MANAGING A LAW FIRM CAN HAVE ITS DIFFICULTIES WITH PARTNERS ALL HAVING THEIR OWN AGENDAS, DISCOVERS JESSICA SMERINWith its associations with the corporate post of managing director, the title of managing partner has a glamorous ring.

However, the reality is that most lawyers do not want the job.

In large firms, the full-time nature of the post means a total loss of client base and a consequent need to re-establish a practice from scratch once a term as managing partner comes to an end.

In small firms, where the managing partner role is combined with fee-earning, the job often appears to be an administrative headache that should be avoided at all costs.Unlike the role of senior partner, becoming managing partner means switching into an operational mode which is far removed from that learnt through years of fee-earning.

The title of senior partner is usually awarded automatically to the longest-serving partner, with the largest equity stake in the firm.

The senior partner enjoys the prestige of a pastoral role in the firm -- in addition to chairing meetings and holding the ultimate decision-making veto -- and an ambassadorial role in the business community.Becoming managing partner involves a far greater culture shift.

Although the younger generation of partners are increasingly interested in management issues, lawyers have traditionally undervalued the skill of running a practice.

Angus Andrew is the senior and managing partner of seven-partner London firm Osbornes, and is the immediate past chair of the Law Society's law management section.

He says: 'Management is undervalued in the profession.

The normal reaction of partners is that management is nothing more than administration.

My own partners rejected the proposal that I should do the MBA in legal practice at Nottingham Law School.'Some managin g partners, like the charismatic Leslie Perrin at top Bristol firm Osborne Clarke, with 60 partners, become passionate about their management role and have little interest in returning to fee-earning.

The firm also uses Mr Perrin, who famously trod the boards, appearing in the film The Wicker Man, before turning to law, as one of its major marketing tools.

However, for many managing partners in commercial firms, loss of their practice is a real concern.

Nicolas Jarrett-Kerr has been the chief executive of leading 66-partner west country firm Bevan Ashford for six years.

His term is coming up for renewal and he has not decided whether to stay on as managing partner.

He says: 'I've retained practically none of my client base.

It's a big worry for people taking on the role of managing partner, how they're going to get back into fee-earning.

My firm is committed to me having a period of retraining and re-establishment when I go back to fee-earning, but some managing partners become consultants rather than return to fee-earning.

It's easier if you're in a position where you can do the job part-time.'In small firms, managing partners usually continue fee-earning, but this means that they are constantly torn between client matters and practice management issues.

In very small firms, a single lawyer is often both senior and managing partner.

This can give rise to conflicts of interest; for example when the lawyer is chairing a partner meeting as senior partner, and attempting to persuade the partnership to invest heavily in IT, as managing partner.

However, the part-time role is made easier by the fact that in small firms there is a large amount of contact between partners, so there is no need for the managing partner to devote much time to achieving a strategic consensus.While large firms tend to have formal and quasi-corporate management structures, small firms tailor make their management structures.

When the senior partner of leading 14-partner north London legal aid firm Hodge Jones & Allen, Henry Hodge, left the firm, the partners decided not to appoint a new senior partner.

The then managing partner, Patrick Allen, decided to implement a new management structure.

He recruited non-fee-earners from a secretarial or management background to run the firm's five departments, taking the administrative burden off the partners who head the departments.

Mr Allen says: 'Partners' main skill is fee-earning.

They have no training in management and such training is not easy.'Another firm which has spread its management burden is 14-partner London practice Fox Williams.

The firm does not have a managing partner, and senior partner Ronnie Fox delegates management tasks to the finance partner, the personnel partner, the practice development partner, the library partner and so on.

Mr Fox, who is an expert in partnership and chairs the Association of Partnership Practitioners, says: 'We find this flattish management structure works very well.

My role is to make sure we're all heading in the right direction and to do the firm's standard bearing in the outside world.'But a management structure such as Fox Williams' did not suit Osbornes at all.

Mr Andrews says: 'We've tried parceling out portfolios, but it has never really worked, because if partners are trying to mix client work with management, the management side always goes by the board.'Many firms have managing partners whose role is largely strategic, with the firm's day-to-day management being handled by a non-fee-earner.

Andrea Lambey Shaw, the general manager of four-partner niche sport s law firm Townleys in London, says: 'A non-lawyer manager can free a managing partner for fee-earning.

They can also provide continuity if the managing partner is changing every three years.'However, most firms believe that their senior manager should be a solicitor.

The managing partner needs to command the respect of the entire partnership, and non-lawyers from, for example, a finance background, experience difficulties in persuading the partnership that they appreciate the issues at stake.

Even solicitor managing partners encounter problems, such as a lack of respect if they have not previously been one of the firm's highest fee-earners.Managing peers and co-owners of the firm requires a great deal of tact.

Mr Jarrett-Kerr says: 'What separates a professional services firm from an industrial concern is that because you have partners, there's a feeling of common ownership.

You have to get the balance right between leading from the front and ensuring a consensus.'This is a balance which some managing partners are unable to achieve.

Many sacrifice strong leadership at the altar of not upsetting fellow partners, and therefore fail to drive through change.

Managing partners who want to be liked are often incapable of making unpopular decisions, such as closing down an unprofitable department.

Mr Fox stresses: 'You must always put the interests of the firm as a whole before the interest of any one partner.

You need to ensure that the policies which you are implementing are always in accordance with the firm's overall strategy.'Picking the right managing partner is crucial to a firm's success.

Large firms usually have formal elections and fixed terms for managing partner.

However, it is widely believed that these often do not produce the best results.

The politicking in large organisations can sometimes result in a relative unknown from a far-flung office being elected.

In smaller firms, where fewer people want to be managing partner, those who put themselves forward are usually the ones who are keen to change things, and are elected by default.

Marketing consultant Kim Tasso, who works with the managing partners of a wide range of firms, says: 'When they are self-selecting, it usually works very well.'Professor Sally Woodward, who teaches many managing partners in her role as principal tutor on the Nottingham MBA, notes some trends in the characteristics of her star pupils.

She has this advice for partners looking to select a leader: 'Firstly, they must have a real interest in and understanding of the process of management.

How things are done matters as much, if not more, as doing the right thing.

Many managing partners have brilliant ideas about what to do, but face problems in getting people on their side by involving them and collecting sufficient evidence.'Secondly, they need a genuine interest in people.

Sometimes the very best lawyers, certainly those who become well known because of their technical expertise, are not necessarily terribly interested in people.

They get appointed because of their huge credibility, but then find they have massive problems in taking a pastoral interest in people as well as trying to be a manager.'Thirdly, they must have a willingness to be accountable and to make others accountable.

The idea of management clashes with the autonomy of the professional partner.

In order to build autonomy at the same time as developing accountability, the managing partner needs to lead from the front, and to set him or herself challenging objectives.'Fourthly, they need a willingness to take credit and really good self-esteem.

This is not the same as being arrogant, but a quiet self-confidence is necessary.'The managing partner of Lovell White Durrant, Lesley MacDonagh, the first woman to manage a City giant, added a further quality to this list in a brief message.

She said: 'I'm going out for a break now, but I'd just like to say that the main quality you need as a managing partner is stamina.'THE GREAT DIVIDEHow lawyers and non-lawyers carve up the management work at Eversheds.The firm has 3,000 people working for it, more than half of them non-lawyers.Chairman: Keith James, lawyer who devotes his time to running the business.Managing partner: Andrew Latchmore, lawyer-turned-manager.Director of Business Development and Marketing: Simon Slater, non-lawyer.Director of Finance: Gill Saunders, non-lawyer.Director of Operations: Ian Jollie, lawyer.International Director: Victor Semmens, lawyer, shares time between corporate practice and management.Director of Quality: John Northam, lawyer.Director of Professional Development Training: Alistair Roberts, non-lawyer.Director of Administration: Peter Gore, non-lawyer and right-hand man to Keith James.In addition, the firm has around 100 non-lawyer fee-earners, providing consultancy work for clients.PARTNERSHIPS ARE A CROSS-SECTION OF PEOPLE OWNING A BUSINESS.

LINDA TSANG ANALYSES THE DIFFICULTIES INVOLVEDThe larger law firms certainly seem to believe size matters as they follow their corporate clients by expanding globally.

Some, such as Clifford Chance, Linklaters & Alliance and Baker & McKenzie, are even aping the management style of those clients by appointing global management boards, chairmen and chief executives.But partnerships by their nature are a broad cross-section of individuals running and owning the business, and how they manage the convergent and divergent interests is becoming more problematic.It is only a little more than 30 years since the Companies Act 1967 allowed solicitors' partnerships to number more than 20.

In 1991, that was extended by statutory instrument to cover multinational partnerships.

Law firms now have hundreds of partners, and the days of regular meetings with all the partners attending to discuss their vested interests are quickly disappearing.David Maister, legal management guru, divides partners into 'binders, minders, finders, and grinders', who each have their own personal style and goals, and by their nature are very individual.

But those categories are not necessarily clear-cut.

According to Tony Sacker, who is head of partnership at City law firm Kingsley Napley and chairman of the City of London Law Society: 'There are as many different descriptions of roles as there are people doing the job.

In many firms, the senior partner is similar to an executive chairman, and may do the managing partner job as well; in some firms the senior partner is a pure figurehead, acts like an ambassador for the firm, and may also chair the annual partners' meetings -- essentially the "binder" as described by David Maister.

That job is also to soothe ruffled feathers and be the diplomat within the partnership, while the managing partner looks after the business side of the organisation to make sure it works effectively and toward its financial objectives.'One firm which has set up its own unique management structure is London media firm Olswang, which has a chairman, a senior partner, a chief executive and a chief operating officer.

Senior partner Mark Devereux and chief executive Jonathan Goldstein also still carry out fee-ea rning work.Mr Devereux explains that the structure is peculiar to that firm's practice: 'The founder partner Simon Olswang as chairman deals with the future and long-term strategy, the chief executive is charged with execution, and the senior partner deals with the people in the partnership and the fabric of the firm.

It is very clear what each of us does.

But for any partnership, the expression that managing it is like herding cats is very true.

It is a delicate balance between adopting a more corporate style and doing it in a way which commands confidence so that decisions are carried and supported -- and there are no surprises, that is the real challenge.'John Pike, chief executive of City firm Stephenson Harwood, argues that is not just a matter of title.

'Senior partner and the current in-vogue role of chief executive will survive for a while, but I don't give a fig about titles.

It is the functions that are important -- an all-singing, all-dancing executive chairman has a much wider role and authority than a managing partner.'He adds that what partners are looking for in a chief executive is leadership, and that is a full-time role: 'There is a confusion between management and administration.

Partners naturally resist management and change -- they want sensible and commercial, not despotic leadership, essentially to take the firm and brand forward.

The partners have to give up some of their authority to a chief executive -- and giving up authority goes against the partnership ethos -- and in return you have to have openness of management.'Mr Sacker says that how a firm is run is a cultural, rather than a legal, matter.

He says: 'If you do want to run the firm in a corporate style, you do not have to incorporate.'Most management decisions can be covered in the partnership agreement, and more commonly on the international and national scene, are usually agreed in principle in the merger agreements.On paper, the benefits of partnership are that the firm works as a team and the partners share what is seen as collegiality, and common interests and goals as owners of that business.

But they are also very large and very profitable businesses, and the consensus is that they have to be run more like companies.

There are a series of departments like divisions in a corporation, and chief executives in law firms are being judged on their results as much as in the corporate world -- all while retaining what may be seen as the anachronistic base of partnership.What is both a benefit and a burden in a partnership is collective responsibility -- where the individual partners can become bankrupt if there is a major negligence claim made against the firm.But few firms have taken the step of incorporating to avoid that burden, and with the Limited Liability Bill currently going through Parliament, they may not need to.

One of the advantages of incorporation is limited liability.

Under the Bill, the partners -- except a negligent partner -- will be able to limit their individual liability in their external relationships with clients.The primary driver for any firm to convert to a limited liability partnership (LLP) is the growing concern about negligence claims.

Richard Linsell, head of the professions group at City firm Rowe & Maw says: 'There are two strands to management -- how you want to run the business and how to manage the risk, and LLPs are all about managing risk.'Most predict that many accountancy firms will go down that route because of the potential negligence claims which arise from auditing work and the liability to shareholders is that much higher.

But for any firm, legal or accounting, it will not be a straightforward process to convert to limited liability; there will have to be transfers of the property leases, equipment hiring contracts, and utility and staff contracts -- all the documentation will have to be revised.Some firms might take the view that, allied with the obligation to publish audited figures annually, there are more cons than pros in the switch to limited liability.

As UK LLPs will, except in terms of taxation, be treated like companies, there has been concern that they will not enjoy the perceived benefits of a partnership culture.

But another major factor in the decision to switch will be the level of the firm's professional indemnity premiums -- if they start to escalate, then limiting that liability will be much more desirable.Mr Linsell points out that, in the US, the laws are much less restrictive than the Bill which is about to become law in the UK.

Some firms may look enviously at Clifford Chance -- as a US LLP following its merger with Rogers & Wells, it does not have to file audited accounts.

But the question of whether to become an LLP may not ultimately be driven by internal concerns and concerns about retaining a hallowed partnership ethos, as Mr Linsell explains: 'The issue about becoming an LLP or even incorporating, is not the liability or simple disclosure as much as the ability of your competitors to look at your business and see how it is performing.'NON-LAWYERS ARE MAKING FURTHER INROADS TO LAW FIRMS, FROM HUMAN RESOURCES TO MANAGEMENT.

BIBI BERKI REPORTSThe Solicitors' Practice Rules dictate that non-solicitors cannot become partners and that firms should be properly managed and supervised.

And that, when it comes to who you appoint to run your practice, is pretty much that.Law firms do not like the Law Society interfering with how they manage their businesses, and the Society is not all that keen on poking its nose in anyhow.

The result is that styles of management have evolved and varied from firm to firm, and the use of non-lawyers in an executive role has become a matter of taste and preference.In the case of the larger firms, the non-lawyer business expert has changed the face of legal practice altogether.

Many act in a 'civil servant' capacity, advising the partners on business decisions and strategy.

Some earn fees for their employers as consultants.

Some firms have even gone to the lengths of appointing non-lawyer chief executives, entrusting them with tasks once only the remit of a managing partner.Gone are the days of a single non-lawyer practice manager, ordering the paper clips in bulk.

Today, firms have whole layers of managers who have never read a law book but who are responsible for the firm's profitability and competitiveness.The Law Society may not interfere with firms' business plans, but it does not mince its words over multi-disciplinary partnerships (MDPs).

Firms cannot make their non-lawyer whizzkids into partners -- at least not for the time being.

Alison Crawley, the Society's head of professional ethics, says firms are staying on the right side of the law despite the increase in non-solicitor roles.

That is not to say that the Society is averse to MDPs as a concept, and it is simply a matter of time before they are allowed.So just how influential can a non-lawyer be in a law firm? It seems to depend on how much influence that firm wants him or her to have.

Alun Lamerton has been chief executive at Manches & Co for the past ten years, after a 26-year career in banking with Lloyds Bank.Obviously, non-lawyers cannot advise on legal matters, he says, 'and non-lawyers don't wish to.

My role is to ensure that the practice runs itself as efficiently as possible in a commercial sense'.

He also sees his job as having to 'persuade the partnership of any policies that I think are right'.He shares with many other non-lawyers in high-ranking roles a belief that lawyers should concentrate on what they do best and leave business to the commercially minded.'I can't understand it myself, but there is still a state of feeling in law that you need to be a lawyer to run a law practice, which I don't particularly believe in,' Mr Lamerton says.

'Ten years ago, I thought law was a business -- but not many lawyers agreed with that.

I don't think many disagree with that now.'Manches, which has offices in London and Oxford, has grown four-fold in the ten years since Mr Lamerton's arrival, although he does not accept sole responsibility for its growth.

Overall business decisions are still in the hands of the partnership, which is headed by senior partner Alasdair Simpson.While it is still rare to find a firm with a non-lawyer chief executive -- indeed, the most high-profile, Alan Morris, left his post at Simmons & Simmons last year after an eventful spell in charge -- other senior management positions are being filled ably by a variety of consultants and directors.Marketing -- the '80s wunder-profession which is still going strong -- has seen its children rise to exalted positions in the biggest City practices.

Jeremy Knott, head of marketing at Clifford Chance for the past 18 months, says non-lawyers are increasingly recruitedinto key roles in IT, human resources and finance.

He admits that some partners are very good business managers, but that some areas of business are better handled by specialists.At Clifford Chance, the chief executive, Michael Bray, is a lawyer and runs the show.

He is joined by a chief operating officer, a chief executive officer and the chairman -- all lawyers who now concentrate on management.Mr Knott says the role of the non-lawyer in law firms could be even more hands-on than it is now.

He says: 'We've got to get closer to business and not be in ivory towers.

We need to get much closer to clients.'Some non-lawyers are already enjoying a close business relationship with clients.

Eversheds' marketing director Simon Slater describes his firm as a 'virtual MDP'.

He explains: 'We have a hundred fee-earning people who are not lawyers.

They are accountants or tax advisers, human resources consultants or management consultants.

We only invest in such people if what they can bring to our clients is ancillary and complementary to providing legal advice.'At Eversheds, the numerous non-lawyers who have a management role are part of an executive which works alongside the all-partner board.

Lawyers recognise that they were not trained to run businesses, he says: 'They recognise that this is a business just like any other.'At Freshfields, the hierarchy is lawyer-heavy with a touch of non-lawyer.

Anthony Salz, Alan Peck and Ian Terry fill the roles of senior partner, chief executive and managing partner respectively.

Alongside them is non-lawyer Kirk Stephenson, the chief operating officer, who has a financial background.Mr Stephenson says: 'There are no clear demarcation lines.

We act as a team.

I am responsible for things that help the firm operate -- finance, human resources, infrastructure -- all of the non-fee-earning functions.

Increasingly, you're finding someone like me in a number of firms who has possibly come from outside and is responsible for the support functions.'Non-lawyers in law firms are nothing new, but they now operate in much higher spheres of influence.

In line with all other sectors, IT is predicted to have an increasingly higher profile.

Law firms' IT specialists will find themselves elevated to more influential positions as their employers expand into new technology.Other support staff are also expected to have newly significant positions, with secretaries playing a more client-orientated role and contributing to the commercial success of the business.In the end, any non-lawyer who enters the world of the law firm at a senior level will have to grapple with the concept of partnership and its concomitant exclusivity.

Partners make decisions which may not be commercially based as they have no shareholders to answer to.Lawyers also suffer, as one non-lawyer in a top-ten firm explains, from the feeling of 'terminal uniqueness'.

And it may be this that ends up being the toughest bar against business advisers rising any higher in some practices.