Howdy, partner

Managing partners are making way for professional chief executives as law firms call in the troubleshooters, writes Michael Gerrard

The role of chief executives in the legal profession has taken off over the past decade.

As law firms have grown in size and complexity, the traditional set-up of a managing partner taken away from fee earning to grapple with administration has become impracticable for many firms.

As Chris Bull, chief executive of Osborne Clark in Bristol, puts it: 'This is no longer a role that can be undertaken by a well-meaning amateur.' Instead, a growing number of firms have decided to bring in professional administrators - often from outside the legal world.

In recent weeks, City firm Reynolds Porter Chamberlain (RPC) has installed its first chief executive, while Stephenson Harwood has announced a 'strategy review' which will see more power being vested in the office of its top administrator.

The firm decided on this action following a series of setbacks including the recent announcement that DLA was taking over its five-partner, 18-assistant Madrid office (see [2002] Gazette, 17 October, 8).

Alongside a sizeable number of redundancies, the review has called for Stephenson Harwood's 13-member partnership council to be reduced in number and influence.

It is set to become non-executive in character, with power being centred on the firm's chief executive and chairman.

Chief executive John Pike acknowledges that economic downturn and poor prospects for 2003 have forced the firm into taking this radical step.

In a statement, he said: 'It is time to accelerate change and drive it deeper and faster though the organisation.'

Likewise, RPC is in 'change mode' with the appointment of Adrian Martin - formerly managing partner at accounting firm BDO Stoy Hayward - as its first chief executive.

Mr Martin has been in post only a month and is still learning about the business.

He says: 'I have not come with a specific agenda, but my first priority is to sit down with the firm's partnership executive and sort out some short-to-medium term objectives.' He will work closely with RPC's executive committee and its chairman Tim Brown, who believes an outsider can bring a fresh approach as another pair of eyes.

Mr Martin says: 'With somebody from outside the legal profession, you get someone with an individual and specific view of how matters can be run, whereas within a partnership itself you do not necessarily have an individual view which can challenge the thought processes.'

He adds that the firm decided to appoint a chief executive because of substantial growth in recent years, which has seen the partnership enlarged to 52 members, alongside greater staff numbers and a growing list of practice areas.

Nonetheless, most firms continue to put lawyers in the role, supported by specialist non-legal staff.

To confuse matters further, in some firms the title chief executive is given to a partner fulfilling the duties of a traditional managing partner.

There is no set pattern governing who chief executives are, their role and how much power is invested in them as opposed to the partnership they are working for.

A common criticism is that sometimes a firm may well decide to appoint a chief executive, but then surround that person with a lot of committees and sub-committees so that in effect they hold an empty title and decisions can never be made.

In practical terms, this role requires people who are multi-skilled - not only must they be good leaders, they also have to be financially literate, and ideally have some knowledge of marketing, technology and personnel matters.

Mr Bull says: 'Except in some of the very largest firms you are unlikely to find those with the required management experience and knowledge from within the partnership, so one has got to buy in the experience of people not simply steeped in the world of law.'

The administrators as often as not come from an accountancy background, such as Mr Bull and Adrian Martin.

Ric Martin (no relation), managing partner and chief executive of City firm Kennedys, says: 'At an accountancy firm, one is given a broad business training, due to the character of that profession.

This is not something that can always be said of lawyers.'

He has learned the ropes not only through many years' experience at law firms, but also at the administrative helm of blue-chip barristers' chambers Fountain Court, over which he presided for three years until 2000.

Taking their cue from law firms, several barristers' chambers have opted for the chief executive route.

Some have been successful appointments, though a number have foundered on the rocks of cultural differences.

Ric Martin admits it can be a difficult role, not least because of the age-old order of things in chambers.

He says: 'It can be a lonely position in that you are not one of the clerks and neither are you a member of chambers.'

Others have found life in chambers to be a suffocating experience.

As one insider put it: 'At least solicitors generally appreciate that we live in 2002 not 1902 - at the bar some are keen to cling on to Victorian values.'

This was the experience of one administrative recruit who arrived at a provincial chambers from a career in business to find a world where a master-servant relationship existed, with clerks addressing barristers as 'Sir' and the two sides not fraternising.

The administrator argues that it was almost impossible to introduce change into this most traditional of worlds.

He says: 'I came up against an immovable force: members who said they did not like change, or that change just amounted to a new computer system or modernising the infrastructure, such as things like the premises and payroll, but not changing themselves.'

Ric Martin's experience of both cultures puts him in a good position to judge the merits of acting as chief executive in two often quite different worlds.

Maybe unsurprisingly, he finds it easier to pull a solicitors' partnership together, where there is the one business entity with a shared interest in overall profits.

This can be contrasted to the situation at chambers, where effectively he was dealing with several one-man businesses each looking to their own profit and own interests, which often as not were conflicting.

Given the increasing size and complexity of law firms, which in many cases have evolved into multi-million pound businesses a world removed from the traditional dispenser of legal advice, the role of chief executive is likely to become an increasingly common feature.

But will there be any room for the ruthless CEO who can make or break careers at a whim? The consensus is that business acumen alone will not enable an incoming chief executive to prosper - chief executives generally recognise that a high degree of diplomacy is required, for in effect you are a hired hand, not the boss.

Chris Bull notes the need for a light touch.

He says: 'In a big corporate structure, a chief executive has a lot of power and their word seldom gets challenged, which is very different from a law firm where you spend most of your time influencing partners rather than telling them what to do.'

Unsurprisingly, all chief executives stress the vital need to engage and inform the partnership about decisions, noting that anyone foolish enough to fail to do so would be unlikely to last long.

Ric Martin says: 'The partners are keen to be in control - the last thing they want is someone coming in and telling them how to run their practice, which if they make a mess of it could destroy 20 years' worth of their work.' So go easy, JR - and watch out for those bullets.

Michael Gerrard is a freelance journalist