‘At what size of law firm do you think full-time managing partners become viable?’ This was a question put to Simon McCrum of Darbys Solicitors during a panel session at last week’s Law Society Law Management Section (LMS) Conference. The conference, Chaired by Andrew Otterburn, was billed as offering law firms ‘practical help for challenging times’. Simon was the first speaker, and in my view he certainly fulfilled the brief. A fuller report of the conference will appear in the January 2013 edition of Modern Law Magazine but here I want to look at this question of when law firms should consider the post of a full-time managing partner.
Many individuals take on the role of managing partner while continuing to do fee earning work. Combing fee earning, with significant day to day management responsibilities must be a very challenging role. As if that were not enough, managing partners also need to be the firm’s principal visionaries and devisors of a strategy to turn the vision into reality. In many cases they also need to be the main drivers of improved procedures and behaviours if the firm’s strategic aims are to be realised.
In his answer to the question put to him Simon suggested this question for many firms becomes translated as: ‘can we afford to lose the fee earning revenue generated by the part-time managing partner?’ Simon suggested that it is relatively easy for a full-time managing partner to replace the revenue ‘lost’ by improved management practices implemented as a direct consequence of the managing partner becoming full-time (Simon was assuming a revenue target of about 200k pa which the senior fee earner / part-time managing partner could reasonably be expected to bring in). If still unconvinced, ‘just try it for a short while’ he said, ‘what have you go to lose?’. Cynics would say a senior fee earner’s revenue of course, but let’s look at this challenge in a little more detail.
Let’s suppose a firm currently has a part-time managing partner and the plan is to pilot-test a full-time managing partner role for six months, therefore let’s assume that a £100k of revenue needs to be generated during that time to replace the revenue the part-time managing partner would bring in. According to my calculations, a law firm of 21 fee earners charging an average of £200 per hour would need to bill an additional two (six minute) units per fee earner per day to generate an additional 100k revenue over six months (making allowances for likely holidays and sick leave). Just two more units charged per day. I am not suggesting this need be additional time worked – just make sure that 2 additional units per day are recorded as chargeable time and billed as such, consistently. How might a full-time managing partner help make this happen during the pilot?
The most obvious starting point is to look to improve fee earner efficiency and productivity which may be done by, for example:
- streamlining some legal service delivery processes
- streamlining some back-office support and practice management processes (which can often take up a surprisingly large amount of a fee earners time)
- Improving productivity by ensuring the right level of fee earner gets to do the right level of work. This can be done by ensuring new matters are opened properly and with the work thereafter distributed appropriately, perhaps following on from the initial risk assessment exercise done during matter opening.
The above points are basic principles of good legal project management, but many would also say, with some justification, they are simply applied common sense. By going full-time the managing partner would be also able to devote more time to things such as improving staff morale (there is always room in all organisations for improving staff morale), and I suspect that this alone would generate an additional two chargeable units per day per fee earner.
I should also point out that, for the purpose of this exercise, I have taken a very narrow view of ROI and assumed that the ‘lost’ revenue can be most easily recovered by improved realisation of chargeable time. In reality it is likely to be just as productive and profitable, if not more so, for the temporary full-time managing partner to devote closer attention to other alternative fee arrangements, particularly those which seek to emphasise, and charge for, value delivered to clients. Value pricing is a significant topic in itself and one I have covered in previous posts (and will no doubt return to again). Ensuring ROI while piloting a full-time managing partner role need not, and should not, be confined to increasing the realisation of chargeable time, although this is perhaps the most direct means of demonstrating ROI in the short-term.
When piloting the role of full-time managing partner it would make sense to create a business case and project plan at the outset and for both to be reviewed regularly during the pilot to monitor progress. Regular readers of this blog will know that I am an enthusiast for controlled pilot projects. I have suggested before that a pilot proposal document need only be short and refer to factors such as:
- Identification of business problem(s) to be solved during the pilot.
- An outline of the potential solution(s).
- A summary of benefits to the firm should the proposed solutions work effectively.
- A pilot project outline should made up of:
- Resource identification – clearly the newly full-time managing partner will need some help and assistance.
- Project Milestones – set specific dates with particular objectives to be achieved by those dates.
- Risk Assessment – list risks associated with the pilot, impact on the firm if those risks transpire and means of mitigating the risks and their impact.
- Some KPI’s – to help assess the pilot. Think in terms of SMART KPI’s, those which are Specific, Measurable, Achievable, Realistic and Time-bound. (An additional two chargeable units per fee earner per day might be a good starting point).
Continuous review of progress against plan has already been referred to but there should also be a thorough review at the end of the pilot, otherwise how will it be known whether the project has been a success? The ultimate purpose of this particular pilot is to see whether a full-time managing partner role is going to benefit the firm more than a part-time managing partner role and I suggest this can best be achieved by reviewing progress in a series of smaller projects within a set time-frame. If in light of the pilot it is decided to move to a full-time managing partner role, there will be plenty of time later to tackle bigger and more complex projects.
Simon McCrum also pointed out that the actual fee earning work which would have been done by the part-time managing partner can still be done by the firm. Files can be distributed to other fee earners, or another more junior fee earner could be recruited to do much of the bread and butter work on the files. So even taking a very narrow ROI perspective, the argument for full-time managing partners soon looks compelling for many small and medium sized law firms. Taking a broader view and considering the difficulties inherent in steering a complex service organisation through the swirling tides of today’s economic environment, the argument for full-time managing partners appears even more compelling.
Some part-time managing partners may be reading this and thinking ‘I can appreciate the logic but I enjoy fee earning work and, besides, continuing with fee earning keeps me in touch with what is going on etc, etc.’ There is absolutely nothing wrong with preferring fee earning over increased management responsibility but the question posed at the conference is a valid one, as are those left unsaid but implied along with it. To what extent do firms benefit more from a part-time, as opposed to a full-time, managing partner? At which point should firms consider a full-time managing partner role? What criteria should be used for judging the success or otherwise of a full-time managing partner?