It's No Coincidence: The Successful Firms Have Strong Management and Leadership

In a corporation, the person who has the most impact on the performance of the business is the Chief Executive Officer. Although the practice of law is a profession, a law firm is a business. Therefore, the person who should have the most impact on the performance of the firm is the Managing Partner. Nothing is as important to the success of the firm as strong leadership at the top. Yet, in far too many firms, the partners are still reluctant to give anyone the CEO authority needed for effective management and leadership.

The Management Pendulum

For many years, law firms were managed autocratically by the founder. He (it was almost always a man) provided the leadership and ran the firm the way he wanted to. The other partners were rarely involved in decisions. This form of management and leadership generally worked well.

When these 'benevolent dictators' died or retired, the management pendulum swung to the other extreme and these firms adopted a 'democratic' form of governance. Most decisions are made by the full partnership. There is often a management committee but its role is usually limited to minor decisions and making recommendations on major ones. The Managing Partner (or equivalent title) generally oversees the business operations of the firm but has little authority and rarely attempts to set a strategic direction for the firm.

Despite the fact that decisions are often made at glacial speed, which is often the price paid for this 'consensus management,' firms have been comfortable with this structure because the partners feel they have a voice in every decision. Furthermore, many firms have operated the same way.

However, as the profession began to change and competition increased dramatically, a few firms such as Cravath, Jones Day, and Clifford Chance, first recognized the need for faster ' and better ' decision-making. Emulating their corporate clients, they moved to strong, centralized management and leadership ' and began outpacing their competition. Recognizing their success, more firms have followed suit and have created the position of Chief Executive Officer ('CEO'). However, many firms, particularly mid-size, still cling to the comfort of a democratic and generally weak form of governance.

The New Role of the Managing Partner or CEO

In firms with strong, centralized management and leadership, the role of the Managing Partner changes in at least three respects:

1) He or she must be heavily involved in Strategic Planning and setting the future direction of the firm.

2) He or she must shift from overseeing internal matters to an external focus, concentrating on the relationship with key clients.

3) He or she must push their firms to understand their clients' business and their industries.

In order for the strong Managing Partner/CEO to fill this new role, there need to be several other changes in the management structure:

• In a large firm, and many mid-size firms as well, it must be a full-time job.
• Practice groups must be headed by strong leaders who have the ability, and are given the time, to manage their groups, and who understand what it means to be a client-focused firm.
• The non-legal, business operations of the firm must be managed by a strong Chief Operating Officer or Executive Director who heads a team of non-lawyer, business professionals.
• Technology, Information Systems, and Knowledge Management must be given high priority.
• The marketing function must be elevated to a strategic level and placed in the hands of a qualified Chief Marketing Officer.

The Qualifications of the Strong Leader

Many partners have the perception that electing a strong leader as Managing Partner is equivalent to appointing a dictator (who may not be benevolent). The record of successful law firm leaders proves otherwise:

• They make few, if any, important decisions in a vacuum. They are skilled in building consensus among their partners.
• They are businessmen and women, as well as good lawyers.
• They are supreme, but also prudent, risk takers.
• They are skilled listeners.
• Delegation, motivation, and inspiration are among their strengths.
• Given these qualifications, it is understandable that it takes a unique individual to fill this role. On top of these rare qualities, the strong MPs or CEOs must also be successful lawyers and business developers or they will not have the respect and support of their partners.

Educating and Compensating the CEO

The CEOs and senior management in a corporation usually have MBA degrees and have spent their careers learning how to manage a business. Few MPs and law firm CEOs have an MBA or have spent much time learning the art of management. Therefore, they and their firms recognize that they need continuing education in leadership and management.

Finally, partners in strongly managed firms recognize that the highest paid person in a corporation is almost always the Chief Executive for good reason. It's no coincidence that, with few exceptions, they apply that principle to their own CEOs as well.

Robert W. Denney is President of Robert Denney Associates, Inc. (http://www.robertdenney.com/), a firm that has provided management, marketing, and strategic planning services to more than 800 law firms and offices throughout the United States and Canada. He has written five books on managing and marketing a law firm, two of which were published by the American Bar Association. He can be reached at [email protected].

In a corporation, the person who has the most impact on the performance of the business is the Chief Executive Officer. Although the practice of law is a profession, a law firm is a business. Therefore, the person who should have the most impact on the performance of the firm is the Managing Partner. Nothing is as important to the success of the firm as strong leadership at the top. Yet, in far too many firms, the partners are still reluctant to give anyone the CEO authority needed for effective management and leadership.

The Management Pendulum

For many years, law firms were managed autocratically by the founder. He (it was almost always a man) provided the leadership and ran the firm the way he wanted to. The other partners were rarely involved in decisions. This form of management and leadership generally worked well.

When these 'benevolent dictators' died or retired, the management pendulum swung to the other extreme and these firms adopted a 'democratic' form of governance. Most decisions are made by the full partnership. There is often a management committee but its role is usually limited to minor decisions and making recommendations on major ones. The Managing Partner (or equivalent title) generally oversees the business operations of the firm but has little authority and rarely attempts to set a strategic direction for the firm.

Despite the fact that decisions are often made at glacial speed, which is often the price paid for this 'consensus management,' firms have been comfortable with this structure because the partners feel they have a voice in every decision. Furthermore, many firms have operated the same way.

However, as the profession began to change and competition increased dramatically, a few firms such as Cravath, Jones Day, and Clifford Chance, first recognized the need for faster ' and better ' decision-making. Emulating their corporate clients, they moved to strong, centralized management and leadership ' and began outpacing their competition. Recognizing their success, more firms have followed suit and have created the position of Chief Executive Officer ('CEO'). However, many firms, particularly mid-size, still cling to the comfort of a democratic and generally weak form of governance.

The New Role of the Managing Partner or CEO

In firms with strong, centralized management and leadership, the role of the Managing Partner changes in at least three respects:

1) He or she must be heavily involved in Strategic Planning and setting the future direction of the firm.

2) He or she must shift from overseeing internal matters to an external focus, concentrating on the relationship with key clients.

3) He or she must push their firms to understand their clients' business and their industries.

In order for the strong Managing Partner/CEO to fill this new role, there need to be several other changes in the management structure:

• In a large firm, and many mid-size firms as well, it must be a full-time job.
• Practice groups must be headed by strong leaders who have the ability, and are given the time, to manage their groups, and who understand what it means to be a client-focused firm.
• The non-legal, business operations of the firm must be managed by a strong Chief Operating Officer or Executive Director who heads a team of non-lawyer, business professionals.
• Technology, Information Systems, and Knowledge Management must be given high priority.
• The marketing function must be elevated to a strategic level and placed in the hands of a qualified Chief Marketing Officer.

The Qualifications of the Strong Leader

Many partners have the perception that electing a strong leader as Managing Partner is equivalent to appointing a dictator (who may not be benevolent). The record of successful law firm leaders proves otherwise:

• They make few, if any, important decisions in a vacuum. They are skilled in building consensus among their partners.
• They are businessmen and women, as well as good lawyers.
• They are supreme, but also prudent, risk takers.
• They are skilled listeners.
• Delegation, motivation, and inspiration are among their strengths.
• Given these qualifications, it is understandable that it takes a unique individual to fill this role. On top of these rare qualities, the strong MPs or CEOs must also be successful lawyers and business developers or they will not have the respect and support of their partners.

Educating and Compensating the CEO

The CEOs and senior management in a corporation usually have MBA degrees and have spent their careers learning how to manage a business. Few MPs and law firm CEOs have an MBA or have spent much time learning the art of management. Therefore, they and their firms recognize that they need continuing education in leadership and management.

Finally, partners in strongly managed firms recognize that the highest paid person in a corporation is almost always the Chief Executive for good reason. It's no coincidence that, with few exceptions, they apply that principle to their own CEOs as well.

Robert W. Denney is President of Robert Denney Associates, Inc. (http://www.robertdenney.com/), a firm that has provided management, marketing, and strategic planning services to more than 800 law firms and offices throughout the United States and Canada. He has written five books on managing and marketing a law firm, two of which were published by the American Bar Association. He can be reached at [email protected].