This article is by Janet Stanton, Partner, Adam Smith, Esq.:

“Non-lawyers.” This is the prevailing term for business professionals employed at law firms. Really? Let’s just start with the fact that it’s insulting to be defined by what you are not. (Thought experiment: How many “non-doctors” work at a hospital?)

Hard feelings aside, there are some hard-nosed reasons why firms should seek out, respect, engage with, listen to, and heed the counsel of high-quality business talent. We’ll start with those reasons, then address some of the expected pushbacks and, finally, provide some suggestions on how to make this happen.

First, a little background. It has been widely and accurately reported that Law Land is increasingly divided into the “haves” and “have nots” (or, more accurately, the “have less”); in every segment of the legal industry roughly 10% of firms are pulling ahead of their peers in terms of financial performance. Each year since the great recession, the chasm widens; the rich are getting richer. So, as diligent students of the industry, we asked ourselves “do these firms share common characteristics?” The short answer is, “yes” when compared to their less-successful brethren. The topline difference is that these strong performing firms are run in a more business-like manner, adopting and instituting approaches that have been SOP in Corporate Land for decades. In short, these firms are managed the same way clients manage their businesses.

What do we mean by “more business-like?” We’re talking about being more intentional, directed and strategic (as opposed to “opportunistic”). Developing a plan that is market-responsive and data-driven that includes goals (financial and otherwise), strategies and an action plan (with timing and responsibilities). Executing the plan with discipline; holding those responsible for elements of implementation accountable for their results. Regularly monitoring the plan’s progress and making mid-course corrections, as necessary. And (bottom line), recognizing performance in comp.

Callout1Other shared characteristics of these higher performing firms are decisive and visionary leadership and carving out a distinctive, compelling market position. And, last but far from least, the leading firms hire and heed sophisticated business professionals, starting with a savvy COO or Executive Director. But that is not enough. Firms need qualified expertise in marketing and business development, finance, recruitment and development, technology and operations.

The very simple rationale for this is – let the lawyers do what they do best, which is lawyering – and bring in similarly-credentialed professionals to lead and manage the business aspects of the firm. Seems to make sense.

I’m not quite sure why firms are so resistant or why this is such a difficult concept for many lawyers to grasp.
I have some thoughts on this.

First off, there is lawyer “psychology” which, it turns out is a real phenomenon. In rigorous, quantitative work done by Dr. Larry Richard, recognized as the leading authority on lawyer psychology, assessing the personality traits of thousands of white collar workers, lawyers, on average evince a much (much) higher desire for “autonomy,” which pretty much means they don’t like to be managed. All I can say is that in today’s hyper-competitive world is: Get over it!

According to McKinsey, managing professional services firms is five times more challenging to run than other types of enterprises such as, say, retail. This means that a $200 million firm is as difficult to manage as a $1-billion retail chain. I’d say that’s kind of daunting and you might think of bringing in some people who know something besides the practice of law and possess credentials other than a JD.

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