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'Successful' law firms of the future will have non-lawyer CEOs

'Lawyers don't delegate - they abdicate responsibility,' says Steve Billot

23 July 2015

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By Manju Manglani, Editor (@ManjuManglani)

In the next five to ten years, most UK law firms will ask non-lawyer managers to make strategic business decisions on the partners’ behalf.

That’s the prediction of Steve Billot, managing director of the global restructuring advisory practice at Duff & Phelps.

He believes that non-lawyer managers are critical to law firms being run as commercially-successful businesses.

“A corporate management structure is needed in law firms to enable effective decision making,” he told Managing Partner.

For him, partners who received traditional legal training are often ill suited to make potentially-risky commercial decisions.

“Accountants have the same problem, but they have learned to delegate responsibility for business management to others,” he noted.

“But, lawyers don’t delegate – they abdicate responsibility and leave it for someone else to pick up and deal with, then grab back control when things go wrong.”

He believes that partners need to think like business owners rather than as professionals if they want their firms to survive.

"Law firms think they are a profession, but they are a business – a professional business, but ultimately still a business,” he said.

“Partners need to think as a business first and as a profession second.”

A growing number of partnerships across the UK legal market have appointed non-lawyer managers over the past few years and this trend looks set to continue.

For example, top-100 firm Birketts appointed Alistair Lang as CEO in September 2001. He was succeeded by former Deutsche Bank divisional COO Jonathan Agar in June 2013.

Non-lawyer Paul Wilson served as CEO of Shakespeares for nine years before joining Canadian boutique practice Smart & Biggar. He was succeeded by the firm’s chief client officer, Andy Raynor.

Media boutique law firm Wiggin made John Banister CEO and a member of the partnership in January 2012. Banister, who had served as COO of the firm since 2003, had previously held management roles at Merrill Lynch, KPMG and Linklaters.

More recently, top-50 firm Mischon de Reya announced in April 2015 that it was giving non-lawyer and board member Bambos Georgiou the position of COO as well as membership of the partnership.

In the same month, fellow top-50 firm Parabis announced that it had promoted COO Jason Powell, who had a corporate management background, to group chief executive.

International law firm Bird & Bird is currently planning to give management roles to non-lawyers, according to a recent report.

England’s oldest law firm, Thomson Snell & Passmore, now has a CEO with a marketing background, Simon Slater. Over the past six months, the firm has been changing its governance model to adopt a more corporate approach.

Appointing non-lawyer business managers may seem an easy way to address the problem of partners often lacking the training or risk appetite to make commercial decisions.

However, these ‘outsiders’ sometimes find that gaining the trust and buy-in of partners for their decisions is a challenge. Trust and a proven track record – preferably within the firm – are essential.

Another option is to appoint non-executive directors (NEDs) to the board who can provide a fresh perspective and help to push commercial decisions forward.

A study of the UK’s top-100 law firms found that those with one or more NEDs on their board achieved average revenue growth of 12 per cent between 2010 and 2014.

Some market commentators, such as Beverly Landais, believe that managing or senior partners approaching the end of their term are ideally suited to take on the role of NED.

“The senior partners and managing partners in charge of these entities necessarily gain significant experience in developing strategy, managing change and negotiating the expectations of their stakeholders,” Saunderson House’s marketing and BD director told Managing Partner.

“The experience gained and the learning along the way of what works, what doesn’t and why, can be translated into valuable insight as a NED. The key is to enhance this experience by developing broader-based commercial expertise.”

Commented Guy Vincent, former managing partner at Bircham Dyson Bell in a Managing Partner blog post: “A managing partner is not an ordinary lawyer, but a person with business as well as legal skills.”

But, Billot warns against law firms bringing in retired managing or senior partners from other law firms as NEDs.

“Former senior and managing partners are still lawyers – few are commercial enough for the role,” he said.

“If they ran their businesses without much change for decades, are they going to be inspirational and challenge your firm to change?

“They know how lawyers think – that’s seen as an advantage – but that just reinforces ‘group think’ rather than challenge it.”

 

 

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