Years ago one of my very favorite Managing Partners said to me, “We’ll know BigLaw is mature as an industry when a firm in need of a new Managing Partner does what every Fortune 500 company has done at one time or another—runs up I-95 to Fairfield, Connecticut, and steals somebody out of GE.”
For the record, we’re not there yet.
But his core insight has, with time, only gathered greater punch and urgency. (The observation I opened with took place well before the Great Reset.)
What I want to discuss in this series isn’t grabbing your next Managing Partner from the ranks of the Jack Welch/Jeff Immelt Graduate School of Intense Management Immersion, but rather treating your C-Suite with the level of respect it deserves—and recruiting and cultivating talent commensurate with the sophistication of your firm’s organizational footprint. (I use the term “C-suite” loosely, but it certainly includes any and all of your firm’s: CFO, CMO, CIO, CHRO, etc., as well as all other non-ministerial business side leaders of your firm.)
There are two sides to this coin, and they are as inextricably related as are heads and tails of that coin:
- Is there a rebuttable presumption that the folks in your C-suite should be lawyers?
- If they’re not lawyers, is their competence prima facie suspect?
I will argue that if your firm holds one or both of these views, you aren’t fundamentally serious about managing your business professionally—and I will have no sympathy for you if your mismanagement has consequences.
A prefatory remark: McKinsey (on whom we will rely in this series) estimates the managerial complexity quotient of a high-end professional services firm to be on the order of 5X that of a conventional retail, transportation, manufacturing, or construction firm. In other words, managing a sophisticated law firm with (say) $300-million in annual revenue is as challenging as managing a “something else” firm with $1.5-billion in annual revenue. We can debate—although we won’t—whether it’s 3X, 5X, or 7X, but it’s clearly >1X.
The problem is that virtually no firm I know is taking this seriously—which means acting on it. The problem is very simple: We do not treat our businesses in a business-like fashion. Shall I specify the bill of particulars?:
- The vast majority of lawyers, in their heart of hearts, have little or no respect for non-lawyers. A substantial minority make no bones about expressing this.
- Lawyers believe they could do anybody else’s job, probably better than that person’s doing it right now truth be told, whereas nobody else could possibly do their job.
- In far too many firms, the degree of respect and trust given to Managing Partners, the Executive Committee, and even office managing partners and practice group leaders, is inversely proportional to how much time those people spend actively managing as opposed to practicing law. In other words, the more cavalier those firm leaders seem to be about their managerial roles (we’re describing actual behavior here, and not admissions against interest except in the most egregious cases), the better the rank and file seem to like it.
- The apotheosis of this attitude—when, as the Washington DC gag has it, someone committed the gaffe of inadvertently telling the truth—was in 2007 when Mort Pierce was running Dewey Ballantine while reportedly billing 3,000 hours/year, and he delivered the immortal statement to The Wall Street Journal: “Management is not my passion.” We now know how that turned out for the firm. And, not so incidentally, do any of you doubt that any Fortune 500 CEO who said that would be frog-marched out of the building as fast as the quote hit the ether—and richly deservedly so?
- A shockingly large proportion of lawyers consciously and avowedly disdain “business” as unworthy of their attention, as evidenced by the tiresome but seemingly evergreen debate over whether BigLaw is “an industry or a profession.” (News flash: It’s both.)
- Finally, lawyers display a strikingly unattractive holier-than-Thou attitude towards even the most dedicated, experienced, and talented of professionals on the “business side” of their own firms.
Given these attitudes going in, you can diagram what’s going to happen.
Bruce,
What you describe here has elements of two common problems on other areas: 1) succession in new companies; 2) administration of university departments. The unified vision and commitment to initial intellectual framework of the founders of an enterprise feed a contention that no other set of qualifications, even well after the initial founding, is realistic. Academic departments are infamous for a belief that the Chair should leave everyone else alone, and woe be to the Chair who is thought to be intellectually second-rate or a “careerist”.
The dysfunction that comes from both examples is legendary. What is common to both, and also to your proposition, is that the people who are supposed to be members of a community at a decision-making level act is if they do not understand that the life of their community depends on the continued functioning of the economic circulatory system. That is not the only sub-system that is important, and no one thinks that it is. But cash flow, backed ultimately by profits is essential to the continued existence of the functioning entity.
the sort of innovation required to change law firms can come from the top as well. Look at the example of Peter Kalis at K&L Gates. He released his firm financials and rightfully challenged the authenticity of the AmLaw 100. He believes in organic growth – not Swiss Verein merger mania. He has orchestrated mergers..yes. In key international markets. He’s one law firm managing partner to emulate – and I believe change can and should come from the top as well as other ranks within a law firm.