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Non-executive directors boost revenues at top-100 UK law firms

Revenues grow a third faster than at law firms without non-executive directors, research finds

11 August 2014

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By Manju Manglani, Editor (@ManjuManglani)

Law firms that have one or more non-executive directors (NEDs) on their boards have seen revenues grow by a third faster than those without one, research has found.

The analysis 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 since the height of the recession in 2010, compared to revenue growth of 9 per cent in law firms without NEDs in the same time period.

According to Edward Drummond, which conducted the research, 24 per cent of the UK's top 100 law firms now have one or more NEDs on their boards.

"The impressive revenue growth of law firms that have a non-executive director on their board underlines how important it is for firms to improve their management structures," said director Neill Fry.

"Law firms that have good corporate governance structures certainly aren't exempt from failure, but they are more likely to have more stringent processes for making strategic decisions.

"A non-executive director can provide constructive challenges to the firm's strategy and objectives, as well acting as a vital sounding board, which can really help to support the firm's growth."

A NED with a strong commercial background is likely to introduce potential new clients, as well as to provide fresh perspectives on how the law firm can access new lines of work, according to Fry.

"The key to appointing a director who will help deliver turnover growth is finding the right individual who offers a mixture of strong commercial expertise and who also understands the unique structure and demands of the professional services sector."

Beverly Landais, marketing director at Saunderson House, has suggested that managing partners should consider becoming NEDs after their terms end.

"Gaining a NED role is a highly desirable option for managing partners and other senior executives and partners who are considering their futures as they move towards retirement," she said in her Managing Partner article 'From MP to NED: Kick start your next career as a non-executive director'.

But, she noted that it can be "a long journey" to finding the right position. "It is vital to start thinking about NED roles at least a couple of years before you actually want to get involved," she said.

She added that, to maximise the chances of finding the right NED appointment, managing partners should focus on developing a broad range of skills and experience.

"Volunteer for business working parties that stretch your capabilities beyond your day job. Non-executive director search companies look for 10-plus years of board experience in a candidate," she commented.

 

 

 

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