Decentralised vs Centralised Management

I've gone back and forth on this over the years working with law firms.

Over-centralised decision making can mean firms are slow to react to market opportunities and issues as everything needs running up the chain of command.

Whereas, go too far the other way, and what you have is less a law firm and more a loose collection of self-employed lawyers pulling in competing directions.

As with most things, 'it depends', but to unpick just what 'it depends' on, generally decentralisation favours flexibility and responsiveness, and centralisation works well for getting efficiency and consistency.

My opening gambit when working with firms is that fee income growth and the direct delivery of that work should be decentralised to local practice areas and teams.

This is allows for a more responsive approach to client and market demands, the dynamics of which are likely to vary significantly across practice areas.

Whereas control of operating expenditure; business services staff, property costs, IT etc should generally be managed centrally.

This is because there are efficiencies to be obtained from a single point of ownership. A firm will do better negotiating it's tech spend from a central vantage point, than having multiple practice groups purchase MS365 licenses individually.

There are some grey areas in between, for example:

• Marketing is likely a mix of activities controlled by the practice group and central, firmwide activities. It's sensible to allocate budget and responsibility to both to reflect this.

  
  

• A live debate for many firms is should Innovation be a centralised team? My view is that the ideas need to come from those closest to doing the work in the practice groups, but the scaling of any solution likely needs central resource.

Decentralised vs centralised is never one size fits all - it differs from firm to firm and within firms.

But by framing that debate as 'do I want flexibility and responsiveness' or 'do I want control, scale and efficiency' helps work through this.

What do you think? Join the conversation on LinkedIn