Richard Williams: Why law firm CEOs should be accountants

From Richard Williams’ perspective, ?it makes sense for accountants ?to lead law firms. Davenport Lyons’ ?first non-lawyer CEO feels that accountants are better suited than lawyers to the role because they are free from practice team loyalties. “It’s very hard ?for a lawyer to step away from that kind ?of silo mentality,” he says.

By contrast, a person with more generalist commercial acumen and no perceived agenda other than to grow the firm can gain higher buy-in for strategic decisions, he suggests. “To have somebody at the top who is independent but actually understands the business, ?has worked in law firms previously and, ?in fact, other PSFs, and understands ?how they operate, I think that was the piece that was absolutely lacking,” says Williams. “Immediately you have people saying ‘ah ok, you’re independent and ?have no hidden agenda, I can absolutely see what you’re trying to achieve’”.

Dispassionate and speedy decision making is another benefit of appointing an accountant as CEO, according to Williams, who suggests that lawyer’s training makes them ill suited to the task of law firm management. “Lawyers are pre-programmed not to take decisions – they are pre-programmed to think things through, to defend, to prod, to poke, to ?try to understand and comprehend, and then try to find other ways that you can ?do it – that’s how they’re built. Whereas ?an accountant would come in and say ?‘no, these are the facts, this is what we should be doing. Let’s forget the emotion and politics for a minute, these are the right decisions for this business’.

“I think law firms are coming round to realising that they don’t have the time to take a long time making decisions, they’ve got to make quick but well-thought out decisions and have the courage of their convictions, and so they’re buying into ?that more.”

A key measure of success as an accountant is the ability to assist non-financial people to understand complex financial information; Williams says he uses that principle as part of his leadership approach at Davenport Lyons. This also ties in with his view that leaders should focus on building a ‘followship’, rather than issuing commands from up front.

“If you can explain to people why it is the right thing to do, if you can speak positively, encouragingly and passionately about your beliefs but can also show the facts, figures, the basis for your decision making, and can walk them through that process, that’s the easiest way to bring people on board,” he says.

“You will always have politics in every single firm, but what you can do is say that logic dictates that this is why we have to go in this direction, and these are the right reasons, and these are the softer reasons around the outside to show that it’s also the right commercial decision for us.”

Becoming a top-50 firm

Williams took an unconventional route to law firm leadership. The chartered accountant spent a year as a financial consultant to Davenport Lyons before becoming its part-time CEO in April 2013. Just over six months later, he took on the role on a full-time basis.

Williams feels this approach to joining the firm was ideal, as it enabled him to operate “under the radar” for a year. “It gave me the opportunity to really get to know the business and to come to my ?own conclusions before they offered the CEO role, but that’s what was needed here,” he reflects.

“I was speaking with very specific people and actually getting to understand the business from the bottom up for a year. Had I come in as CEO, it would have been a much harder job – I would have been immediately bombarded with 20 or 30 people saying ‘you must do this’ or ‘you must do that’.”

Having trained at Ernst & Young and subsequently worked in a range of organisations in a financial capacity – ?from a television company to an outsourcing firm to a legal technology provider – Williams has a broad commercial perspective.

When he was first brought in as a financial consultant to the London law firm, Williams was asked to manage four key projects related to the future growth of the business: conversion to an LLP; a premises move; improvement of working capital management; and higher profits.

The LLP conversion is due to take place by March 2014 and will result in the equity partnership expanding from seven members currently to potentially include all of the firm’s 41 partners (of which 14 are fixed-share and the remainder are salaried).

The office relocation is now complete; the firm recently moved from “a quite tired and run-down office” in Mayfair to an open-plan and modern-looking office just off the Strand. At time of writing, there is capacity for a further 71 people in the firm’s three floors. There are also two free floors in the building, which Williams ?would like to take up, making Davenport Lyons the building’s sole tenant.

The speediest path to achieving this growth target is through mergers or bolt-ons, both of which are on the cards for Davenport Lyons. “They are all things that we are looking at,” Williams confirms. However, he emphasises that he would only consider a merger if the ‘right’ firm approached him. “If the fit is right, the financial benefits that can come through the business are huge,” he adds.

“It will bring revenue against a reasonably fixed cost base and the synergies that we can have in bringing ?two firms together means that we won’t ?need two finance directors, HR directors or BD directors. So there is an awful lot ?of automatic cutting of costs that can come as part of that, resulting in an automatic uptick in profitability.”

He insists however that, while Davenport Lyons is on the market for a merger, the firm does not need it to stay afloat. “There is a financial case for most firms to go through a merger in the current legal market,” he says. “But there is a real danger of merging because you have to, rather than because you want to. And I would never want to merge with a firm because I had to – because then you ?have to compromise significantly, and it takes a long time for that integration process to happen.”

External investment by means of an alternative business structure is also an option which Williams is open to; he says he is “happy to have conversations with whoever might come forward”.

To achieve his target of increasing profits at Davenport Lyons, Williams is focusing on top-line growth rather than further cost cutting, which he feels has now reached its limit. “There is only so far you can cut into a cost base until you start to cut too deep into the flesh and start to bleed and it becomes a negative and a downward spiral,” he says. “The growing of the top line right now is probably the most important piece in the profitability puzzle. Business development is a big ?part of this conversation.”

Another important tool in increasing revenues – along with achieving ?financial transparency – is a firmwide dashboard on fee-earner performance. Introduced recently, it has met with ?some resistance and even demands ?to “take it away”, despite it only initially listing the top performers in terms of billings and collections.

Williams admits that there is room for improvement in terms of gaining buy-in for the new system. “The point here is not to take it away because people have said ‘take it away’ but to adjust what they are being shown and to show the benefits of why it’s being shown,” he says.

Meanwhile, he has specific growth targets in mind for Davenport Lyons. ?He wants to increase the firm’s revenues from £22m currently to £30m within the next two years. However, that could happen sooner; he notes that “one or ?two bolt-ons would push us over the £30m mark immediately if we do them ?in the next six months”.

Over the next five years, he wants the firm to reach the £50m mark, bringing it on the cusp of the UK’s top-50 law firms. “I see no reason – certainly in this market – why it can’t be achieved,” he says.

Williams points to the example of Mishcon de Reya, which was of a similar size to Davenport Lyons about five years ago and, following a rebranding and repositioning, climbed the ranks to become a top-40 law firm focused on high-net-worth private clients. “That is ?the kind of thinking and mentality that ?I believe is going to change this market – there is room now for the entrepreneurial mindset,” he says.

For Williams, one of the key lessons from Mishcon’s success is the need ?for a clearly-identified value proposition. “There are too many faceless law firms out there at the moment that are ten a penny, that people can go to and get a piece of commoditised work done,” ?he says.

He is currently considering how Davenport Lyons can differentiate itself ?in terms of its brand, heritage, people and services; a communications consultancy has been brought in to help with analysing and articulating the firm’s identity. Once that has been clearly defined, Williams says he will work with the equity partners to build a strategy around how the firm is going to “live and breathe” it both internally and externally. The firm’s target client base as part of that strategy includes high-net-worth individuals, entrepreneurial businesses and media organisations.

Beyond ‘pure’ legal

Also on Williams’ list of priorities is developing a value proposition that goes beyond pricing and ‘pure’ legal services. For him, law is the last in the professional services sector to recognise that the billable hour is dead “unless you have an absolutely top-flight gold-plated brand”. He sees this as particularly true for firms in the mid-market, in which Davenport Lyons currently resides. Many such firms, including his own, now offer a range of tailored fixed-fee packages to provide clients with cost certainty.

Williams attributes client pressure ?as the reason why law firms have been ?creating new value propositions and gradually moving away from offering ?‘pure’ legal services to ultimately ?become vertically integrated ?end-to-end service providers.

“I don’t believe that what clients ?want anymore is a pure legal service; what they want is a client-focused, tailored, bespoke, specific service ?that’s right for them and at a price which they’re willing to accept,” he says.

“I think the offering of a pure legal service will die. That’s where the market is heading, that’s where we need to be heading, but it’s not something we can do right now. We’re not yet at that point where we can pull that value-added offering together and then start to offer ?a value-added price.”

Williams is not alone in recognising the need to create diverse offerings for clients. Some firms have invested in providing clients with bespoke training programmes; Berwin Leighton Paisner was an early starter with its Busy Lawyers Programme, which was first conceived ?in 2004. Others are diversifying their service offerings to meet clients’ wider needs; Mishcon de Reya’s 2010 partnership with Quintessentially to provide the firm’s high-net-worth private clients with global concierge services ?is one such example.

Leadership challenges

Under Williams’ leadership, Davenport Lyons may well be able to learn from Mishcon de Reya’s example and steadily climb up the top-100 ranks in the next few years. But, he will first need to lead the development of a distinctive brand and value proposition – a challenge which law firms of all sizes are grappling with in the current market.

Williams has confidence that his ‘followship’ approach to leadership will help him on this journey. The key, however, will be convincing the firm’s new set of equity partners in the LLP to follow him into the future he has mapped out for Davenport Lyons. This will inevitably require changing individual working practices and attitudes, which will not ?be easy given the resistance encountered to his new financial dashboard. To achieve his vision for the firm to become a top-50 law firm, Williams will have to lead this same group of lawyers into embracing modern methods of practice management – a challenge for any person, let alone ?an accountant.

Manju Manglani is editor of Managing Partner (www.managingpartner.com)

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