The traditional governance and management structures that persist in some
form in the majority of law firms globally oftentimes pose considerable hurdles
in managing a business entity capable of successfully offering highly skilled
professional services at a reasonable cost. The proprietors of the majority of
law firms are also expected to play important, time-consuming, hands-on
responsibilities in operating the business, selling the firm's services and
supervising their delivery, generating the majority of revenue, and—do not
forget—finding time to practice law.
The emergence of alternative business structures for law firms in some
jurisdictions, coupled with the ongoing frustrations associated with attempting
to make the traditional model work as a viable, cost-effective business
structure in a modern business environment, suggest that the traditional law
firm may become extinct in the majority of the world well before the end of this
century.
Even if the old law firm model is abandoned, the demand for legal
services, as well as the economic structures and organizations required to
provide them, will persist. Meanwhile, even if law firms are a threatened
species, they must continue to manage the various strategic, financial, and
professional challenges they face today. Thus, good law firm governance is a
strategic imperative for all law firms and vital survival skill for some. To
refer to law firm governance as a skill implies that governance plays a
significant role in the twenty-first-century law firm.
We define good governance as the basis and structure upon which law firms
establish and realize strategic objectives, develop and implement sound business
decisions, and respond to the extraordinary challenges posed by accelerating
changes affecting all parts of the practice of law. Good governance involves not
only the law firm's formal ownership and management structures, but also the
informal principles and practices that govern the firm's daily operations. While
sound governance ensures continuity and stability, it also has the potential to
direct attention and resources toward the need for deep change. Finally,
excellent governance is how a business takes sound decisions and ensures that
tasks are completed.
As a result of this holistic view of governance, the most critical strategic
issues confronting law firm executives today are discussed, as well as their
implications for the firm's governance and vice versa. The emphasis is not on
what, but on how—specifically, how might improved structures, policies, and
practices assist in resolving difficulties vital to a law firm's long-term
sustainability.
How may excellent governance assist a legal firm in accomplishing crucial tasks?
- building an efficient structure
- developing the principles, since good governance is a strategic
construct; • the development of a law firm's governance structures should be
driven by its strategy; and • the governance structures and practices of a
law firm should promote, not hinder, strategic attainment.
We discuss the growth of broad principles of good governance in law firms over
the last few years, as demonstrated by the International Bar Association's (IBA,
Law Firm Governance Initiative Best Practice Guidelines, released in 2008 by an
IBA working committee.
Of course, as is always the case with any collection of best practices, there is
no such thing as a one-size-fits-all solution. Thus, good governance serves as
an organizing framework for managing the law firm's professional activity and
business. When deciding on a structural alternative, a business should strive to
strike the correct balance of extremely firm-specific characteristics. The
requirement to integrate and manage governance structures, strategic objectives,
the firm's defining professional characteristics, and business operations is
prompting small and mid-size law firms to abandon the traditional approach of
lawyers serving as amateur, part-time business managers in favor of hiring
experienced managers.
The crucial but frequently missed relationship between a firm's governance
system's strengths and weaknesses and its capacity to resolve strategic
management problems:
Governance Challenges for Law Companies begins with an examination of the normal
decision-making processes in law firms.
These include the following:
Addressing the frequently painful and frequently neglected subject of managing
partner performance: establishing a partner remuneration scheme that is aligned
with the firm's strategic objectives, equitable, and reflective of and
supportive of the partnership culture;
- ensuring that the managing partner has access to the information he or
she requires
- establishing and adhering to cost-effective risk management policies and
processes; and
- succession planning and retirement, both from the firm's and the elder
partner's perspectives.
Each of these concerns demands a significant amount of time and attention from
the partner. These factors can have a detrimental influence on a law firm's
financial performance, reputation, and long-term viability if not properly
managed.
Governance in the Future:
For the future and how good governance may assist law firms in preparing for and
responding to it, we must explore the implications for law firm governance of
the growth of alternative law firms and changes in the regulation of the legal
profession. A thorough examination of change management skills and strategies is
a necessary component of good governance in twenty-first-century law firms.
They
are vital in leading the adjustments that today's law firms must undertake to
position themselves for long-term success in the future, contours of which we
may only begin to detect but must soon grasp.
References:
- https://www.thelawcodes.com/law-firm-governance-a-strategic-imperative/
- https://www.thelawcodes.com/
- https://www.thelawcodes.com/law-firm-in-gurgaon/
- https://www.thelawcodes.com/law-firm-in-jalandhar/
- https://www.thelawcodes.com/law-firm-in-mohali/
- https://www.thelawcodes.com/lawyers-chandigarh/
- https://www.thelawcodes.com/lawyers-in-gurgaon/
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