ALA CLM flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Span of Control

The number of subordinates who report directly to a single manager. Wide spans create flatter organizations with fewer management layers; narrow spans add hierarchy and supervision.

Unity of Command

The principle that each employee should report to exactly one supervisor. Violating it creates conflicting instructions and unclear accountability within the firm.

Centralization vs. Decentralization

Centralization keeps decision authority at the top of the firm; decentralization pushes it to practice groups or offices. The choice trades consistency against responsiveness.

Matrix Organization

A structure in which staff report along two dimensions, typically functional specialty and client or matter team. It increases coordination but can create dual-reporting conflict.

Policy vs. Procedure

A policy is a standing general guide for making decisions; a procedure is the step-by-step method for carrying out a specific task. Policies state what and why; procedures state how.

SWOT Analysis

A planning tool that inventories internal strengths and weaknesses and external opportunities and threats. Results feed directly into objective setting and strategy selection.

Delegation of Authority

The assignment of decision rights to a subordinate. Authority can be delegated, but ultimate accountability for the outcome stays with the person who delegated it.

Profit Per Partner

Firm net profit divided by the number of equity partners. It is the standard benchmark for law firm profitability and is driven by rates, realization, utilization, and leverage.

Realization Rate

Fees billed or collected divided by the standard value of hours worked. It measures how much of recorded timekeeper value survives write-downs and write-offs.

Collection Rate

Cash collected divided by fees billed during a period. A low rate signals slow-paying clients or weak billing follow-up and strains firm working capital.

Utilization Rate

Billable hours worked divided by available working hours. It measures how fully a timekeeper's capacity is converted into billable work.

Leverage Ratio

The ratio of non-partner timekeepers, such as associates and paralegals, to partners. Higher leverage can raise profit per partner when realization and demand hold.

Working Capital

Current assets minus current liabilities. In law firms, unbilled time and accounts receivable are the largest components and the main liquidity risk.

Revenue Per Lawyer

Gross fees divided by the number of full-time-equivalent lawyers. It combines rate, utilization, and realization into a single productivity indicator.

Budget Variance

The difference between actual and budgeted amounts. It is favorable when revenue exceeds budget or expense falls below it; the sign convention must be stated.

Job Analysis

The process of gathering information about a position's duties and requirements. It produces the job description and the job specification used for hiring and evaluation.

Structured Interview

An interview using predetermined job-related questions and a consistent scoring rubric across candidates. It is more predictive and more legally defensible than an unstructured interview.

Behaviorally Anchored Rating Scales

A performance appraisal method that anchors each rating level with concrete behavioral examples. It reduces rater subjectivity by tying scores to observable conduct.

Management by Objectives

An appraisal approach in which supervisor and employee jointly set measurable goals and evaluate performance against their attainment during the review period.

Progressive Discipline

A graduated sequence of responses to misconduct, typically verbal warning, written warning, suspension, then termination. Each step requires documentation and consistent application.

Total Compensation

The full value of rewards to an employee: base salary plus benefits plus variable pay such as bonuses. It is compared to market survey data by position and geography.

Turnover Rate

Separations during a period divided by average headcount for that period. Voluntary and involuntary separations should be tracked separately to reveal the real cause.

Conflict Check

A screening of a prospective matter against records of existing and former clients and adverse parties. It must be completed before the firm accepts the engagement.

Engagement Letter

A written agreement defining scope of work, fee arrangement, billing frequency, and client responsibilities. It is the firm's primary risk-management document.

Cycle Time

Total elapsed time from matter opening to closing, including waiting periods. Reducing non-value-added wait time raises throughput without adding staff.

Capacity Planning

Comparing forecast demand, such as matter volume by practice area, against available timekeeper hours. It identifies staffing shortages or surpluses before they affect service.

Standard Operating Procedure

A documented set of repeatable steps for a recurring task. It ensures consistent quality and reduces dependence on any single individual's knowledge.

Records Retention Schedule

A plan setting minimum retention periods by record type and specifying destruction timing. Destruction must be suspended when a litigation hold or ethical duty applies.

Net Promoter Score

A client loyalty metric computed as the percentage of promoters minus the percentage of detractors from a willingness-to-recommend survey question.

Client Lifetime Value

Average annual revenue per client multiplied by average retention years, less acquisition and service cost. It guides how much to invest in retaining a client segment.

Client Segmentation

Grouping clients into tiers by revenue potential and strategic value so business development resources are allocated by expected return rather than equally.

Alternative Fee Arrangement

Any pricing structure other than pure hourly billing, including fixed fee, capped fee, blended rate, and contingency. Each shifts risk between firm and client.