Freshfields bosses vow to focus on fee-earning

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  • Imagine this scenario: Think about a publicly traded company, a company that you have personally invested in and a company wherein you own a fair amount of shares in your personal investment portfolio. Now, imagine that this same public company has just issued a press release stating that they are going to redirect the time and attention of their senior management into spending more time on the production line.
    Now, is that a buy sign for you ("let me immediately get out there and buy more shares) or a SELL sign?
    Ahhhh . . . here's to the age of enlightened law firm management!

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  • What a poorly thought out comment above. Firstly many senior managers of listed companies have absolutely no experience of working on a production line so their involvement would probably hinder work; secondly senior partners are experts at what they do and as such their involvement in client would be beneficial to, and a bonus for, clients. What the above poster is advocating (probably without realising it) is that law firms should have management structures akin to listed companies (i.e. directors, not partners). We have seen that this approach does not tend to work.

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  • Agree that the first comment is a little misguided. A good law firm probably is one that requires little management and therefore one where its senior partners (likely to be pretty competent lawyers) can continue to do what they do best.
    But, maybe the idea of law firms having non-lawyer management figures (an idea the second poster seems to dismiss out of hand) isn't so ridiculous. It's not like we've got too much evidence that firms are adept at handling internal problems during a downturn and maybe a bit of listed company experience wouldn't go amiss. This is particularly true as the biggest firms become more and more akin to corporate entities anyway.

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  • How amusing. Two commentators who choose to hide behind a cloak of anonymity.

    There is ample empirical evidence, in the research of Dr. David Maister and others, to clearly show a direct correlation between firms with good management and those same firms achieving higher performance and financial success. I would refer you to the global study of 139 offices contained in the book, Practice What You Preach.

    “A good law firm is one that requires little management?” Interesting comment. Unfortunately in many firms what passes for management is a system of strict financial controls with a periodic meeting of the partners to listen to the latest speech on how we’ve got to get close to our clients.

    In my thirty years of working with the profession, I have observed that the mediocre performers, across various professions and geographies, simply assume that their professionals will be self-starting and inherently self-motivating. They believe, therefore, that they shouldn’t have to exert too much effort in leading or managing them. The evidence clearly shows that without leading or managing (you pick which term you prefer), which really translates into reaching out to energize, challenge, inspire and enthuse professionals and help them individually to be more successful than they might have been without your intervention, you achieve little by way of marketplace dominance and much by way of mediocrity.

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  • No one it appears has considered the conflation of three roles - owner, manager and governor. Would a law firm sit idly by and watch a major client conflate these roles when appointing an executive director? Moreover, how many partners have the range of skills and training required to manage a business with a T/O of a £Billion or more. Working on the production line (fee earning) is very different from building and running a complex service business. Add in the opportunity cost element of £1M - £2M a year of lost partner income and the economic argument for the perpetuation of partner managers weakens further. Perhaps the small numbers of independent professional managers is behind the lack of managerial innovation in the law. As it becomes increasingly difficult to sustain margins and profits it will be interesting to see what the future brings.

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  • Two ways of looking at the same issue:
    “A good law firm probably is one that requires little management” Anon above
    “In the longer run, we now see very clearly that running law firms as thinly capitalized worker cooperatives is not an equilibrium solution in this market.” Prof Larry Ribstein 2009
    The advent of external capital in the legal sector later this year will change the nature of many firms – directly or indirectly through response to competition.
    “What the above poster is advocating (probably without realising it) is that law firms should have management structures akin to listed companies (i.e. directors, not partners). We have seen that this approach does not tend to work.”
    I strongly doubt that Patrick McKenna would advocate anything “without realising it”- he has probably done more research into the field than anyone else. Nor do I expect that he would advocate the listed model for all substantial firms. I suspect that he sees major law firms becoming more like the larger accounting firms – run by professionals, but with extensive management training and experience, and a management infrastructure in support.
    Not that the idea of running Law firms akin to listed companies can be dismissed – for the first time (in the UK) there will shortly be firms which ARE listed companies. Some of these will be from the top 20 or so current firms, and their capital and management will give them the scope to get into the top 10 before long.
    The Workers’ Cooperative model will survive for a few more years, and for a time some of the largest firms doubtless including Freshfields will be able to remain aloof. For the rest , Management will no longer be the optional extra it has been in most firms till now.

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