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The right leaders

The traditional partnership model is preventing many firms from adopting a more sophisticated management approach
Law Office Management
|Written By Marg. Bruineman
The right leaders
Vigg

It’s been a decade since Stewart McKelvey moved toward a leadership model that places a chief executive officer in the key management role, dispensing of the usual managing partner role typically employed by law firms. 

With its 220 lawyers, the regional firm figured with its significant footprint in Atlantic Canada it would clarify some confusion in the marketplace. Having a CEO allows those familiar with the corporate model to identify with the structure of the firm. “It just made sense to the firm that we would start to move a little more to a corporate model,” says Lydia Bugden, a Halifax-based corporate lawyer who took over the position in 2015. “There seems to be at least a baseline in the marketplace and among your constituents as to the level of responsibility and the level of decision-making that needs to go into that role. That certainly has helped us in terms of defining the role and responsibilities.”

And although the move has been deemed to be effective, when Bugden took over, she wanted to signal that she’s also still a partner in the firm and convinced the partner board to reinstate the older title, adding it to the CEO title.

Cox & Palmer, another major regional firm in eastern Canada, also has a CEO steering the ship. But while Bugden works at that job full time with Stewart McKelvey, Cox & Palmer’s George Cooper continues to carry on with his practice in Moncton. Cooper says the firm’s CEO, board of directors and managing partners at most of the large offices are all supported by a team of professional managers, with chief operating officers in each of the four provinces.

The resulting operations committee executes the strategic plans and decisions that all report back to the COOs. “In our structure, the professional managers are meant to carry the majority of the load by way of execution,” says Cooper. “The board of directors, the CEO and the managing partners are meant to set policy, goals, objectives and develop, with the assistance of the professional managers, strategic plans.”

That business focus in the leadership structure hasn’t yet been universally adopted, says Thomas Clay, principal at Altman Weil, Inc., whose work focuses on law firm management principles. For the most part, law firms use the same old structure, although he does see a lot more people involved in the management leadership function and has seen those roles change over time.

Clay, who co-authored Altman Weil’s Law Firms in Transition 2018 — a survey of U.S law firms with 50 or more lawyers — believes what needs to happen with the current evolution of the law firm is the involvement of nonlawyers in executive roles to help drive the business of the firm and address client demand for increased efficiency and cost effectiveness. Law firms are facing additional competition, including from the large accounting firms that now include legal as a major aspect of their service options.

Skills he sees as being increasingly necessary for both lawyers and nonlawyers in the firm include legal project management as well as knowledge management systems and processes such as artificial intelligence and machine learning. While the recession was the major threat to law firms a decade ago, the current threat to the profession comes “primarily from the sweeping force of technology evolution over the last two decades that has resulted in the commoditization and commercialization of more and more legal services,” according to Altman’s introduction in the survey study, warning firms that they need to be more forward looking. “Few firms have taken full advantage of the disruption as an opportunity and run with it to distinguish themselves from competitors.”

Given that the ownership structure of law firms in North America remains tied to lawyers, Clay sees only limited movement here toward approaches adopted in England and Australia where the leaders of the firm are not necessarily lawyers. “At some point, the U.S. and Canada have got to get rid of this protectionist stance against nonlawyers, or people who are not lawyers, having an equity interest in the firm,” he says. “We just need a whole cohort of professional people that are part of the human capital of the law firm and that they are treated as though they are lawyers with lawyer degrees and they can have, actually, an ownership stake. That’s where I think we need to be.”

Timothy Corcoran, past president of the Legal Marketing Association and an elected fellow of the College of Law Practice Management in the U.S., also sees the future of the law firms involving a move to a more sophisticated management model including corporate executives with business backgrounds. 

Yet as law firms largely continue to follow the traditional partnership model with a managing partner co-ordinating the overall leadership structure, there has been some evolution, he says. Many firms now have co-managing partners, a managing partner and a chairperson or managing partner for each of the different offices or geographic locations. That allows them to divide the responsibilities.

“I think one of the reasons why we’re seeing co-managing partners is some people have a good vision, long range, big picture and some people are willing and able to dig into the day-to-day operational stuff, making battlefield decisions” about salaries, leases and operational concerns, he says. Some divide up regional responsibilities and allocate them to executive committee members who serve as sort of stewards. 

The wrinkles he sees is the managing partners who continue to carry on their legal practice and the tendency to put the top lawyer in the position of being the managing partner. That, he says, shows that the firm doesn’t necessarily have or value business acumen.

Corcoran sees a more ideal management approach in having an executive committee with a plan or framework, dedicated to thinking about the fortunes of the firm with a full-time managing partner and chairperson at the helm. That involves controlling the expenses of partners and scrutinizing any rate discounts to avoid pricing pressures elsewhere and have consistency in the delivery of legal services.

That requires the partners to buy in and for that to happen they need to be willing to be led by the managing partner or CEO, says Jordan Furlong, principle of Law 21 and legal market analyst and speaker based in Ottawa. Encouraging all the partners to forfeit a portion of their autonomy requires them to trust that person and accept guidance from them.

“I don’t think it matters that much what leadership structure you have in place. If the lawyers in the firm and the partners in particular don’t acquiesce at some level to being led and managed to some degree and some manner, it doesn’t matter what your leadership structure is,” he says.

Furlong sees that reluctance to be led as part of the culture of resistance in law firms to adopt the business model that sees a CEO at the top of the organization. At some point, the firm goes beyond simply being a bunch of lawyers working in close quarters, referring work back and forth and eating what they kill, but rather a business that requires a degree of business administration and management, he says.

Furlong sees the traditional mode of installing a lawyer as a managing partner for a term and then expecting them to return to their practice as flawed. By way of example, he points to the corporate world where CEOs, department chairs and division heads are not interim positions. There instead needs to be an understanding that law firms are complex businesses that are difficult to manage and lead and that the challenges need to be addressed by a team of dedicated professionals leading it.

But having a lawyer in the top role lends legitimacy and credibility, which can increase their ability to get the buy-in required from the lawyers, says Loretta Bouwmeester, managing partner of the Calgary office for Mathews Dinsdale & Clark LLP, who also serves as chairwoman of the CBA’s Alberta Law Firm Management & Leadership (South). “Because managing lawyers could be like herding cats, with Type A personalities, I think that the benefit of having a lawyer in a management role that is still able to bill some of their time is the legitimacy and credibility that comes with that for the team they lead,” she says.

Bouwmeester started her firm’s Calgary office and continues to manage it as the managing partner while carrying her management-side workplace law practice, which is the firm’s sole focus. But there is no term attached to her role and she expects to soon have an office manager take over many of the day-to-day tasks of the office that includes six lawyers and four staff.

Through the CBA leadership group, Bouwmeester has explored many of the approaches around financial issues, managing privacy and team support. And in the Calgary market, which experienced a dramatic downturn in 2014, there was emphasis on being nimble and it emphasized the importance of limiting the number of non-billing professionals not deemed essential. Achieving the proper balance is important in ensuring the firm can remain forward looking while also responding quickly to changes, she adds. 

“You do no one any favours if you have too many people or too few people. Too busy is just as toxic as not busy enough,” says Bouwmeester. “Being able to identify the right size for your team is a talent.”

Back in Halifax, Bugden says she can continue her relationship with many of her corporate clients in her full-time role as CEO. That allows her to keep the door open to picking up her corporate law practice again once her management term comes to an end. “I think corporate law does allow a little more of a transition . . . because of the relationships servicing many people over many years.”

Firms in transition

Altman’s 2018 Law Firms in Transition survey of U.S. law firms with 50 or more lawyers included these findings: In 69 per cent of law firms, partners resist most change efforts; Equity partners are not busy enough in 51 per cent of all law firms; 59 per cent of law firms are not feeling enough economic pain to motivate more significant change; Only 38 per cent of law firms are actively engaged in experiments to test innovative ideas or methods; Overcapacity is diluting profitability in 58 per cent of all law firms.