A law firm’s managing partner has myriad responsibilities and competing pressures, from keeping business operations running smoothly to serving as a chief role model and motivator. If you have been asked to take up the mantle or aspire to lead your firm one day, it would be wise to understand exactly what the position entails: the challenges, the stresses, the skillset required and the compensation.
What’s in Store for a New Managing Partner?
Senior attorneys step into the managing partner position for a number of reasons. Some volunteer their time and energy as an act of servant leadership, committed to carrying the torch for the firm. Others are nominated and sometimes “volun-told” to step up and do so with reservation and maybe some resentment. And then, there are those whose ego prompts the move, fueled by a thirst for power and prestige.
Gaining experience and developing skills within the legal profession is crucial for those aspiring to become managing partners. A significant aspect of this role is shaping the firm’s culture, which involves establishing the firm’s mission and vision and guiding attorneys and staff in supporting the firm’s goals and strategic decisions.
Whatever the reason for assuming this important role, few attorneys anticipate what awaits them in the corner office.
Every law firm, no matter the size, requires strong leaders to establish and execute a vision for success. In some firms, one lawyer bears the responsibility. In others, there may be an executive committee of partners and executives that share the collective duties of running the firm. For the purposes of this article, we’ll focus on the more traditional model of one managing partner at the helm.
Top 10 Challenges for Law Firm Managing Partners
Being a law firm’s managing partner is a multifaceted and demanding role. This includes overseeing the day-to-day operations, such as financial management, supervising staff, and ensuring compliance with ethical standards. While specific responsibilities can vary based on the firm’s size, specialization and market conditions, the job has several common challenges.
1. Balancing Leadership and Lawyering Responsibilities
For managing partners who continue to manage their individual legal practices, there are never enough hours in the day. They must balance client matters and billable hours and provide top-notch legal advice while also dedicating time to strategic planning, firm management, partner relations and decision-making.
2. Managing Diverse Stakeholder Expectations
Managing partners must deftly navigate the expectations and demands of partners, associates, staff, clients, and external regulators. Each stakeholder group has different priorities, which requires diplomacy, effective communication and the ability to prioritize conflicting interests. Success in this area requires a high level of skill that few new MPs are equipped with.
Read “The Three Most Common Conflicts in Law Firms and How to Resolve Them.”
3. Strategic Decision-Making in a Complex Environment
Making strategic decisions for the firm involves analyzing market trends, assessing risks and identifying growth opportunities. Managing partners must have a keen understanding of the competitive landscape, regulatory changes, staffing opportunities, and technological advancements impacting the legal industry. This responsibility requires research, ongoing education and soliciting input from qualified peers.
4. Financial Management and Profitability
Overseeing the law firm’s financial stability and profitability is a top priority for managing partners. MPs are responsible for overseeing budgeting, financial reporting, billing practices, capital expenditures and overhead. The pressure to increase revenue in a competitive environment and the challenge of billing hygiene struggles add to the complexity of financial management. Neither law school nor experience as an attorney prepares a managing partner to understand and actively manage the firm’s finances.
Read “Are Your Law Firm’s Financial Systems Ready to Scale?”
5. Talent Acquisition and Retention
Recruiting and retaining top legal talent is the biggest challenge in the legal space today. Providing guidance and support for attorneys in their legal career is essential for talent retention. When it comes to properly staffing a firm, the buck stops with the managing partner. They must create a healthy culture, provide clear opportunities for career development, and oversee the mentoring and training of younger professionals. In addition, they must ensure the firm offers competitive compensation packages to attract and retain skilled lawyers and staff. Many of these responsibilities are associated with newer trends in legal hiring and, therefore, might be unfamiliar territory for more seasoned managing partners.
Read “Protecting Your Investment: How to Realize Robust ROI From New Associates.”
6. Managing Firm Culture and Morale
Fostering a positive and productive firm culture is essential for employee morale, retention, and overall performance. Managing partners must promote collaboration, transparency, and inclusivity while addressing conflicts, managing performance issues, and promoting work-life balance. These responsibilities cannot be managed by the MP alone and must be delegated and overseen by other leaders in the firm.
Read “Achieving Work-Life Balance: Is It Even Possible for Attorneys?” for steps firms can take.
7. Adapting to Technological Changes
Embracing and integrating legal technology advancements into the firm’s operations is crucial for efficiency, client service delivery and competitive advantage. Managing partners must remain informed about legal tech innovations, invest in appropriate technologies, ensure that lawyers and staff are trained to leverage these tools effectively, and hold their teams accountable for the adoption of new systems. Securing a firm-wide commitment to technology adoption is a substantial undertaking, and it falls to the MP to hold everyone accountable.
8. Succession Planning
Planning for transitions among firm leaders, staff and client relationships can be a substantial and long-term challenge for managing partners. They must identify and nurture talent, delegate responsibilities, and ensure the continuity of client relationships and institutional knowledge as senior partners move on. To properly plan, managing partners must be willing to consider their own retirement, a difficult realization for many lawyers.
Read “Removing Succession Planning Obstacles.”
9. Leadership Development
Equipping rising leaders with the skills necessary to become effective stewards of the firm’s vision and longevity is an essential but daunting task. Managing partners must prioritize this investment to secure the success, sustainability and overall health of the firm. Traditional law firms have followed the “trial by fire” approach to leadership development, but forward-thinking managing partners must think differently about how the firm invests in its future leaders.
Read “How to Future-Proof Your Law Firm.”
10. Dealing With External Pressures and Public Perception
Managing partners often represent the firm externally and must manage its reputation, handle media inquiries and navigate public relations challenges. Ensuring that attorneys provide high-quality legal services while adhering to ethical and professional standards is crucial. They may also face scrutiny from clients, competitors, and regulatory bodies, requiring them to uphold high ethical standards and maintain trust and credibility.
In addition to these challenges, assuming the leadership mantle takes an emotional toll. It’s lonely at the top — an inconvenient reality most managing partners feel but don’t want to admit.
Read “The Managing Partner’s Dilemma — and How to Remedy It.”
Managing Partner Compensation
Compensation for managing partners in law firms varies widely based on several factors, including fsize, location, profitability, and the managing partner’s specific role and responsibilities. Here are the key elements of managing partner compensation.
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Base salary: Managing partners sometimes receive a base salary, which reflects their seniority, experience and the firm’s size. This salary should be in addition to compensation tied to origination or production and typically serves as a stable income component. However, many managing partners do not receive such a salary, depending on the firm’s financial performance, market conditions and priorities.
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Profit sharing or equity stake: Most managing partners are also equity partners in the firm, so they participate in profit-sharing arrangements and other benefits enjoyed by the partnership.
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Bonuses and incentives: Additional compensation may be awarded through performance-based bonuses or incentives tied to achieving specific financial, operational or strategic goals. These bonuses can vary annually based on the firm’s performance metrics, such as revenue growth, profitability targets, client retention, or successful completion of major cases.
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Benefits and perks: Law firm managing partners typically receive comprehensive benefits packages, including health insurance, retirement plans (e.g., 401(k)), and life insurance. Other perks may include car allowances, expense accounts, executive compensation, and membership dues for professional organizations. These benefits contribute to the overall compensation package’s attractiveness and competitiveness.
Top Skills of Successful Managing Partners
For partners interested in leading their firms, skills development is paramount. The law firm’s managing partner role is the pinnacle position in the legal hierarchy, requiring a diverse skill set. Here are six skills all successful managing partners possess:
1. Emotional Intelligence
It is critical to develop a high level of emotional intelligence to effectively manage a law firm’s high-pressure environment and various personalities. Having high EQ supports managing partners’ own well-being and makes them empathetic and impactful firm leaders.
2. Delegation
Delegation is a vital skill for any attorney, but it is especially important for managing partners due to the various and often competing priorities on their desks. Learning how to delegate tasks effectively is essential for firm leadership.
Read “Three Steps to Effective Delegation for Attorneys.”
3. Leadership Basics
Leadership is a learned skill, not an innate ability. It can be particularly challenging for attorneys because being a leader requires a willingness to take on risk — something lawyers are trained to avoid. Anyone interested in becoming a partner in a law firm should invest in learning about the tenets of leadership through books, courses, peer groups, coaches, workshops and videos.
4. Communication
Even though lawyers communicate for a living, their skills often center around external communications with clients, other lawyers and referral sources. Effectively communicating within the firm is different and should include simple language, attention to tone, good listening skills, empathy and frequency.
5. Management
Successfully managing people, time, projects and client expectations is a heavy lift, and managing partners must make the time to hone these vital skills. Building strong relationships with other partners is crucial for effective firm management.
6. Financial Literacy
Law firms are businesses, and too many lose sight of this fact. It falls to the managing partner to become fluent in the firm’s numbers, including goals, benchmarks, budgeting, profitability, collections, and realization. If the managing partner does not develop a mastery of these components, they cannot assume the necessary fiduciary duties of the job.
Playing for High Stakes
Law firm managing partners play a crucial role in the success of the firm, its lawyers and staff and its respective clients. Just as great leadership can deliver consistent profitability and healthy growth, a poorly performing managing partner can derail even the most prestigious and stable firms. The better a partner understands the role and can commit to what’s necessary to champion their firm, the more profitable, impactful and sustainable their organization will be.
Managing Partners Corner
Watch this space for feature articles, resources and much more for small to midsize law firm leaders — brought to you by StrategyHorse and Attorney at Work.
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