Taking care of business
22 August 2005
The days of law firm finance directors' (FDs) duties being limited to processing bills or day-to-day number crunching are over. As firms become ever more business-orientated and lawyers begin to adapt to the post-Clementi age, the leading finance directors are becoming as integral to running and managing a law firm as any of the partners. The Lawyer quizzed the men and (all seven of) the women in the top financial job at the UK's largest 50 law firms to discover exactly what it is that they do.
Pinning down the FD's role
It is easier to report what it is that FDs (or their equivalent - the job titles vary from firm to firm) do not do. They do not simply look after finance. At least, not in the narrow sense.
Kevin Mortell, chief operating officer (COO) and FD at Norton Rose, is responsible for a 60-strong finance team and the firm's 90-person IT team. He is also ultimately responsible the whole of HR. For the last two years, the majority of Mortell's time has been devoted to Norton Rose's move from a "campus of elderly buildings" to a new, single building on the South Bank. Mortell, as might be expected, maintains that this will be "the best office building of any law firm" in town. Another of his major projects includes reviewing and revamping the firm's IT system. And, of course, he has also been looking after the firm's finances.
Salans COO Neil Woodcock has a role that is equally wide. As head of the finance, IT and marketing teams, Woodcock manages approximately 100 people. As a consequence, between 10 and 20 per cent of his time is dedicated to general management, 30-40 per cent is spent on finance and 40-60 per cent is devoted to IT and marketing. Woodcock sums up his role as "making sure the ship sails forth in a steady way". More prosaically, he sees his role as supporting the managing partner and ensuring a good interaction between the support teams, partners and clients.
Although in the case of Norton Rose and Salans the support teams (ie finance, marketing, IT and HR) are led by directors who report back to the FD, it is possible to see their role as that of a managing partner overseeing strategic and operational functions in the same way as the actual managing partner oversees the whole firm. An FD's role in a law firm extends far beyond the realms of pure accountancy and contrasts with the same role in other professional services organisations. Whereas in an accountancy firm, for example, the emphasis may be placed on cutting-edge number crunching, in a law firm a finance director's challenge is to work with people, the majority of whom may not be financially aware. This requires different skills.
Most of the FDs in the top 50 UK firms quizzed by The Lawyer trained as accountants at one of the big accountancy giants, such as Arthur Andersen, Ernst & Young or PricewaterhouseCoopers. Many subsequently went into industry and gradually worked their way up to finance director level.
Most importantly, the accountants profiled here will have drawn on their experience at accountancy firms - in particular in terms of the systems (be it for time recording or structuring their work to maximise profitability), branding and international expansion - and have brought that expertise with them to the legal market, which according to many is at least 10 years behind the accountants on these issues.
"Law firms are behind compared with accountancy firms in terms of systems, processes and structuring work to maximise profitability," argues Rosemary Kind, finance director at Shoosmiths. "In some ways, many law firms are still run more like sole practioners. But that can mean there are great opportunities for forward-thinking finance heads within law firms."
Kind is one of just seven female finance directors within the top 50 firms. The Lawyer's research highlights the extent to which the sector, like top law firm management (see The Lawyer, 29 March 2005), is male-dominated. But as another one of the seven admits, she has long since "stopped noticing" that she is the only woman. Another says she chooses not to dwell on it, adding: "You basically get on with doing a good job and earning the partners' respect."
There are, though, some exceptions among the top 50 that buck the trend. Trowers & Hamlins is , for example, among the most diverse firms proportionately, with two female partners on its management board, while its firmwide head of finance and head of corporate is a woman, Jenny Gubbins.
What may be more difficult for FDs to adapt to on entering the legal market from industry is the decision-making process. Although many of the directors who came from the accountancy profession will be familiar with partnership culture, they are less used to having so many people involved in that process. As Stephen Purse, finance director at Clifford Chance, points out: "In a corporate culture, the chief executive decides - and that's it."
Despite this, and the continued lack of partnership status, the majority of FDs interviewed claimed they were treated as equals at their firms. Several pointed out their places on their firms' boards as evidence of recognition of their positions. "Partnership isn't something I need for status in terms of getting things through," says Joy Middleton, director of finance and facilities at Dundas & Wilson. Purse says it is "not an issue", and explains that he is there to get a job done. The title is "irrelevant", he adds.
However, although many FDs have significant responsibilities and hold senior roles, most of those surveyed in the top 50 have not secured voting rights on the board. In fact, not all of them will be invited to sit on the board in the first place, but among those who have been, many do not hold an executive position. Their role is advisory only.
The effect of Clementi on the FD's roleFDs nevertheless do, of course, exercise influence in firms. The mutual respect for fellow professionals has helped them gain that influence. As Middleton puts it, building a solid relationship with the partners over the years has enabled her to be treated as an equal and with respect.
That respect may become increasingly necessary over the next few years as the legal market prepares for its biggest regulatory and structural shake-up in years. Over the last decade, as law firms have become businesses, the influence wielded by FDs has increased incrementally. Once Sir David Clementi's proposals become law, the position of FDs in law firms will theoretically change fundamentally.
Clementi's review of the UK legal service market is likely to result in the introduction of a new independent legal service body to oversee: the existing regulators (ie the Law Society and the Bar Council); the creation of a new structure (ie the LDP model) to enable barristers and solicitors to join a single partnership; and the acceptance of non-lawyers in the management and ownership of law firms. In theory at least, Clementi could be about to blow away the last remaining barriers, real or imagined, between lawyers and non-lawyers.
Although the majority of the FDs interviewed maintained that they were treated as equals in their firms, most also expressed a keen interest in becoming partners. As one puts it: "In some respects, I'm a risk-taker and would get a good deal of satisfaction from being a partner." Kind at Shoosmiths agrees, saying: "Non-lawyers as partners would be of great benefit."
However, there may also be disadvantages to introducing a non-lawyer to the partnership - in particular, in terms of facilitating the passing of a decision. A finance director can play a pivotal role in the partnership remuneration process, because their impartial position will encourage good dialogue and a fair hearing in the decision-making process. As DLA Piper Rudnick Gray Cary's chief financial officer Paul Edwards puts it: "They can play the independent card."
|Finance directors at top 50 (by turnover) UK firms|
|Rank||Firm name||Name of financial director||Title||Previous employer||FD since...|
|1||Clifford Chance||Stephen Purse||Finance Director||Management Consulting Group||2005|
|2||Linklaters||Nick Heywood-Waddington||Finance Director||Deloitte & Touche||1998|
|3||Freshfields||Laurence Milsted||Finance Director||Deloitte & Touche||1998|
|4||Allen & Overy||Ian Dinwiddie||Finance Director||Guinness Mahon Holdings||1990|
|5||Lovells||Russ Houlden||Finance Director||BT Wholesale||2002|
|6||DLA Piper Rudnick Gray Cary||Paul Edwards||Chief Financial Officer||Simmons & Simmons||2004|
|7||Eversheds||Claire Hafner||Finance Director||Barclays Bank||2005|
|8||Slaughter and May||Rick Brabiner||Finance Director||Continental Reinsurance London||May 1995|
|9||Herbert Smith||John Mullins||Head of Finance and Administration||L Messel & Co||1978|
|10||Norton Rose||Kevin Mortell||Chief Operating Officer and Finance Director||Denton Hall||2000|
|11||Ashurst||Nigel Morland||Finance Director||Wilde Sapte||1997|
|12||Simmons||David Mclaughlin||Finance Director||Linklaters||2005|
|13||CMS Cameron McKenna||Arthur Ferry||Finance Director||Eco-Bat Technologies||2004|
|14||Denton Wilde Sapte||Stephen Watson||Director of Finance||Richards Butler||2004|
|15||Pinsent Masons||Steve Hancock||Finance Director||PricewaterhouseCoopers||1997|
|16||Addleshaw Goddard||Martin Gaskin||Chief Financial Officer||HBOS||2002|
|17||Hammonds||Laurence Campbell||Finance Director||Heywood Williams Group||2004|
|18||SJ Berwin||Mike Giles||Finance Director||CB Richard Ellis||1999|
|19||Berwin Leighton Paisner||Charlotte Balfry||Finance Director||Colt Telecommunications||2004|
|20||Clyde & Co||Ian McAndrew||Finance Director||Lawrence Graham||2001|
|21||Irwin Mitchell||Mark Dakin||Financial Director||Lloyds Bank||1995|
|22||Nabarro Nathanson||Andrew Scholefield||Finance Director||Watson Farley & Williams||1997|
|23||Salans||Neil Woodcock||Chief Operating Officer||Partner at PricewaterhouseCoopers||2003|
|24||Richards Butler||Tim Salmon||Finance Director||Andersen||2004|
|25||Wragge & co||Paul Taylor||Finance Director||KPMG||2000|
|26||Beachcroft Wansbroughs||Chris Charles||Director of Finance and Operations||Hanson Trust||1997|
|27||Bird & Bird||Paul Colvin||Chief Financial Officer||Eversheds||2001|
|28||Barlow Lyde & Gilbert||Angela Kelly-Burns||Director of Finance||Englehart Industries||1990|
|29||Macfarlanes||Rob Gibbons||Head of Finance||Richemont||2004|
|30||Taylor Wessing||Stuart Milloy||Finance Director||Spicer & Oppenheimer||Feb 1990|
|31||Osborne Clarke||Chris Bull||Chief Operating Officer||Ernst & Young||1996|
|Malcolm Smith||Head of Finance||KPMG||2000|
|32||Olswang||Kevin Munslow||Finance Director||Munslows (accountants)||2000|
|33||Lawrence Graham||Caroline Rouse||Finance Director||Tisham Speyer Properties||2005|
|34||Shoosmiths||Rosemary Kind||Head of Finance and IT||PricewaterhouseCoopers||2000|
|35||Stephenson Harwood||Danny Cohen||Director of Finance and Administration||Manches||1999|
|36||Travers Smith||David Thomas||Partnership Secretary||Eland Hore & Patersons||1976|
|37||Withers||Mike Timms||Global Finance Director||Renaissance Worldwide||2001|
|38||Field Fisher Waterhouse||Douglas Peniston||Director of Finance and Administration||Coopers & Lybrand||1997|
|39||Holman Fenwick& Willan||Nick Handley-Jones||Director of Finance& Administration||Frere Cholmeley Bischoff||1997|
|40||Reynolds Porter Chamberlain||Helen Cumming||Finance Director||Wigrams||1986|
|41||Charles Russell||Andy Staite||Finance Director||Crawford & Co||1998|
|42||Cobbetts||James Boyd||Director of Finance||Ricksons||2000|
|43||Halliwells||Stephen Roe||Finance Director||Staffordshire Tableware||2001|
|44||Watson Farley & Williams||David Greening||Operations Director||Allied Domecq||1995|
|45||Ince & Co||Andrew Jennings||Director of Finance||Macfarlanes||1993|
|46||McGrigors||Tim Wilcock||Director of Finance and Operations||Quintiles||2000|
|47||Hill Dickinson||Colin Wardale||Director of Finance||Kings Chambers, Manchester & Leeds||2002|
|48||Burges Salmon||Simon Russell||Finance Director||CMS Cameron McKenna||2003|
|49||Dundas & Wilson||Joy Middleton||Finance Director||Andersen Legal UK||1997|
|50||Trowers & Hamlins||David Dixon||Head of Finance||PricewaterhouseCoopers||1998|
|Source: The Lawyer|