Ask the Experts
Question: We have an office manager, but I just don’t think it’s right to let her handle the money end of things. My partners say I’m crazy to require a firm lawyer to daily carry our receipts to the bank and handle all the bill paying. I say it is part of our fiduciary duty to the partnership. What do you think?
Benjamin Shames: The partners are responsible to each other for making sure the firm is run efficiently and responsibly. After all, it is their firm and their money. That being said, it is not cost-effective to have the partners handle the back-office functions of the firm. This question raises several important issues: internal controls at the firm, responsibilities of staff and partners, and your hiring procedures and staff selection.
For internal control purposes in a small firm, for example, the receptionist can open the mail, make copies of all checks and prepare the deposit slips, and make the deposit (via mail, scanner or going to the bank). The office manager can record the deposits in the billing and accounting system. Then, one of the partners can compare the total deposits each month to the total deposits in the monthly bank statement and financial statements.
The office manager can prepare all payments in the accounting system and print the checks. One of the partners can then review the supporting documentation and sign the checks. Checks over a certain amount (to be determined by the partners) should require a second partner signature. It is preferable to have one partner be the main check-signer, as that partner will remember what expenditures he or she has previously approved and signed. Also, for internal control purposes, the person who reconciles the bank accounts each month should not handle deposits or issue checks.
The last issue is the hiring and selection of staff. When selecting an office manager, the firm first needs to outline the position’s responsibilities. Since the finances of a firm are critical, the individual responsible for this function should have a strong accounting and computer background.
Partners need to allow staff to handle the routine functions of the office. This delegation of duties will allow the attorneys to spend their time practicing law, maintaining client relationships and marketing to potential new clients, which are the better uses of their time, while still retaining control.
Benjamin Shames is Director of Operations for Valorem Law Group, LLC, a commercial litigation firm with 12 attorneys. He manages all aspects of the firm’s operations, including finance, billing, HR and technology. Previously, Ben was Executive Director for Goldberg Kohn for 11 years, Financial Services Manager at Jenner & Block and Controller for the Chicago office of Baker & McKenzie. He has been a member of the ALA since 1998, serving three terms as treasurer for the Greater Chicago Chapter. Ben is a CPA with an MBA in Finance from DePaul University.
Janine Book: As managers, one of our main jobs is to relieve the partners of day-to-day administrative tasks, so they can focus on serving their clients. This role comes with a high level of responsibility — performing accounting duties is just one. This means that we have been placed in a position of trust by our partners. For example, to ensure compliance by our firm and its professionals with applicable codes of ethics, it is important that administrative personnel manage receipts and properly segregate and accurately account for client monies.
A partner’s fiduciary duties consist of the duties of care and loyalty. Administrative decisions should be based on what is in the best interest of the partnership and firm clients. Maintaining a trusting relationship with your office manager helps the firm perform at a high level — it contributes to the value this person brings to the workplace and, most importantly, relieves the partners of the worry. Trust is the most important ingredient for a workplace to be successful.
Janine D. Book is Office Administrator in the Pittsburgh office of Pepper Hamilton LLP. Her responsibilities include overseeing all personnel in the office, facilities management and managing the office’s operations budget. She is a Director of the ALA’s Region 1, and received the Outstanding Volunteer Award from the Pittsburgh Legal Administrators Association.
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