practice: The Profitable Exit Strategy (LawBiz, 2005).