Law Practice - May/June 2013

PRACTICAL STEPS IN MARKETING, MANAGEMENT AND FINANCE
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Reviewing Your Firm’s
Governance Structure

By Karen MacKay

W HEN WAS THE LAST TIME you reviewed the governance structure of your firm? How long has the status quo existed? Do you have a structure in place that provides the right blend of security so that the firm is well organized, and the freedom to keep your partners actively engaged as owners? Finally, how do you review your structure without it feeling like a performance review of the incumbents?

SIGNS OF DISCONTENT

When your governance structure is not meeting your firm’s needs, the signs can be everywhere, but you need to notice them. Meetings may be poorly attended, and conversations may instead happen in small, informal groups rather than at the meetings designed to address the business of the firm. Leaders feel lack of support, while partners feel as if they aren’t being informed and heard. People disengage, issues are not raised or discussed, and inertia sets in. Any debate carries the risk of feeling like criticism, and those in leadership and management roles feel like it just isn’t worth the personal sacrifice. If this sounds familiar, it might be time to take a look at your governance structure—the transparency, alignment and mechanics of getting things done at your firm.

STRUCTURE: HOW MUCH IS ENOUGH?

When was the last time you asked your partners what they need to feel informed, engaged and enfranchised? What are your assumptions about the current structure in place at your firm? How much and what form of structure do you feel is the right balance going forward?

Just as you align decisions, you should align communication
appropriate to the issues. For what types of issues do partners
simply want a heads-up—a weekly email, perhaps, with the high-
lights of the life and work of the firm beyond
any specific practice or
group? What is enough
for them to feel informed,
to not be blindsided by a
member of the staff (or
someone outside the firm)
in a conversation over lunch?

TRANSPARENCY

Nothing frustrates partners more than a lack of transparency. A decision-making structure that clearly sets out the decisions that specifically need to be put to the partnership is a good start. From there, map out the scope of decisions that can and should be made by the managing partner, and those that can be made by the firm’s administrator. For example, small decisions, such as an unbudgeted expense, might be made by the administrator if less than $2,000, or less than $5,000 if approved by the managing partner, but anything greater than $5,000 would need the approval of the partners at their regular monthly meetings. Partners tend not to be bothered by small items and recognize that the business of the firm needs to keep moving, but at some threshold appropriate for the firm, the partners want input and approval. What is the right threshold for your firm?

ALIGNING RESPONSIBILITY AND AUTHORITY Perhaps the culture that your firm began with, and thrived under, was one where staff were hired by, and aligned with, particular individual attorneys. This practice is still alive and well