Driverless law firms unsafe at any speed

Edward Poll, The Daily Record Newswire

The day and age of omnipresent driverless cars will be here sooner than you may think, according to an August 2014 Washington Post article by Ashley Halsey III. The cars are really quite impressive, but they are still imperfect. For example, they don't yet have the ability to interpret hand signals from a police officer.

Similarly, small law firms and solo practitioners cannot run perfectly without a "driver"-that is, an executive director. Law is a business, and lawyers want to better manage their practices. Hiring a part-time executive director is one way that a solo or small firm can better manage the practice, deliver higher-quality legal services, and make more money doing it.

The executive director's job

An executive director manages the firm. He helps the lawyer identify the problem areas of the firm, suggests and creates solutions to the problems, arranges for the personnel to be trained to handle the solutions, and provides follow-up involvement and guidance.

Within this general framework, the specific tasks that an executive director performs are many and varied: facilitating and participating in the process of preparing a business plan; preparing or facilitating the preparation of a marketing plan; preparing or facilitating the preparation of cash-flow projections; collecting accounts receivable; establishing and maintaining good relations with the firm's creditors, including, but not limited to, the firm's banker; organizing the office routine; hiring necessary employees as the firm grows or as new personnel are required to replace retiring personnel; facilitating and arranging for the training of employees, both at the staff and professional levels; buying new equipment; creating purchasing procedures for supplies; leasing new facilities; and all the other, myriad details of running a practice as a business.

When discussing the functions of an executive director, most people imagine a full-time, on-site employee. However, all of the above tasks can be performed by someone on a part-time basis, either on-site or from the office of an independent contractor.

A profit center for the firm

In a law practice, the lawyer is the revenue center. The executive director will not produce revenue. However, the executive director will produce - or cause the production of - profits. This is accomplished in several ways.

First, the executive director can do tasks that the lawyer would otherwise have to do, freeing up the lawyer to turn his attention to more lawyering, which is normally a higher per-hour value than managing. Thus, the total revenue of the firm will increase.

Further, the executive director will be sensitive to the costs that the firm incurs for maintenance of the firm's library, health insurance, and other big-ticket costs. By focusing on reducing these costs, the executive director can usually facilitate savings for the firm.

Measuring benefits

Most lawyers, especially solo practitioners, concede that they spend 10 to 20 hours per week doing what they consider to be management activities. Assuming a billing rate of $100 per hour (a very modest rate, to be sure) and fifteen hours per week, the value of the time expended by a lawyer in management activities would be $1,500 per week, approximately $6,500 per month, and approximately $78,000 per year.

If 50 percent of these management activities were performed by an executive director, resulting in time saved by the lawyer, $39,000 gross would be saved annually. The actual savings would be less due to the cost of the executive director, but this cost would be substantially less than $39,000 per year no matter how much the part-time executive director might cost.

By hiring a "driver," the lawyer, especially the solo practitioner, benefits by having a better-run organization and an organization that will be poised to accept growth and deliver higher-quality legal services to the clients of the firm. As long as the lawyer is either lawyering in the present or marketing for the future, an executive director will be valuable to the team.

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Edward Poll, J.D., M.B.A., CMC, is a law practice management thought leader and contributor to this publication. His website is at www.lawbiz.com.

Published: Thu, Dec 04, 2014