Daily Dispatch

Ethics and Management

Passive Practice Management Sinking Your Law Firm?

By | May.22.13 | Daily Dispatch, Ethics, Law Practice Management

Law Firm Sinking Ship

Is anybody actually steering the ship at your law firm? Many smaller firms I visit across the country seem to have this in common: a passive practice management style, defined by reactive decision-making. Typically in these firms, managing partners serve part-time, without compensation, and their primary responsibility is to address staff-related issues and administrative functions—but only when absolutely necessary.

The reality is that under a passive management style, no true firm leadership exists, and no one is steering the ship.

This is particularly true in smaller firms for a number of reasons.

  • Some managing partners fear being accused of playing favorites, being overly protective or being unduly harsh. Tough decisions are avoided altogether—with the hope that the problem will eventually go away. Inaction is driven by fear of making the wrong decision.
  • Some fear jeopardizing the partner-to-partner friendships that originally brought the group together.
  • Then, of course, there are those who simply have no idea what to do about the problem at hand.

Even worse, though, are firms that are managed by consensus—the ultimate lack of a ship’s captain. Decisions are made at the speed of molasses, if at all, because consensus can be quite elusive.

Is Passive Management a Malpractice Risk?

Absolutely. Consider a situation where a partner is going through a difficult divorce and seriously depressed. As the divorce drags on, financial pressures mount and the attorney begins to drink. Now personal friendships and even loyalty come into play and this attorney, who may be developing a true impairment, receives support from his peers at the firm. Support through a personal crisis is admirable and quite appropriate. However, failing to manage the professional side of this personal crisis as well means that malpractice claims can arise. For example, should the attorney’s files be reviewed or the calendar checked? That would seem prudent since impaired attorneys often neglect client matters.

This is one real failure of passive management: Firms can fail to proactively address the professional side of a developing crisis. Yes, when faced with a malpractice claim, most of these firms respond by having management—in whatever form it exists—step in; however, it is often too little, too late. Then, the unfortunate outcome is a change in the firm makeup—not always limited to the firm divorcing itself from the problem attorney. Since accountability naturally falls on the managing partner, the result may be a firm split or dissolution.

In contrast, actively managed firms are proactive—they take steps to prevent possible claims from arising. In response to the situation above, an actively managed firm might have conducted the file review at the first sign of trouble, and assigned a mentor or granted a temporary reduction in workload. Any of these actions would professionally support an attorney who is struggling. If substance abuse, as an example of a full-blown impairment, becomes a known and legitimate concern, additional steps—such as requiring successful completion of an addiction treatment program as a condition of remaining with the firm—become essential.

Certainly, that is more difficult. The hoped for result, however, will be the ability to maintain the overall integrity of the firm—and the recovery and retention of a valuable firm asset, the attorney himself.

What Can You Do?

If aspects of a passive management style exist at your firm, consider strengthening your firm’s management and leadership capabilities. Steps that might be taken include:

  • Formalizing a management position by creating a job description. Have an open, honest discussion about the degree of authority that will be given to this individual, and then follow through and respect that authority when it is exercised.
  • Recognizing the importance of the management position, whether full-time or part-time, with appropriate compensation.
  • Training. If no one at the firm has a complete set of management skills, there are resources available at a variety of price ranges, from well-written books to intensive law firm management courses that last several weeks.
  • Hiring an experienced manager if no attorney has an interest in managing the firm. Again, make certain to give this individual the necessary authority; otherwise it’s just going to be wasted time, energy and money.

I believe in having strong leadership and effective management within organizations. In law firms, this not only contributes to lowering exposure to malpractice claims, but can also significantly impact a firm’s financial bottom line in the most positive ways.

That said, remember this: According to our ethics rules, we are our partner’s keepers. When it comes to the success or failure of the business, firm attorneys will sink or swim together. Isn’t the better option to put someone in charge of actually steering the ship, and try to avoid ever having to sink or swim together?

Personally, I’d rather be on the ocean than in it. What about you?

Mark Bassingthwaighte is a Risk Manager with Attorney’s Liability Protection Society, Inc. (ALPS). In his tenure with the company, he has conducted over 1,000 law firm risk management assessment visits, presented numerous CLE seminars, and written extensively on risk management and technology. Mark received his J.D. from Drake University Law School. He blogs at ALPS411. Contact him at mbass@alpsnet.com.

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Illustration © iStockPhoto.com/Alex Mathers

2 Responses to “Passive Practice Management Sinking Your Law Firm?”

  1. Tom Grella
    23 May 2013 at 9:51 am #

    This is an excellent post. I do not know Mark, and whehter he was ever the leader of a small firm, but he really hits the nail on the head about how difficult it is to lead in such a firm, as well as the risks of a failure to do so. If Mark has never been a small firm leader, he sure understands the difficulties I have experienced over 12 years in the area of managment and leadership of my 25 lawyer firm, and the risks I have run from time to time when I have not spent enough time and effort to lead, as well as manage issues that arise, and instead have taken the “it will resolve itself over time” approach.


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