The littlest hobo of law

While many a partner has taken on the role of managing partner, either giving up fee earning or maintaining some client work on the side, there is now a discernible trend in law firms appointing non-legal chief executives who can use their industry experience to manage the business while leaving the partners to do what they do best – fee earning. Paul Stothard is just such a case. He may be a chartered accountant by profession, but Stothard is taking on the legal profession at their own game as the latest chief executive of Shoosmiths. Caroline Poynton finds out if he has what it takes to show a law firm the right way to manage a business.

The first thing that strikes me about Paul Stothard is his straightforward manner, his enjoyment of the job combined with a realistic appraisal of his finite future with the firm. It’s not that he lacks enthusiasm for his job as CEO of Shoosmiths, but the intense and unwavering exuberance of many a managing partner earlier profiled in these pages seems strangely absent. They revelled in talking about every aspect of their law firm and were keen to demonstrate their long-term commitment to their firm’s future. Nigel Knowles summed it up when he said: “You can only ever have one serious relationship with a law firm,” (Managing Partner, vol 6, iss. 6, November 2003). For Stothard, however, this clearly isn’t the case.

In eight years, he has worked for two law firms. He was chief executive of Townsends in Swindon from 1996 before joining Shoosmiths as finance director in 1999 (he was elected chief executive in May 2002). And before that, he didn’t have any experience of the legal profession. As a chartered accountant, he worked for an array of companies, none of them legal: Ernst & Young (spending three years in Bahrain), Midland Bank (now HSBC), WH Smiths and the BBC. Even his reason for joining Townsends seemed to have little to do with any interest in the legal profession as such. “At the time, I was in a role loosely based in London but travelling all over the country. With a family that was relatively young, I needed to cut down my working week and I was looking for something that would enable me to do that,” he says.

While affording him a better work/life balance, Stothard also says that he was impressed by Mike Sefton, the then managing partner of Townsends, who Stothard describes as a terrific influence on his early days in the legal industry. However, convincing though this might be, it hardly lives up to the commitment to legal practice demonstrated by many managing partners. The question is whether he is able to match or surpass the management abilities of a former/acting fee earner or whether his non-legal background distances him from partners and clients and, therefore, the firm’s business needs?

Stothard agrees that there can be potential problems with appointing a non-legal chief executive. He points to the fact that firms might choose this route thinking that a CEO from outside will come in and sort everything out. An external appointment, however, will expect a certain freedom to act and authority that at least at first, is unlikely to be there. He demonstrates this argument in reference to day-to-day meetings. In the companies for which he worked before joining Townsends, meetings would be given a very high priority and your cards were soon marked if you failed to attend or respond by the given deadlines. Of law firms, however, Stothard says: “I can’t remember the last time I had a meeting with the operations group and/or office heads where they all turned up. That’s no criticism of the individuals, it’s the nature of the beast.” He agrees that in law firms the same priority isn’t given to leadership and management and that runs right through from recruitment and reward to succession planning. He also admits that there are those within Shoosmiths who were against a non-lawyer chief executive. “They couldn’t get their heads round the idea that somebody who didn’t do the business of law could understand running the law-firm business,” he says.

Considering the inherent problems of his role, however, Stothard is convinced that his appointment is the right way forward: “There is a product or service that we’re delivering and that’s what the lawyers do, but then there’s running a business and if you have the skill sets, you can run a business without understanding every nook and cranny of it,” he says. He also has the advantage over other lawyer managing partners of being in the post full-time without having to worry about his former client base and whether he’ll be able to get back to it on completion of his term in management. His varied background should also ensure that he can provide a broad range of skills and experience, enabling him to deal with situations in a more even-handed way.

Of course, a lot depends on personality and leadership skills. Stothard agrees, saying that success is about structuring it right, spending a lot of time listening, taking counsel when he’s in areas where he’s not an expert and making the tough decisions to drive the business forward when necessary.

Certainly, his time at Shoosmiths has not always been easy and a disappointing financial year to April 2003 made difficult decisions critical. Right at the beginning of his tenure, he was involved in the divestment of the Banbury office. The decision was a sensible one, coming as it did as part of a strategic review to become a national firm with a bigger commercial practice. The process was also amicable, with the Banbury partners deciding that they would set up their own practice, Spratt Endicott. However, Stothard still found it tough, partly because he’d only just been appointed, but also because it involved key partners and a lot of firm-wide sensitivities.

Since then, however, his role in the strategic change has been vindicated: the firm has opened its Birmingham office, which in a year has grown from eight to 40 staff, exceeding fee expectations and sparking over 250 job applications from lawyers. The past few months have also seen many lateral hires from rival Birmingham firms, with more planned for the coming year.

Stothard claims that he finds strategic decisions tough because of the uncertainty of knowing whether you have got it right. If this is the case, then he is currently embracing a trial by fire. Apart from Banbury, he has also thrown himself into completely reforming Shoosmith’s partner remuneration and performance-management system. Although warned by many partners that the two should be kept firmly separate, he was convinced that one could not be tackled without the other (see article in Managing Partner, vol.6, iss, 7, February 2004). Time will tell whether his scheme will be fully successful in practice, but the early signs are good and the fact that he won the support of the firm’s people for such fundamental reform is a good indication that he has overcome any residual resistance to his role in the firm.

Of course, it is early days and Stothard still has some learning to do. He says that he has a tendency to do too much across a broad plane, losing focus on the key things that need to happen. That is perhaps understandable for somebody who is not familiar with the inner workings of the business and it may be that he has to do a lot more listening before he is ready to tackle some of the more intricate workings of the firm. My concern, however, is that he may not be around for long enough to really get involved at this level.

Stothard himself talks about his three-year itch, the fact that nearly all of his experience has been based on three-year stints at various companies, from Ernst & Young through to Townsends. However, with four now behind him at Shoosmiths, he’s breaking a personal record that will extend further if he is re-elected as CEO in 2005.

Re-election is likely and Stothard is clearly committed to a second term. Beyond that, however, things become uncertain. Even if Stothard wanted to stay, his term of office is restricted to two three-year terms, so at most he will have four further years as CEO. I wonder whether it is wise to limit terms in such a way. Stothard may put in place various reforms that will not be fully implemented by the time of his departure, and finding a suitable successor to the role may undermine the whole process anyway. Stothard, however, in keeping with his career trend, does not seem too troubled by the thought of moving on. “As of today, if I was given the chance to stay beyond the two terms, I probably wouldn’t,” he says. “It’s not because I don’t enjoy what I’m doing – I do and I think I add value. But, after six years of doing this role, I think there has to be someone with better ideas who can inject pace and a new way of looking at things.” It is a good argument that touches on the problems many firms are now facing with managing succession issues, especially when a partner has retained a leadership role for so long that there is neither a client base to return to, nor a clear successor to the post.

Before he leaves Shoosmiths, Stothard hopes that he will be “chief executive of an upper-quartile firm that has a stable, progressive environment where people are really realising their potential”. If he succeeds, there will be many other law firms interested in him taking the helm but, like the littlest hobo, he seems destined to do his bit, before leaving in search of new pastures and fresh challenges.

There is perhaps a message in this for those managing partners that would baulk at the thought of leaving their firms: there may be such a thing as being overly involved, where personal interests collide with tough strategic decisions and where it’s impossible to know when it’s the right time to stop and let a successor take over. Stothard, on the other hand, can make the business decisions necessary for the firm without becoming too emotionally involved, so to speak.

The jury is still out as to whether a non-legal CEO will make a real long-term difference to the business development of Shoosmiths but it is at least good to see firms taking a fresh look at management and the people responsible for leadership. And for Stothard, this may just be the beginning of a long and rewarding career in law-firm business management, not just with one but across many firms in need of a fresh outlook and a business rather than legal-centric approach.