Forward thinking

We have all read the articles and comments regarding the inability of many firms to manage their own practice, let alone deal with the changes currently sweeping through the profession. Many partners and owners have never been trained in management skills and are finding it difficult to evolve a strategy for their future.

A surprising number of firms are embracing change by using the skills of a non-executive partner-director to help them formulate strategy and implement change within their organisation.

Recognising their own strengths and weaknesses will result in a realisation for many partners that they do not have the necessary skills to develop a change management strategy within their practices. We have seen a steady growth in the number of non-lawyer chief executive positions within larger and mid-sized practices, where external management skills can make a significant difference.

These ‘management specialists’ come from a variety of backgrounds and will command a salary commensurate with their experience – in other words, you get what you pay for. In many cases, they make a significant improvement in the bottom line, therefore justifying their costs.

However, many firms are reluctant to make the commitment to investing in such a position and either try to do it themselves or employ a halfway solution in a practice manager who has little or no authority or responsibility.

If partners do not accept that change is inevitable, then they are not ready for a CEO. A number have tried it and said it didn’t work for them – was that because once the CEO told the partners some unpalatable news, such as a reduction in drawings in line with performance, the CEO role suddenly became redundant?

The use of a non-executive is both a cost-effective and extremely productive alternative; if resources are tight, utilising the experience, knowledge, and skills of a non-executive can be the difference between thriving and just surviving. Someone who is prepared to challenge the partners and ensure the strategic plan is implemented will have a dramatic impact for those practices that have the fundamental desire to embrace change.

Under pressure

It could well be that the current partnership is under some pressure, seeing a reduction in turnover and profit per equity partner (PEP), but fundamentally they wish to remain as a partnership, providing world-class client service at a premium rate to genuine clients. It has been argued that continually reviewing the client base and deliberately removing the bottom ten per cent of their clients will make firms more profitable.

I have only used the word ‘client’ in the above scenario, and it is essential that we do not confuse the client with the customer. Clients value your service and will pay a premium for your time, whereas customers are buying on price – you simply cannot make money by providing client-led services to customers.

Solicitors who enjoy practising law have rarely been trained in management skills, and with the current sweeping changes within the profession it is more important than ever for ideas and management skills to be brought into the practice at an affordable cost.

Alternative business structures, referral fee bans, and the changes to legal aid are just some of the outside influences that are technically out of your control but will have a huge impact on the future of your firm if not dealt with correctly.

If a firm has dealt with the recession properly, then it will have cut costs, made the necessary, although painful, redundancies, and reduced drawings accordingly. The luxury of having an external chief executive, probably a non-lawyer, to run the practice appeals to many practitioners, but the cost of employing a full-time CEO is prohibitive in the current circumstances.

Hence the growth of the non-executive director-partner position within mid-sized and even smaller law firms: a non-executive will still allow you to run your organisation but will give you invaluable advice and guidance in all aspects of business and managing change.

The opportunity facing firms far outweighs the downside, on the condition that you are running your practice as a business. Bringing those business skills into your practice does not have to be expensive but should make an incredible difference. The strategy may well be to bring in a CEO role in a few years’ time, and many nonexecutives are seen as an interim arrangement towards that goal.

Whether you have a strategy for the future or are looking for guidance, consider joining the ranks of the ever-growing number of legal practices that are embracing the opportunities and utilising the skills of a non-executive to build and enhance their practice. SJ

Viv Williams is CEO of 360 Legal Group

@360legal