Best Practice: How much non-billable time for managing partner?
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. I am a partner in a 17 attorney firm in Madison, Wisconsin. We are a business law firm and we have 10 partners and seven associates. We are managed by a managing partner, one of my partners, and he also practices law. We pay him his standard client bill rate for his non-billable time spent on law firm management. For the last couple of years his non-billable hours spent managing the firm have been increasing to the point where he is now spending 50% of his total time - 1,000 hours a year - managing the firm. This has caused tension in the firm and my partners and I are concerned. I would appreciate your thoughts.
A. I would concur that this amount of time is excessive for a firm your size. Even if you stay with the managing partner model of governing your firm - most managing partners in firms your size are able to get the job done for around 500 non-billable hours a year - 25% or less of their total time. You may want to consider the following:
- Put in place a budget for the total non-billable hours that the firm will pay the managing partner.
- Clarify the duties, role, responsibilities, and projects that the managing partner should be spending his time.
- Review the overall governance/management structure that the firm has in place.
- Consider supplementing the Managing Partner with an Office Manager or Firm Administrator.
- Consider whether the managing partner role is still the most appropriate approach for your firm.
I suspect that your managing partner is either not delegating to staff some of the day to day management tasks or he does not have sufficient billable work to stay busy. At a $275 bill rate, 1,000 hours is costing the firm $275,000 a year. I believe that a firm your size can handle this function more economically.
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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.