Legal Village

More than one way to skin the management cat

Posted 10/05/2007 by Stephen Gillespie

I have been struck recently by the increasingly large number of (in my view) relatively 'young' partners (by which I mean anyone under the age of 45)  taking on so-called 'management' roles in some of our leading law firms. This raises at least two questions:

• how much management do law firms need; and
• when is it a good time to take on a management role in a law firm?

I speak from experience. I was a partner for 12 years in a heavily-managed magic circle firm and for the last five of those years occupied what turned out to be a more or less full-time management position. Last year, I moved to a firm which has no defined management roles and where I have been able to return to full time fee-earning work.

As to the first of those questions, one needs to contrast what might be called, for the sake of simplicity, the 'UK model' with what, on the other hand, might equally simplistically be called the 'US model'.

The large UK-originated firms (including, but not limited to, those in the magic circle and the chasing pack below) have, whether by accident or design, ended up running structures with key characteristics including:

• sharply defined divisions between departments - banking, capital markets, litigation, corporate and so on - each of which has its own revenue, profitability and chargeable hours targets, accounts and performance management metrics;
• equally sharply-defined geographic decisions between regions and offices, where each office has its own revenue and profitability targets, accounts, performance management metrics and so on;
• management structures supporting these divisions - that is, departmental and regional office management structures - which supplement, duplicate or sit alongside firmwide management structures (full-time senior and managing partners, executive boards, partnership/supervisory boards, executive management committees and so on); and
• substantial investment in 'unproductive equity', that is, partners (many of them once great client operators) who occupy full-time management positions, record little or no chargeable time, deliver no bills and make no meaningful contribution to the bottom line.

All of this is to be contrasted with what might be referred to as the US model; that is, a generalised description of the management structures adopted by most of the leading US-originated firms.

In its most extreme form, this model embodies the lightest possible  management touch; there are no full time partner-managers, no elected senior or managing partners, no heads of department (indeed, no 'department' in the hard-wired sense), no heads of regional offices, no departmental or regional revenue or profitability targets or accounts, a single set of firm-wide performance management metrics and a committee system that ensures such minimum management functions as need to be performed are shared as widely as possible across the partnership.

In a less extreme manifestation, the US model is represented by a very small group of full-time managers (a senior partner, one or more managing partners and an executive director, perhaps) charged with responsibility for the leadership and management of the firm.

In any of its forms, the key characteristics of this model are:

• an emphasis on structures that allow partners to concentrate exclusively or primarily on fee-earning and client-facing activities;
• a de-emphasis on partner-manager/producer-manager roles such that there are as few as possible parallel or overlapping management structures within the firm; and
• an extreme concentration or an extreme diffusion of management responsibilities. This may sound paradoxical, but the model tends towards either a committee system that spreads management responsibilities as widely as possible throughout the firm or a system in which management responsibilities are concentrated in the hands of the smallest possible number of partner-managers. In both cases, the objective is the same - to enable the greatest possible number of partners to concentrate on what they are trained to do, what they are best at and what, in most cases, they most enjoy doing - client-facing work.

It would be presumptuous to suggest that one model is superior to the other - they reflect the heritage and needs of the  businesses they serve. But my experience working in a US firm has demonstrated to me that there is more than one way in which to do things and that law firms (even big multi-jurisdictional law firms) can operate perfectly effectively with remarkably little 'management' in the UK sense of the word.

 That is not to say that a 5,000 person professional services firm can run itself. There are certain important processes and events (such as associate appraisals, partner promotions, partner performance management and so on) that require partner-level management and periodic partner attention. However, there are an equally large (probably much greater) number of matters that can be left to professional non-lawyers to manage (in some cases, under the supervision of a partner committee or oversight group), many of whom will do a better job than any number of untrained partner-managers.

Leaving something to a non-lawyer does not mean that it is not important; rather it means that the firm in question recognises that non-lawyer professionals are often better equipped to deal with the relevant issue and can do so without having to be constantly watched over by one or more partners.

That brings me to my second question - when is a good time to take on a management role in a law firm?

In light of what I’ve said above, the (not entirely) facetious answer would be 'never'! However, accepting that not all of our leading law firms are going to change course overnight and will have a continuing need for partners to fill management roles, I think one must question the wisdom of allowing or encouraging relatively young and still potentially highly-productive partners to move away from fee-earning and client-facing positions to adopt what are essentially inwardly-focused, non-fee earning jobs.

One need only look at the 'Fifty over 50' piece in this month’s Legal Business to see a small cross-section of the array of senior talent lost to the profession, many of whom have found themselves unable or unwilling to find a way back to practice after filling senior management positions. This is an avoidable tragedy, exacerbated by pushing lawyers into management positions too early in their careers.

That is not the only factor, of course - the rigid and inflexible career structures and remuneration systems of many UK firms also make re-entry very difficult - but it is a significant contributory factor to the talent drain.

When I was asked to take on my first management role at Allen & Overy, two wiser and older colleagues counselled me not to do so. Whilst I do not regret any of the experiences I gained in management, I am certain that I would give the same advice to anyone in the same position today.

And to all partners in over-managed firms, I would say: guys, there is another way.