Managing Partners shouldn’t be Administrators – the Case for COOs

Different law firms have had different experiences with COOs. But whatever the experience has been in the past, COOs are a great way to improve a law firm in terms of professionalization of management – all while saving (opportunity) costs.

Key words: Managing Partner, Administrator, COO, Back Office

Image: Pexels / Shelby Waltz

Managing Partners as Administrators

After having grown to a certain size, basically every law firm chooses to elect or appoint a managing partner, who is in charge of overseeing the law firm as a whole and – depending on various factors such as size, culture etc. – steering the law firm into the future.

Let’s now look only at law firms that have passed a threshold of – let’s say – 50 lawyers. A firm like that might have a headcount of about 100 people – 10 partners, 40 associates, 10 paralegals and trainees, and 40 people acting in important support and administrative roles such as secretaries, assistants, receptionists, bookkeepers, IT personnel, HR or Marketing professionals etc. In many of these law firms the governance structure hasn’t really been adjusted to the growth of the firm in a very long time. Therefore lots of new tasks requiring some sort of leadership have been stuck with the managing partner, who at this point oversees not only the law firm as a whole but is worrying about the firm’s strategy, acting as the firm’s figurehead and caring about what could be summarized as ‘Partner Affairs’ among other tasks. And as if that wasn’t enough many managing partners are more or less single-handedly heading the back office with its dozens of employees ranging from receptionists over IT to marketing and HR staff as Chief Administrators – a time-consuming exercise better to be left to COOs.

What are COOs and what do they do?

Usually, a Chief Operating Officer or COO is a senior executive who is responsible for the day-to-day management and administration of a company or firm. He or she reports to the Chief Executive Officer or CEO (or a managing partner or managing committee in a law firm setting) and belongs to a firm’s executive leadership team. The COO's main role is to ensure that the firm's operations are running smoothly and efficiently, which involves overseeing various back office departments and functions, such as IT, marketing, finance, business development, and human resources. Often COOs work closely with other senior management to assist in developing and implementing strategies for growth, profitability or other initiatives.

Some specific responsibilities of a COO may include:

• Running/overseeing the back office

• Developing and implementing business plans and firm goals

• Managing budgets and resources

• Overseeing the firm's operations and logistics

• Improving processes and systems to increase efficiency

• Analyzing data and KPIs

To be successful in his or her role, a COO should showcase strong leadership and management skills, as well as a solid understanding of business operations and the firm’s products and/or services as well as its strategy. COOs should also have excellent communication skills, as they will be working with a wide range of people, from (mainly back office) employees up to senior executives and external stakeholders.

But why would a Law Firm need a COO?

I said in an earlier paragraph that managing partners shouldn't act as administrators and that this task should be delegated to COOs. But why would that be necessary or desirable considering that many managing partners seem to be doing a good job administering the back office next to all other tasks they’re facing? The answer boils down to two arguments: (Opportunity) costs and expertise.

Most managing partners were or are successful lawyers, often among the so-called rainmakers raking in hundreds of thousands or millions in revenue. Why would a law firm want to reduce the time these partners have to do what they do best and which brings the most value to the firm by burdening them with time-consuming tasks such as overseeing the back office? Or going at it from a different angle: many law firm partners make a seven-figure salary (incl. their share of the profits). Especially in firms with a so-called lockstep compensation model, a partner’s remuneration will not change once he or she takes on more management responsibility. But would a law firm pay somebody else this amount of money to oversee its back office? Probably not – the actual costs would be too large to bear. A COO will cost far less than a partner, while a the same partner can produce much more value for the firm with his or her newly gained time than he or she would have as an administrator..

The second reason is expertise. Who makes it to partner in a major law firm has proven that he or she is an expert lawyer in a certain area of the law, that he or she is able to acquire new clients and many times that he or she can lead a team of associates. However, when (managing) partners become responsible for the back office, they leave their area of expertise only to be confronted with finance, HR or IT problems. A COO is usually someone who has worked with people and lead teams in one or more of these key back office areas before, therefore having not only more subject-matter expertise but also more experience in the entire back office setting.

In summary, COOs can provide valuable support to managing partners by relieving them of a significant portion of administrative and leadership tasks, especially in relation to the back office. Because of their focus, which is entirely on non-mandate-related tasks, they can drive projects of company-wide interest, the implementation of which would be repeatedly postponed by revenue-driven (managing) partners in favor of mandate work.

Successful Integration

However, in order for COOs to be successfully integrated in a law firm environment, the following three points must be met:

• COOs must know what they are getting into: Law firms differ in many ways from industrial or other service firms. As owners of the law firm, many partners, regardless of their position on the organizational chart, will feel that they are the superior of a COO and will behave accordingly. In addition, COOs without a legal background will have to repeatedly justify their actions and be held accountable for their perceived lack of knowledge in providing legal services.

• COOs need a clear job and authority description: Precisely because a COO is faced with many partners who may all see themselves as his or her superiors, it is important that COOs enjoy formal authority. This comes from a clear definition of authority, e.g. in form of a clear job description or some other form, which is brought to the attention of the partnership or, ideally, approved by the same.

• Managing partners meet COOs at eye level: COOs perform an important function in law firms. As heads of the back office, they also exercise oversight, leadership and responsibility over the largest group of people, usually larger than any single practice group, in the law firm. In addition, they are the repository responsible for ensuring that frameworks, processes, and information are collected, sorted, and recorded and can be made immediately available when management changes in the law firm.

COOs should not be seen as a substitute for managing partners. Due to the special characteristics of law firms, in the vast majority of cases a (lawyer) partner must continue to be at the head of the firm. COOs are, however, a suitable tool for a change in the management dynamic and the professionalization of the management structure, with the added benefit of reducing opportunity costs.