Opinion: Chief running firm

By Colin White, managing director, Ortus Professional Search

THE RISE of the chief executive in the law firm has been noticeable by the fact that in the large commercial environment, it is now more unusual not to have one, where just ten years ago, there were few. So, what were the catalysts that caused partners to believe in this strategy? This month, I spoke with a number of partners and chief executives to find out.

A chief executive is frequently appointed when a partnership recognises that the business is not performing as well as it should be, so a major reason for the appointment is to facilitate change. Often these people come from outside of the partnership because they have a detached view, unimpeded by history. Paul Stothard, chief executive of Shoosmiths, explained: “With this freedom from baggage, any decisions made are in the best interests of the partnership as a whole.” It is not difficult to imagine completely impartial decisions are sometimes difficult when people have worked alongside each other for ten years or more.

Recognising and recommending change is one thing, delivery is quite another. The chief executive is ideally placed to deliver the mandate of the partnership but can often encounter barriers when ensuring partners take action on recommendations. Jeremy Dutton of Campbell Hooper suggests that the key to obtaining real commitment from partners to implement recommendations is to present proposals supported by client opinions. “Consult your clients and allow lawyers to hear their views. This is a very powerful stimulus to action because the client has ultimate power in any law firm.”

Essentially, the chief executive must think creatively to deliver their mandate and earn the trust of the partners who have effectively devolved much of their power to one person.

Ric Martin, chief executive of Kennedys, said: “Speed of action is an excellent reason to devolve power to a few rather than the whole partnership.” He gave me an example of an opportunity presented to Kennedys to conduct the UK work for a Polish firm where, within one month, financial returns were seen. “We were producing fees from this contact when other firms may well have been waiting for a partners’ meeting to decide if the association was even wanted.”

Another feature of law practice means that the best fee earners usually become the biggest shareholders and consequently gravitate toward management, regardless of their skills and aptitude for this very different discipline. Jonathan Fox, chief executive of St Philips Chambers and formerly Collyer Bristow, gave me an unequivocal example. “If you have five partners in a meeting discussing such things as photocopiers, that meeting can cause £2,000 in opportunity cost when one considers what they could have been doing with that time.”

Even so, there are many very successful firms that have decided against going down this avenue. Thring Townsend is one such firm. Managing partner Thomas Sheppard told me: “Each organisation must have a leader and whether you have a chief executive or a managing partner, one still has to understand and address the same issues.” The major factors dictating the success of a firm are, of course, essentially the same as most companies: sales, cash flow, professional development and utilisation, so all must face the same decisions. Neil Braithwaite, managing partner of Dickinson Dees, agrees and goes further: “It is important to have the management understanding business from the partners’ point of view and associate with the lawyer’s position.”

While pointing out that a managing partner has the advantage of seeing things from a shareholder perspective, he concedes that one must be able to provide a more “detached view” to make correct business decisions and, like Thomas Sheppard, firmly believes there is no absolute need to go outside of a partnership to run a firm well, if the skills are available within.

Many partnerships continue to elect their leaders based on their fee-earning performance rather than management abilities, and this may prove to be a dangerous strategy as non-shareholding partners are welcomed into the profession by those embracing the new opportunities and skills made accessible by Clementi. Whether managing partner or chief executive, one thing is certain: as Clementi takes effect, partnerships need to ensure that the critical management roles are entrusted to those who engender trust and affect changes, regardless of their previous allegiance.

Colin White is managing director of Ortus Professional Search. He can be contacted at colin.white@ortussearch.com