Can lawyers manage?
5 October 1999
13 October 2003
17 February 1998
17 October 1995
5 December 1998
14 October 2002
He has had enough. Two-and-a-half years into a four-year term Theodore Goddard's managing partner Peter Kavanagh has called time on being both a lawyer and a manager and returned to full-time fee earning.
Kavanagh tells The Lawyer (see City Profile, page 17) that he planned to split the management and legal role 50-50, but looking back, he says, "it was clear relatively early on that I was going to find that difficult". In short, it all got too much.
Theodore Goddard needed a hands-on manager and, in retrospect, with the best will in the world, Kavanagh's 50-50 approach was never likely to be enough.
But behind the immediate story of one man's resignation, there are many issues about how modern legal firms, keen to build themselves as legal businesses, are trying to create a management team fit for the task.
What is becoming increasingly apparent is that even for a mid-sized or regional firm, management is a full-time job.
David Temporal, of Temporal Management Consultants, says the nature of firm management has changed dramatically over the past decade from basic administration to an elaborate mix of strategy and personnel management. The manager now needs to handle technology issues and plan and carry out mergers, acquisitions and alliances, for the firm as well as its clients.
The complexity of a modern law firm, Temporal thinks, is such that it is now like managing any other business.
With increasing demands on lawyers' time and more intense competition between firms, it is no longer realistic for lawyers to take on top management responsibilities while continuing to practise.
At Freshfields, chief executive Alan Peck says practising lawyers find it hard to juggle client workloads with management tasks.
"We are all trained to put the demands of the client first, which means we feel very guilty about not spending time on management," says Peck.
Firms are increasingly realising that they may need to look outside for specialist skills and in recent years have brought in directors of marketing, IT and education to strengthen their support services. But there remains a reluctance to place an outsider at the top of a firm.
This a lingering sign of partners' conservatism and "clubby" culture, according to Maurice Allen, head of Weil Gotshal & Manges' London office. He thinks it is time firms took off their blinkers and thought seriously about hiring "outsiders".
He remembers a meeting at Clifford Chance 10 years ago when a lone partner suggested looking outside for a manager. Then, he was laughed down but, thinks Allen, no one is laughing any more.
"The pace has quickened for law firms and the pressures push them into acting more quickly. The average partner now needs someone to be above them who pulls things together," says Allen.
"Managers can and will bring a different outlook and because they're outsiders, it's in some ways easier for people to accept. They have no agenda, are not part of competing departments and have a client focus."
One of the few non-lawyers leading a law firm is Chris Schulten of Richards Butler, a former senior financial director at the WPP Group.
To him, there is nothing magical about hiring an outsider. The important thing is having a full-time manager with the ability to manage people and think strategically. "I think business will suffer if you don't give it the time it demands," he says.
Richard Hoskins, an accountant and chief executive of south-west firm Stephens & Scown, says having a financial background and no clients to worry about gives him a huge advantage in facing the day-to-day pressures of running a practice.
Recruiting non-lawyers allows firms to tap into the commercial acumen that some believe they lack and that increasingly they need.
Partners, traditionally running their firms in what Allen calls a "nicely amateurish, slow-moving way", can find it hard to switch from working with clients to dealing with the strategic development and business strategies of what are increasingly multinational organisations.
What is more, many do not want to run the practice. On the one hand, firms do not want to give up one of their best fee earners and on the other, the partners themselves do not want to risk hampering or even halting their rise through the legal ranks.
Temporal thinks many lawyers who could make able managers are scared off. He says: "You are trying to shape and direct a group of highly intelligent, highly opinionated, high-ego, high-intensity professionals, all of whom think they know best, all of whom are primarily concerned about their own area.
He adds: "Someone once compared being a managing partner to being the only fire hydrant on a street of 50 dogs. You have to be robust."
So if lawyers are reluctant to take on management, why do firms not look outside their ranks more often?
One reason often cited is the profession's non-hierarchical tradition. With partnerships having been the basis of firm's development, there is a fear of simply having a managing director or chief executive officer overseeing the whole team. "Law firms find it very hard to accept non-lawyers having authority over them," says Allen.
Temporal agrees: "Lawyers will only follow and take directions from someone in whom they have a lot of trust and respect. So that usually means one of their own."
Another potential source of conflict is control. For Stephens & Scown's Hoskins, "the only slight disadvantage is that I'm an employee of the firm and not a partner, so I can advise, but I can't actually be part of the decision-making".
Temporal says he has yet to see an outsider successfully take the reins of a firm from its partners.
"That person eventually becomes more of an administrator or overseer of support services rather than someone who can get among the core business areas," he says.
In 1997, Simmons & Simmons moved its finance director, accountant Alan Morris, to the post of managing director. He was one of a clutch of non-lawyer managers hired by leading firms including Alsop Wilkinson (as it was then) and Eversheds.
A trend seemed to be developing and Morris said at the time: "I suspect you'll get more and more firms run by people who have a claim to be professional businessmen."
Several years on Morris has left the post and what Richards Butler's Schulten recalls as "a little trend" has never really taken off. Simmons & Simmons went back to having one of the partnership as head of the firm.
"Since then one or two have reversed it," Schulten says. "The trend seems to have dried up for a while."
The more favoured model, and the one both lawyers and analysts think is most likely to continue in the future, is a mixed management team, with a lawyer leading from the top and a full-time manager alongside.
Temporal says the division of roles needs to be between management and leadership. He looks to Freshfields as a good blend.
Senior partner Anthony Salz is clearly the firm's leader and one of the main direction-setters. But he has few management duties and can continue his legal work while chief executive Peck and others deal with the daily issues.
As Allen says: "I think you can be a leader and a lawyer. But if management means what I think it means these days, you can't be both a lawyer and a manager."
With firms marketing themselves as effective businesses and aggressively expanding, there is obviously a need for a keen business mind to steer the firm.
There may be a new feeling that the 50-50 option is no longer viable but, whether the partners look to one of their own or look outside, it is clear something will have to take its place.