Law Firm Leadership in the 21st Century:
Say Hello to the Law Firm CEO
The role of law firm leader is evolving rapidly toward that of a law firm CEO whose main focus is on managing people, administration, business development, long-term planning and running a business — not practicing law. Here's a look at how some successful law firm leaders are redefining the role by creating a management model that more closely resembles that of their clients.
At one time law firms passed the managing partner baton like a hot potato that nobody wanted. Senior statesmen with grey hair and slightly smaller practices were often the best selections because they had more time to devote to the “headaches” of dealing with people issues, administration and operations. At times, a law firm would select one of its best rainmakers to lead, but that frequently resulted in disaster because the best lawyer-salespeople rarely have the time or the inclination to manage people, systems and organizations.
As one of my managing partner friends once told me, in past generations management and leadership could never be allocated to non-lawyers or even to those without active practices because those people had “no credibility” among the partners. Furthermore, few lawyers wanted to be a managing partner for more than one term because there was no significant compensation for taking the leadership baton, and because they risked the loss of their clients and practices if they began devoting full attention to leadership.
Then, a new breed of managing partner emerged — a lawyer with credibility who was willing to risk the loss of his or her flock of clients while tending first and foremost to the internal staff and to the long-term direction and focus of the firm. These new managers also became recognized for the value of their management and leadership, and were compensated accordingly.
Leaders such as Greg Jordan of Reed Smith, Jay Zimmerman of Bingham McCutchen, Regina Pisa of Goodwin Procter, and Paul Perlman of Kramer Levin started to focus the vast majority or, in some cases, all of their time on leading and managing their firms. You can check the annual statistics published by the American Lawyer to discover that during the tenure of those leaders, their firms experienced well over 10 percent growth per year in lawyers and total revenues while continuing to build revenues per lawyer firm-wide (“RPL”) faster than the pace of price inflation (despite the fact that RPL often slumps during a period of growth by acquisition while taking in firms with smaller RPL numbers).
Though some of these leaders have moved on to positions as Executive Committee Chairmen after many years, some still manage full time and all remain as critical leadership contributors. Some firms, such as Reed Smith, even have numbers of lawyers now who focus most or all of their time on operations, leadership and management.
Many of the most successful firms have done this because they recognized what their clients have long understood - that leadership and management are not afterthoughts or secondary activities. They are the sine qua non of long-term success, and they are necessarily time-consuming. As Jay Zimmerman said in a piece for The American Lawyer several years ago, “It would be nuts not to have full-time management of a $700 million business.”
Following the example of their institutional business clients, some firms are now ready for the next evolutionary step — the appointment of a full-time Chief Executive Officer who is specifically trained in management and leadership.
The 500-lawyer firm of Pepper Hamilton, for example, announced in February that it hired a non-lawyer with significant business experience to be responsible for both business strategy and operations as CEO of the firm. Scott Green holds a Harvard MBA and is a licensed CPA. He also started his career with Deloitte & Touche, and moved on to management roles at Goldman Sachs and ING Barings. He also picked up management experience in law firm settings at Weil Gotshal & Manges, as well as WilmerHale, where he served as Executive Director.
The Chair of the Pepper Hamilton Executive Committee, Nina M. Gussack (former managing partner) explained to BusinessWire reporting service that the decision to create the CEO role and the decision to hire a non-lawyer executive were the result of a year-long process during which the firm’s executive committee analyzed:
• Succession planning;
• Alternative management structures; and
• Best practices in organizational governance.
Gussack reportedly said: “We began with our clients’ desire for value, creativity, quality and efficiency [and] concluded that a management model that more closely resembles those of our clients would enable the lawyers at Pepper Hamilton to focus on providing legal services in the most effective way.”
This is absolutely revolutionary in the law firm industry because the decision was made based on a study of best practices and management structures, as well as a focus on the desires of clients.
The results of this decision have yet to be demonstrated, but the fact that Pepper Hamilton’s management took this step after a year of deliberations is significant. Among other things, it suggests that Green will have solid support behind him for the implementation of business standards, values, processes, and efficiencies, as well as marketing, sales and service disciplines.
If the firm acts in a business-like manner, moving toward a client-driven focus, it could yield not only greater client approval ratings, but more successful recruiting efforts to tap the best team-players and best professionals in the industry.
Such a success could pave the way for more professional leadership and management at other firms and momentous evolutionary changes for professionals in marketing, sales and service. Among other things, we might expect to see, as we do in business:
• Quarterly executive committee and board meetings that begin with marketing presentations on what clients want, business intelligence on where clients are going and why, client retention and defection reports, and periodic client survey information of all kinds;
• Statements of organizational mission and values that are centered on clients and client service;
• More recruiting, retention and promotion of personnel based on adherence to the mission and values of the organization;
• Better institutional training in client service for all employees with constant attention to improvement of client service scores;
• More internal service training and scoring of internal service providers, who form the foundation of solid outside service;
• More use of client service teams and industry service groups;
• More use of sophisticated sales strategies geared to the expressed desires and demands of clients, as well as their behaviors;
• More sophisticated sales training for key personnel involved in client outreach;
• More delegation and entrustment to professionals other than lawyers (ie, marketing, sales and service professionals) for the benefit of the lawyers and their clients; and
• More integration of marketing, service and sales professionals into all levels of law firm management and leadership, as well as practice and industry groups.
If past is prologue and the science of business is a good guide, then these changes will eventually come to the legal industry as a whole, and they will prove fruitful to clients, legal professionals and marketing professionals alike.