“From most perspectives, there was no problem adjusting to the legal environment,” he recalls. “Because I had held a similar position as COO for A.T. Kearney, a billion-dollar management consulting firm, I was accustomed to dealing with highly compensated professionals in a service environment. Many issues were very similar.”
Yoshimura’s experience reflects a larger reality across the legal landscape: More law firms than ever are starting to realize they need professional management to leverage the legal expertise of their attorneys. Larger firms that have become accustomed to the value of professional managers are expanding their duties into areas such as pricing, client value, diversity and project management. Smaller firms that have long relied on management by senior partners are starting to hire professional chief executive officers (CEO) and COOs for the first time. And firms of all sizes are starting to realize that expertise from outside the legal environment can bring fresh ideas to the development of efficient and profitable operations.
BUSINESS FIRST
Whatever the firm size, the motivation is the same — an imperative to put organizations on a solid business footing. Pressure to do so is coming from the marketplace. “There has always been a bubbling interest in professional law firm management,” says Jared D. Correia, a former practicing attorney who is now CEO of Red Cave Law Firm Consulting. “But now that competing firms are getting more innovative and marketing more effectively, the interest is much greater.”
Contributing to the trend, too, is a global pandemic that has forced lawyers to think about their operations in a different way. “In the past, lawyers were running old-school analog businesses, doing everything in person,” says Correia. “Now that they aren’t able to connect with their clients and their staff in the old way, they are having to rethink everything. They are starting to understand that they need to be better business owners.”
The move to professionalize business operations carries an important benefit: the liberation of attorneys from the need to take time away from their primary duties to devote to activities outside their native expertise.
“The scarcity of suitable candidates opens up enviable opportunities for ALA members, many of whom already have the experience in dealing with the vagaries of law firms.”
“Firms have realized that they can’t continue to operate with a split focus in the people who are supposed be building the business forward,” says Bill Josten, Enterprise Content Manager at Thomson Reuters Institute. “We are seeing a pretty strong trend away from having a library partner, a marketing partner, a finance partner and so on. Lawyers who take on such responsibilities run into inevitable tension. Is their first priority their managerial duties or performing as a partner?”
The reality, says Josten, is that the attorney’s first priority will always be what they are paid to do — and that is to participate as members of the legal team. “When the partner side wins, the management side is on the outs.”
Another advantage to professional management is the ability to make business decisions untarnished by personal considerations. Under the old split-role system, a business manager who was also a longtime partner in the firm would often shy away from difficult but necessary conversations (such as a termination or a de-equitization) with attorneys regarded as a friend. Yoshimura puts it this way: “An objective third party can look at things from a business perspective and engage in a discussion that is clearer and less emotional.”
CHALLENGES ABOUND
All this is not to say that the legal world lacks idiosyncratic challenges for the recruited business manager. “From a business perspective, there is the inability to work with clients that have legal conflicting situations,” says Yoshimura. “That is relatively unique, since in most industries you can typically work for direct competitors without major issues.”
“Firms of all sizes are starting to realize that expertise from outside the legal environment can bring fresh ideas to the development of efficient and profitable operations.”
“The second big difference is that in most other professional service industries, partners have a much higher sense of company ownership,” says Yoshimura. “I don’t mean from a financial perspective, but from a feeling of responsibility for spending a lot of time improving the firm, developing the people and contributing in ways other than doing client work. Many law firm partners view their firm as a work platform and as a source of resources for their success.”
Both of those unique characteristics can throw roadblocks in the way of proposed initiatives intended to expand business operations or strengthen internal operations. So can the need to obtain consensus on key decisions. “At any other business, when a good idea bubbles up, you can say, ‘That’s a good idea. Let’s do it,’” says Josten. “But at a law firm you have to say, ‘That’s a good idea. Let’s put it to a partnership vote.’”
The need for decision-by-committee creates inherent tensions for any professional manager trying to push new ideas. Matters are not helped by the typical lawyer’s conservative managerial mindset — one that can resist initiatives that involve risk. Failed initiatives can also bring unpleasant repercussions. “Research shows that lawyers are less resilient,” says Josten. “Things don’t necessarily roll off their backs all that readily. Mistakes tend to rattle them.”
“In the past, lawyers were running old-school analog businesses, doing everything in person. Now that they aren’t able to connect with their clients and their staff in the old way, they are having to rethink everything.”
All these characteristics make an incoming leader’s job more challenging. “Many managers don’t want to work in a law firm environment because older partners tend to be set in their ways and resistant to change,” says Correia. Demographics, though, are changing in the manager’s favor. “A lot of older law firm partners are leaving because of the pandemic. Younger attorneys are much more open to new ideas and also to outsourcing, which is tremendously helpful.”
SCARCE CANDIDATES
In their efforts to up their management game, law firms face a problem not unlike that of other industries: a scarcity of talent with the desired expertise.
“Law firms want highly experienced people, so they’ll aim to bring in a [certified public accountant] to be a [chief financial officer] or an MBA to be a COO,” says Josten. “But then they also want prior experience in legal, and that means there is a very shallow talent pool available.” Many people who have done this managerial work have been in their roles for a really long time and are now in their late 60s or 70s. A lot of them retired when the pandemic hit and there aren’t a lot of replacements waiting in the wings.
The scarcity of suitable candidates opens up enviable opportunities for ALA members, many of whom already have the experience in dealing with the vagaries of law firms. These skills will be in growing demand as the industry emerges from the pandemic economy to take on new work. With a view toward improving their salaries and job titles, talented administrators may want to participate in the same “Great Resignation” popular in other industries, where personnel at all levels are playing a profitable game of musical chairs.
The solution is to toss a wider net. “Law firms are getting pretty aggressive about hiring more managerial personnel who are not lawyers,” says Correia. This can be a good thing, he feels, as it can bring fresh air into an environment that is too often stultified. “In my opinion, legal experience should not necessarily be a prerequisite for a law firm that wants to operate more like a business. My preference would almost be to look outside the industry.”
