Electing strategic partners: A solution for the midsize law firm
It’s time for firms to let go of the formal power structures, and rely more on professional business support.
Formal and informal power structures are a hot topic for many midsize law firms. The challenge they face is that traditional partnership structures are impeding how they can optimize their internal management. This drives partners to make hasty or shortsighted business decisions in a legal landscape that is getting harder to navigate by the month.
Instead of wasting time in meeting rooms making business decisions that are often based on faulty assumptions about a market they haven’t thoroughly studied, midsize firms would do well to look to professional strategists for support. In fact, they should be appointing strategic partners to leadership positions. By leveraging that expertise, midsize firms can enable their lawyers to focus on contributing value to the client.
For years, the partnership model – which brings smaller businesses operating autonomously under the same roof – has worked out well. But in an increasingly digital and demanding business landscape, lawyers must now collaborate and make long-term business decisions both for themselves and for the benefit of the entire firm.
A recent study conducted by Ernst & Young suggests that a major obstacle to innovation within law firms is the pressure of business-as-usual. Partners with tightly packed schedules are pressed to find the time to give proper consideration to challenges facing the firm that require a strategic response, and well-planned business decisions. There is no shame in that. Lawyers are very good at being lawyers and need to spend their time focusing on just that.
In recent years, larger law firms have been shifting to new corporate governance models that draw inspiration from traditional, non-legal businesses. They are naming CEOs, CFOs, and COOs to managerial positions. Those executives are then tasked with making business and strategic decisions for the law firm, and enforcing the adoption of innovation and other initiatives.
One of the problems with the traditional partnership model is that equity partners are often left with the feeling that they are no longer in control of their own business. It falls on management to enforce innovation and change within the law firm. This can be challenging when the key stakeholders are both the partners deciding management’s fate and the ones who reluctantly have to adapt to any changes forced upon them.
A way to resolve this dilemma in midsize firms is to name strategic partners. They would serve on the firms’ boards of directors – along with representatives from the firm’s management group, legal practitioners and someone with expertise in technology. The executive and board recruiting firm AmRop recently published a report showing that enterprises with board members who have technical capabilities, perform significantly better than those enterprises that don’t. In today’s changing legal industry, technical skills are an absolute must in law firm executive suites, as well as in other enterprises.
Electing strategic partners could follow the same process as choosing a managing partner, and the number could vary depending on the size of the firm and its practice areas. The duties of the strategic partner include:
- Serving as an anchor for innovation in their respective practice area and within the firm overall
- Offering their insights based on experiences with clients and the market in general
- Protecting the interests of other equity partners, and
- Developing future strategies in collaboration with the rest of the board.
Ideally, the strategic partner would enjoy informal and formal authority to drive others, without getting too involved in daily management duties. They would spend the majority of their time practicing as lawyers. At the same time, they would have to be business and tech-savvy to be able to make decisions and forge a future-looking strategy in collaboration with the rest of the board.
Essentially, the modern midsize law firm needs to let go of the formal power structures exclusively focused on partners, and rely more on professional business support. Partners will still remain at the centre of the legal business. It is in their interests that will be safeguarded by the strategic partners they elect — much like the managing partner.
Relieving partners of much of the burden posed by innovative and strategic demands will ultimately free up more of their time to focus on serving clients, sparing them the distraction of having to make business decisions based on shaky assumptions. This will result in a law firm being run by business professionals where partners use their time more productively, knowing their elected representatives are taking care of their interests and assisting in forging the future strategy of the firm.