Law firms are recruiting non-lawyers for their management boards, which, as Kate Hanley explains, is to the benefit of both


Whether or not you are a viewer of BBC1’s ‘The Apprentice’, you cannot fail to have encountered the hype surrounding the show and its boardroom affray. It has made a reluctant TV star of Margaret Mountford, a former corporate partner at City firm Herbert Smith and Sir Alan Sugar’s ‘most trusted adviser’ in the series.



Off screen, Ms Mountford is a non-executive director of Amstrad plc, a natural progression following her many years’ service as legal adviser to the company. But while such directorships were once perceived as gongs to be awarded at the end of a career, or ‘jobs for the boys’ to be dished out on the putting green to merely rubber-stamp decisions of the board, such notions are, like the Amstrad computer, outdated.



Today, even law firms are realising the benefits of bringing skilled outsiders on to the board. Earlier this month, non-lawyer William Arthur, former director of professional practices at Barclays Bank, was recruited as a non-executive director by Kent firm Cripps Harries Hall. He is not there to make up the numbers at partnership meetings, or to roll out as trump card during pitches. Instead, his brief is comprehensive and demanding: to use his 30 years of top-end commercial experience to steer the firm through the challenges facing the legal profession today.



‘Law firms are getting bigger and bigger and are not small businesses anymore. The market place is changing rapidly and they need to apply the best business principles to everything they do,’ explains Mr Arthur.



‘Many firms are acknowledging that while they have exceptional professional skills, they don’t always have the full suite of business skills and experience to bring them to the front of the field.’



While firms have been employing non-lawyers in senior roles for years, such as directors of IT or human resources, the appointment of non-executive directors is a relatively new phenomenon.



Last year, City firm Lovells recruited two high-profile non-lawyers to its international executive, both senior figures in their respective worlds of accountancy and management consultancy. In March, national firm Hammonds hired Clive Williams, UK CEO of Capgemini, as a non-executive director; he joins non-executive chairman Crawford Gillies, a former management consultant. And Simmons & Simmons has had a non-executive director in Richard Stone, former deputy chairman of accountants PwC, since 2003.



‘Lawyers are pretty intelligent guys,’ notes Mr Stone. ‘They look at things in detail, dotting the i’s and crossing the t’s. But one of the things they find difficult is getting above the detail and looking at strategy. Having someone in the boardroom who is not a lawyer can help them look objectively at strategic needs.’



Essentially, non-executive directors are non-stakeholders in a company or organisation, and do not have day-to-day management responsibility, thereby rendering them independent of the executive board. In the post-Enron era, this independence has become crucial for corporate governance, so much so that the Higgs report of 2003 – commissioned to examine the role of non-executive directors – recommended that a company’s board should comprise at least 50% non-executive directors.



Whilst this is not relevant to law firm partnerships, there is a growing awareness that non-executives can bring far more to the table than satisfying corporate governance regulations.



‘We act as a benchmark for the way things are done in the wider commercial world, which law firms acting in the narrower legal world may not be aware of,’ says Mr Arthur.



A non-executive director can bring either a breadth of corporate management expertise – Richard Stone has been involved with over 100 companies in his career to date – or specialist knowledge.



Cardiff-based Capital Law recently recruited its second non-executive director in Debbie Jones, a human resources expert and vice-president at FTSE-250 company Inmarsat. Her brief is ‘to get our people to pedal harder’, says Capital Law’s senior partner, Christopher Nott.



Previously, the firm used a former PwC accountant and local entrepreneur as non-executive director to kick its financial systems into shape. Mr Nott explains: ‘I have always been a huge fan of this [non-executive directors]. I am a great believer that they add masses to the business.’



Non-executive directors also bring a network of contacts to an organisation, and act as a sounding board for ideas. There are many issues facing law firms in the coming years, such as corporate structure and how to attract and retain talent, particularly in light of the Legal Services Bill and proposal for alternative business structures, for which senior figures from other sectors will be invaluable in sharing past experience.



‘Large corporations have already gone through major change and have had to deal with all the issues now facing law firms, such as how to structure themselves and how to keep people on board,’ confirms Tony Williams, of legal management consultancy Jomati. ‘This is something that can be very useful, but it depends on firms being ready and willing to involve the non-executive rather than using them as a token. It is something that is often not used as well as it should.’



There are reasons why non-executive appointments have not been widely utilised by law firms. David Jensen, chairman and CEO of headhunters Brooklands Executives, explains: ‘Professional practices generally are like family businesses. The partners have a strong sense of ownership and it is a powerful sentiment. If an interloper comes in who has not developed within the organisation, you can anticipate a fair amount of reluctance to have them on board.’



He does, however, note a sea-change in attitude and a greater willingness in the legal sector to allow outsiders in. So too has Mr Stone: ‘In professional services terms, the legal world is slightly ahead of the field in grasping the nettle and having non-executive directors attend board meetings. From my experience, every law firm should consider having a non-executive director at such meetings.’



Headhunter Ian Harvey, business development manager of non-executive directors at Exec-Appointments, reveals there are a number of major law firms currently looking at appointing non-executive directors to improve the development of young partners – a sort of quasi-mentoring role.



But the message is clear: do not recruit a non-executive for the sake of it. ‘Lawyers do not have to have non-executive directors in order to tick boxes,’ says Mr Nott. ‘So anyone coming into the firm must want to be involved in your business and it must be clear where they can add value. If they are doing it because they need the money, then they are not for you.’



With pay in the corporate world ranging from £1,500 a day for a small to medium-sized company to several hundred thousand pounds a year plus expenses at a blue chip firm, the allure of directorships is obvious. But there are less material advantages too. At Cripps Harries Hall, Mr Arthur concedes: ‘I can bring my skills into an environment where they are eagerly received and that is extremely rewarding. And because I don’t spend all my time and skills in one place, there is flexibility and variety, which always enables me to bring a new perspective.’



Most non-executive directors hold several directorships concurrently. In the past, it is easy to see why the cross-fertilisation of directorships (‘you sit on my board, and I’ll sit on yours’), led to an ‘old boys’ network’ and little scrutiny as to a candidate’s suitability for the job. Today it is a different ball game. Roughly 85% of non-executive directors are recruited via headhunters, while ten to 15 years ago this was only 50%.



‘The selection process we go through is extremely rigorous,’ reveals Mr Jensen. ‘Candidates are all fairly high profile and many express amazement at the selection process because they are at such a high level and haven’t been properly interviewed in years.’



Mr Harvey adds: ‘I couldn’t say with my hand on my heart that every company has a transparent and exhaustive recruitment process for non-executive directors, but it is going that way.’



And finally, rather like Sir Alan Sugar and his new-found reality-TV fame, ‘the best non-executive directors are the ones who treat it as a second career’, says Mr Harvey.



‘They give it all the commitment necessary, and take time to understand the company and its business.’ Is their room for a strategy guru at your firm?



Kate Hanley is a freelance journalist