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Lawyers like to think they are different from other professionals. But when it comes to managing other lawyers, just how different are they, and is it time to tap more leaders from beyond the law?
Law firm leaders face many of the same pressures as all business leaders: rising global and local competition, demographic change, client pressure for greater efficiency and more transparent pricing, increasing threats of takeover and consolidation, and raging culture wars.
Overlaying, amplifying and accelerating these trends is the rapid spread of generative artificial intelligence.
Yet law firms continue, to a greater or lesser extent, to regard themselves as separate and distinct from other businesses. Or, as tech and media company Thomson Reuters put it in a recent report on the US market, adhering “to familiar management patterns drawn from earlier and simpler times”.
“I’ve never seen the intensity and degree of change in law firm management and structure in my career in the US as I’m seeing now,” says Bruce MacEwen, president of Adam Smith Esq, a boutique consultancy serving law firms.
Laura Empson, Bayes Business School professor and an expert on how to lead professionals, is a little more circumspect about what she describes as “breathless rhetoric around change”. She says: “The direction of travel is clear; the only thing to be debated is the pace.”
Where analysts agree is that law firms are, in MacEwen’s words, putting a premium on “sophisticated management ability and not just a big rain-making book of business, as a qualification to lead the firm”.
Leaders picked from the ranks of senior practitioners bring to the role a knowledge of firm culture. Their proven legal abilities command the support of peers. “By the time you get to the top of these organisations, you’ve already been running a substantial and complex business. The people who rise to the top realise what they don’t know,” says Empson — and are prepared to fill those gaps in leadership capability quickly.
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Still, some of the settled foundations of legal partnerships are shifting, and leaders have to adapt. “You used to join a firm for life — that’s changed,” points out one leading New York-based corporate lawyer at a global firm.
It is becoming more common for firms to pursue “lateral hires”. Latham & Watkins has just poached star dealmaker Zach Podolsky from rival Wachtell Lipton, for instance.
One obvious challenge for the leader of a global firm is to ensure that colleagues worldwide pull together, rather than jealously protecting their local fiefdoms. The New York corporate lawyer says managers “need to set the global culture in the firm and appropriate structures and incentives, so people want to work together. [The lawyers] need to understand it’s good for the firm, it’s good for them and it’s good for the client.”
Another foundation stone that is under pressure is the principle that law firms are best owned by lawyers. Liberalisation of law firm ownership in the UK and elsewhere is spreading to the US, via Arizona, where openness to “alternative business structures” has attracted KPMG and other professional services firms to the market.
In the UK, law firm leaders are already managing a range of specialist advice provided either directly or through partnerships with other providers and fuelled in part by technology.
It would be natural, then, for law firms to start searching more widely for leaders with broader experience.
Jessa Baker was recently appointed chief executive of Chicago firm Levenfeld Pearlstein, succeeding a chief executive who had risen through the firm’s finance function. A former consultant to law firms, Baker works alongside the managing partner and has an equal vote on the firm’s executive committee. “It can be a challenge for lawyers to feel comfortable with ‘non-lawyers’ driving the strategic direction of the firm,” she acknowledges, but professional managers complement lawyers’ traditional strengths.
Business leaders can focus on the long-term development of the business, respond to AI-fuelled threats to the way firms price legal services and train junior lawyers, and absorb increasing demands to weigh in on social and cultural issues.
Outsiders can also compensate for a classic weakness in established firms: their preference to look to each other for examples about how to develop and grow. This copycat instinct is one reason why much innovation in the sector is largely incremental.
Law firms are “much more sophisticated than they used to be” when it comes to leadership, says Empson, but they suffer from “institutional isomorphism”.
“The big challenge for law firm management is their difficulty looking outside the legal sector for precedent,” she adds. “They will all copy each other, but they aren’t very good at learning from other sectors.”
