Passive Management: Is Your Law Firm Lacking Leadership?

After having consulted with over twelve hundred law firms over the years, trust me when I say that more than a few small law firms around the country are being passively managed. From a malpractice risk perspective, this makes me nervous, particularly at a time when so many now work from home to varying degrees. In order to explain why, however, I need to start by defining what passive management means to me.

I define passive management as reactive decision making, meaning decisions are only made when there is no other choice. Here’s one example of how this might play out. The designated “managing partner” position is considered part-time, and everyone knows there will be little to no compensation for serving in that role. Of course, one consequence of that reality is the position is one that most attorneys hope to avoid at all costs. As a result, no true firm leadership exists. To state it another way, no one is steering the ship.

This outcome occurs in smaller firms for a number of reasons.

• Some managing partners have concerns over how their actions may be perceived by the other partners. Such concerns might be due to a fear of being perceived as playing favorites, as overly protective, or as unduly harsh.
  
  
• Others do all they can to avoid having to make tough decisions, perhaps with the naïve hope that the problem will eventually go away if it is ignored long enough. After all, heaven forbid anyone ever question the propriety of a decision!
  
  
• Sometimes there is an underlying problem of simply being afraid of jeopardizing the partner-to-partner friendships that originally brought the group together.
  
  
• And then, of course, there will always be those who simply have no idea what to do when a decision is called for.

Worse yet are those situations where the entire group of attorneys decides to manage by consensus. This is the ultimate when it comes to the lack of a ship’s captain because, in these firms, decisions are made at the speed of molasses if they are made at all.

Could Passive Management Bring About a Malpractice Claim?

You bet. Consider a situation where a firm attorney has become depressed as a result of an ongoing difficult divorce. As time moves on, pressures mount, and this person turns to alcohol. Once the firm becomes aware, and think about how difficult that might be if this attorney works remotely full-time, personal friendships and even loyalty come into play. This person, who unbeknownst to the firm is actually on a path toward the development of a full-blown impairment, and receives support from others at the firm.

Now, while supporting someone through a personal crisis is admirable and quite appropriate, if any work-related ramifications of this crisis are minimized, dismissed, or ignored, a malpractice claim may be right around the corner. One reason why is impairments can lead to the neglect of client matters. In a perfect world, this person’s files would be periodically reviewed, or their calendar monitored. These would be prudent steps to take under the circumstances. Unfortunately, such steps often won’t happen in passively managed firms.

This example demonstrates one of the most significant risks of passive management, which is firms can fail to proactively address any developing crisis. Yes, when faced with a malpractice claim, many passively managed firms will respond by having management - in whatever form it exists - step in; however, that effort usually ends up being too little, too late. And unfortunately, that sometimes means a change in the makeup of the firm is about to take place and know that this change isn’t always limited to the firm divorcing itself from the “problem” attorney. Since accountability naturally falls on the managing partner, the outcome can be a firm split or even a dissolution.

In contrast, actively managed firms are proactive. They will take additional steps in an attempt to prevent possible claims from ever arising, think prioritizing wellness as just one example. Then, in response to the situation described above, an actively managed firm is going to do things like conduct file review at the first sign of trouble. If necessary, the firm might assign a mentor, or grant a temporary reduction in workload request until things get back on track. This is how you responsibly address the work-related ramifications of a personal crisis while still supporting 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 necessary condition of remaining with the firm become essential. Without a doubt, this will be a more difficult road to go down. Just understand that such decisions are made with an intent to maintain the overall integrity of the firm coupled with a desire to see the subject attorney fully recover and remain a valuable firm asset.

How Can We Move Past a Passive Management Style?

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 confirm that everyone will follow through by agreeing to respect that authority whenever it is exercised.
  
  
• Recognizing the value and importance of the management position with appropriate compensation, regardless of whether the position is full-time or part-time.
  
  
• Training. If no one at your firm has a complete set of management skills, there are resources available at a variety of price ranges, from well-written books to intensive off-site management courses that last several weeks. Seek them out.
  
  
• 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 am a firm believer in the value of strong leadership and effective management within all law firms, regardless of size, because I believe it will reduce a firm’s exposure to malpractice claims and also positively impact a firm’s financial bottom line. I say this because when lawyers go into business together, they become their partner’s keepers. Think about ABA MRPC 5.1 “Responsibilities of a Partner or Supervisory Lawyer” just for starters.

When it comes to the success or failure of the business, firm attorneys will sink or swim together. For those of you who practice in a firm that is passively managed, wouldn’t having someone actually in charge of steering the ship be a better option, if for no other reason than to try and avoid ever having to sink or swim together? I don’t know about you; but speaking personally, I’d rather be on the ocean than in it. The water can get pretty rough out there.