Only a few decades ago, even the largest, most respected law firms had a relatively small number of lawyers. For example, Baker & McKenzie employed 500 attorneys in 1979. By 1987, that number jumped to 1,000, and in 2001, the firm boasted over 3,000 attorneys. Today, Baker & McKenzie employs more than 4,100 lawyers. In the past 30 years, law firms have focused their efforts on global expansion and opened offices everywhere from South Africa to Turkey to South Korea.
Correspondingly, the law firm structure has shifted to accommodate practices' growing international demand and large staffs. Previously, top law firms were a true partnership: all for one and one for all, with a managing partner who was more involved in running the firm. Frequently, firms sought out retired military personnel or public accounting professionals to manage the “back office” of the firm. The role was certainly not a strategic one. Over the years, the structure of law firms has shifted from a geographical model to a practice group model. Rather than placing leaders in each geographical office, law firm practice group leaders have more power.
As law firms have evolved in size, reach, and complexity, so too has the need for seasoned executives to manage the business of law.
The Alexander Group conducted our first search for an executive director of a law firm in 1985. Since then, we have completed countless searches for executive-level positions in law firms. In the past year alone, we have completed chief operating officer searches by five global Am Law 100 firms. The list is endless, but here are four things that today’s Am Law 100 COO is expected to do.
1. A law firm chief operating officer runs a global business.
International business experience is an important quality of law firm COOs. Large firms regularly open several new global offices a year to better serve their clients.
Opening and sustaining an international office requires familiarity with that country’s government, culture, and economy. A deep, thorough knowledge of currency, employment regulations, and partnership requirements is necessary to guide a law firm through the process of recruiting talent and developing the business. A well-worn passport also helps a COO candidate obtain cultural sensitivities that can be crucial for running an international business.
2. A law firm chief operating officer must understand competitive pricing models.
A growing number of law firms are being pressured by clients to take a more pragmatic approach to fees or consider an alternative pricing strategy. Today’s COO must have the adaptability to evaluate various pricing and staffing models. Now more than ever, law firm leadership must be flexible, nimble, and creative with regard to attorney productivity and budgeting.
3. A law firm chief operating officer must have experience with mergers, joint ventures, and alliances.
Today, law firms grow by mergers, acquiring new practices, and affiliations. A law firm COO must have the financial acumen to evaluate these growth strategies, both domestically and globally. Following a merger, chief operating officers lead the due diligence to bring two firms together and integrate culture, clients, practices, and ultimately, profitability.
Additionally, more law firms today, such as Dentons, are becoming Swiss Vereins, meaning that firms operate independently even though they all belong to one overarching association. According to Ed Shanahan in The AmLaw Daily, “The member law firms independently render legal services and severally accept the rewards and liabilities that accompany such work.” An effective COO must have the business acumen, political savvy, and cultural sensitivities to evaluate such a decision and function in a new business environment.
4. A law firm chief operating officer must be able to manage a high-performing, specialized senior management team.
The modern law firm’s senior management team may include a chief financial officer, a chief marketing officer, a chief human resources officer, a chief information technology officer, and/or a chief knowledge officer. In the last decade, law firms have increasingly reached outside the legal industry to recruit qualified, strategic, business-minded individuals for C-level positions.
For example, five years ago, The Alexander Group was retained to conduct a chief financial officer search for Orrick. The successful candidate had previously worked in the top financial role at Playboy Enterprises. And most recently, The Alexander Group completed a chief marketing officer search for Latham & Watkins. The firm’s new CMO was previously the top marketing executive at Morgan Stanley. Sometimes, you can find the best fit for a position in unexpected places. A successful, strategic chief operating officer should understand how to recruit and lead a highly talented executive team with diverse backgrounds and skill sets.
5. And the blocking and tackling that goes with the day-to-day running of a large business.
In addition to the four traits listed above, a COO must, as has always been the case, ensure that the firm is adhering to best practices and providing a robust and efficient infrastructure so that their lawyers can provide the best legal representation to their clients. Tactically speaking, this means that the COO should have a working knowledge of technology trends, talent development and retention, financial planning, and budgeting.
How can growing law firms find an individual who can navigate the challenges of a rapidly changing legal industry? Although we use these four standards to help discover incredible leaders for our clients, there is no cookie cutter for law firm COOs. Each firm requires a different type of leader with different specialties, and finding the perfect match for a firm’s unique culture requires hard work, research, and search expertise. The challenges and demands of this role will undoubtedly continue to evolve as law firms themselves change. In future posts, I will discuss which fields successful law firm candidates frequently come from and how clients have recruited C-level talent for their executive team.