Surprisingly few lawyers have taken on non-executive roles for outside companies but that looks set to change. Kate Hanley talks to some who have and explores the key issues involved


According to headhunter Ian Harvey of Exec-Appointments, ‘the sort of people our corporate clients tend to look for at the moment have commercial experience, have been in an executive role themselves, or have business understanding or perhaps knowledge of a specific function that the company needs to improve upon’.



With that in mind, experienced commercial lawyers with a track record in management, such as managing or senior partner or on the partnership board, tick all the right boxes to become non-executive directors themselves at outside companies. Surprisingly, there are relatively few.



US dual-qualified lawyer Stephanie Liston, senior corporate counsel at regional firm Howes Percival, was appointed non-executive director of Ofcom in 2005. ‘On the whole, it’s pretty non-traditional for lawyers to join company boards in this country, while it is well tracked in the US,’ she confirms.



The main reasons are conflict of interests and issues over professional indemnity insurance. While a number of former City managing or senior partners have moved on to non-executive director roles as a second career after leaving the law, it is not so easy for those still in practice; they face the dilemma of their firm having to withdraw legal services to a company where a partner sits as director. And what’s the point of being in bed with a client if there is no likelihood of an instruction? At the very least, the lawyer-director would have to recuse himself from any decisions impacting upon their firm.



Prior to moving to Howes Percival last year, Ms Liston was a partner and co-head of European communications and e-commerce at US firm Wilmer Cutler Pickering Hale & Dorr. ‘[Potentially] I have huge conflicts working at Ofcom. I cannot act for any regulated businesses, which was the bulk of my client base at Wilmer and what led me to move in a different direction.’



It’s a double-edged sword: a lawyer is most likely to be headhunted for a directorship because of in-depth experience of a particular sector, but this is also his/her client base.



‘I understand the business and guts of telecoms,’ explains Ms Liston. ‘It’s not about whether you are a lawyer or an accountant, but who you are as a person and what you can contribute.’



Despite the obvious pitfalls, lawyers do undertake non-executive directorships while still in legal practice.



In May, David Morgan, head of residential property at Midlands firm Higgs & Sons, was appointed non-executive chairman of the Tipton & Coseley Building Society. He has already served over six years as a non-executive director there.



Others include Maurice Watkins, senior partner at north-west firm Brabners Chaffe Street, who is well-known for his work for Manchester United, where he is also non-executive director.



And Law Society President Fiona Woolf is a non-executive director at Three Valleys Water while retaining her position as consultant at City firm CMS Cameron McKenna.



She reveals: ‘I’m detecting a trend in the market that says, “actually, we need more lawyers as non-executive directors, particularly solicitors, because they have the broader skills base”.’



Both the legal and regulatory jungle in which companies need to operate these days are increasingly difficult. What company boards really need is an independent second opinion.’



According to Ms Woolf, lawyers have plenty of added value to bring to the table: as well as legal advisers, they sit comfortably in the roles of compliance and risk management, with excellent analytical skills. ‘Water is heavily regulated with a great deal of environmental issues. It is an area where lawyers have a lot to add in understanding the complexities of the regulatory risks that arise.’



As is common practice when filling non-executive directorships, Ms Woolf was headhunted for the position at Three Valleys. The company specifically sought a lawyer for the role and finished up employing two, the other being Baroness Peta Buscombe, shadow minister in the Lords for education and skills.



‘She was appointed for her strong ability to scrutinise statute law, and I brought skills in economic regulation,’ explains Ms Woolf, whose area of practice has been energy and projects.



There are some who argue that lawyers are best kept as legal advisers and away from the boardroom. Mr Harvey confirms that his recruitment consultancy has a number of lawyers on the database for non-executive directorships, but he cannot point to a job recently that sought a lawyer.



‘What makes a good non-executive director is not just knowledge, but the application of that knowledge and what you can bring to the table, including your personal attributes. One might argue that the lawyer’s role is to advise, not to make decisions about the advice.’



It is something that Stephanie Liston has also noted: ‘There is definitely a prejudice out there that lawyers are decision creators, not decision makers.’



With the legal profession undergoing such radical change in the coming years, the door may well widen for lawyers to juggle private practice with outside business management. With corporate governance a key issue for companies and the ever-expanding regulatory demands from Brussels, who would not want a lawyer on the board?



‘I suspect if we had this conversation in 12 months time, I'd have far more answers to give on the role of lawyers as non-executive directors,’ says Mr Harvey. Meanwhile, he is off to a conference in a fortnight’s time. The subject? ‘Do lawyers make good non-executive directors?’