Management by Beneficent Despot

♬ Speak softly, love and hold me warm against your heart
I feel your words, the tender trembling moments start
We’re in a world, our very own…♬

Lyrics and Music by Larry Kusic and Nino Rota,

Marlon Brando as The Godfather

Do you promote people to management roles in your firm based on their popularity or influence, or do you select them because of their business acumen? Does your management structure resemble a beneficent despot, gently but carefully controlling and directing the firm, or does it resemble a raucous democracy where everyone gets a vote? Maybe it’s run by a committee, or even groups of committees?

Democracies are wonderful governmental structures, but they are not designed to most effectively and efficiently make money. Firms headed by beneficent despots seem to work great until the time arrives for the despot to retire – which can leave a vacuum and create a power struggle, often resulting in the break-up of the firm.

In the long run, it’s less disruptive and more efficient to rely on a management group that enjoys the trust of the majority while making the hard decisions that must be made to keep the firm out of red ink and running effectively.

Can your management structure be streamlined to be more nimble and responsive? One way is to move from an owner-run operation to one involving professional management. Whether it’s an executive director, a firm administrator, a chief financial officer, or an HR director, professional managers are paid to produce results in their areas of expertise, freeing lawyer-owners to spend their time doing what they do best – attracting new clients and handling client matters. The series of LexisNexis Economic Surveys (which, unfortunately, appears to have stopped in 2008) consistently found a strong correlation between top-quartile firms and the presence of professional management.

How can you tell if your practice is ready for this step? As managing partner, if the amount of your time spent on management multiplied by your hourly billing rate is higher than the salary and benefits of an executive director, or even close, you are losing money by not engaging such a person. There is a secondary benefit, too, from having someone who is not trying to practice law also running the firm. The managing partner needs only to ensure that the professional manager is doing his or her job effectively – rather than to worry about whether everyone else in the firm is doing his or her job effectively.

Having a proper management structure, combined with good professional management in place, will be better for the firm in the long run than having a beneficent despot, speaking softly, all alone in his room…