Should Your Midsize Firm Hire a CEO?

One of the strangest habits of traditional law firms (which really means most law firms, if we’re being honest) is the tendency to take one of the firm’s most productive lawyers out of a practice he or she loves and appoint that lawyer to manage the firm.

It’s hard to fathom why we do this. We place these lawyers into a management role for which they were never trained, a role whose long-term strategic focus is directly at odds with lawyers’ natural tendency to dwell on details and solve the present problem. Then, once the managing partner’s term is complete, we expect them to re-enter and immediately revitalize their dormant practice — assuming the lawyer still has a practice to which to return. That this is the dominant model of law firm management goes a long way toward explaining why law firms have been managed so erratically.

No wonder, then, that many firms have thought seriously about hiring, or have gone ahead and hired, a Chief Executive Officer to fill this role. CEOs, after all, are trained in management, leadership and strategy. They’re paid to look both down the road and up at the big picture — an especially beneficial feature in a legal marketplace undergoing rapid and drastic change. Non-lawyers from all walks of business and industry are playing key roles and driving change in the legal market. Why not counter these advances with a non-lawyer of your own?

Here at Harrison Pensa, we made the move in 1999 to bring in a non-lawyer CEO. Geoff Pulford, an accountant by training, has been a tremendous addition to the firm and has helped improve our efficiencies and competitiveness. Reflecting back, I’ve identified several key factors and necessary conditions to ensure your CEO is successful.

Think you’re ready?

First, you need to ask — and answer honestly — some tough questions. Will your lawyers be willing to give up some responsibility and recognize the value that a non-lawyer professional manager can bring to your firm? Lawyers, as a general rule, tend to focus their energies on their individual practices and far less on law firm management – even among partners. Lawyers also struggle with recognizing what they’re good at (delivering legal services) and perhaps not quite as good at (understanding clients, maximizing resources, looking to the future).

A good law firm CEO could diagnose these disconnects and set about to remedy them. But not every firm’s lawyers will be open to the possibility. So determining your firm’s readiness early in the process will be key to ensuring a successful outcome and a seamless onboarding of your CEO hire.

If your firm is ready and everyone has signed on, it will be important to choose your candidate carefully. Not every CEO is built for leading change in a law firm. Law firms are idiosyncratic, (sometimes dysfunctional) multi-player partnerships; midsize firms are especially prone to operating as a group of individual practitioners sharing overhead and a name. Ensure your CEO fully understands the lawyer/non-lawyer dynamic and has the patience and people skills to negotiate the delicate balancing act between firm and individual lawyer needs and realities.

The relationship structure of law firms is another factor worth considering. In midsize law firms, the most important relationship is frequently between the lawyer and his or her client. In larger firms, the relationship is more often at the institutional level, where there is greater integration. CEOs tend to have more success developing strategic plans to best serve institutional clients; accordingly, you might want to hire a CEO as your firm assembles a critical mass of such clients.

Most importantly, law firms need to have clearly defined objectives and goals and understand that change will be a necessary outcome. This means that your CEO must be supported and given the mandate as well as the authority to work towards achieving those goals. Hiring a CEO, only to tie his or her hands, would be a waste of talent and would thwart your original efforts to elevate your firm and drive future success.

So if your firm is in the right place at the right time with the right mindset, and if your lawyers are focused on top-line growth and believe a changing legal industry requires a plan for the future, then your firm may be ready to hire a CEO. But even if your firm doesn’t pass this high threshold, there’s no need to give up on the idea of a non-lawyer manager. Hiring a non-lawyer manager can, at the very minimum, help pave the way for a more mature partnership to move up to the next level and engage a CEO to bring them forward into the new legal marketplace.

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