Non-lawyer chief operating officers – here today, gone tomorrow?

Karl Wingfield gives an invaluable insight into two differing COO roles.

Aprovocative title for an article about the role of a non-lawyer chief operating officer (COO) in a law firm, but the right one based on my experiences as COO of two law firms of contrasting backgrounds. The first – Tite & Lewis, the law firm associated with Ernst & Young until Enron derailed the ‘one-stop-shop’ train for professional services. The second – B P Collins, one of the strongest, full-service law firms in the Thames Valley.

Prior to becoming COO of Tite & Lewis, I had been either financial controller or finance director of three top-50 firms, but it was a chance meeting early in 2000 with former colleagues that led me to join Tite & Lewis – a new law firm that Christopher Tite and Mark Lewis were setting up with the support of Ernst & Young.

Ernst & Young were looking to build a law firm (initially in the City) from scratch to 200 lawyers within five years, occupying a top-10 position in the UK. To do so, they were prepared to invest large sums of money, hire capable people, create a high-quality infrastructure and run the firm as a business.

The management team comprised Mark as chairman, Christopher as managing partner, and me as COO, with highly-skilled HR, sales and marketing directors. The firm had 23 partners at its peak, who were consulted about all major strategic goals and any initiatives that affected partners directly (such as remuneration proposals), but day-to-day decision-making was concentrated in the hands of the management team. This worked reasonably well, as in the interests of building the firm quickly, all the partners were prepared to accept more direction than they would have been used to in the major City practices they had come from.

The wide experience of the management team, and our ability to access the global resources of Ernst & Young, meant that we were able to make things happen quickly. The culture of the firm helped – we were new and ambitious, and were looking to establish our position in the market quickly – and we took calculated risks. Barriers to progress were challenged, and people who didn’t appreciate the dynamics of the firm didn’t hang around. Reward followed effort and achievement.

It is, perhaps, a model for successful law firms in the future – substantial ambition matched by a willingness to make decisions (and be held accountable for them), without trying to carry everyone, or spend too much time analysing how decisions might affect everyone.

My role was to execute the strategy, ensuring that the business infrastructure was able to support the planned growth, and work with the other directors in ensuring that all our resources were applied to growing the business through the partners. The role was largely internally focused, and distinct from the chairman and managing partner roles, which were mainly externally focused.

How useful was the COO role at Tite & Lewis? My functional responsibility for finance and infrastructure was important in helping the firm grow, but I could have been director of finance and administration in that case. What was probably most valuable to the firm was the reliance the firm placed on me to ensure that the strategy was executed.

By contrast, B P Collins was founded in 1966, and at one time had ten offices across Buckinghamshire. The firm developed as a conveyancing practice in the high streets of many of the towns in the county, but consolidated in Gerrards Cross in the late 1980s. The firm diversified, and by 2006 was a full-service firm with fee income of over £8 million.

The firm was managed by a board comprising the senior partner/managing partner, three elected partners and the finance director. The firm was divided into practice groups, but the practice group leaders had no management authority, except that which they created for themselves. Two-thirds of the equity partners had been in partnership together for more than ten years.

In 2005, the firm undertook a strategic review and decided that the current structure wasn’t working and that a COO should be recruited to run the firm on a day-to-day basis, reporting to the board, who in turn were responsible to the partners generally. A formal structure was created for the practice group leaders at this point, but power continued to be vested in the partners and in the board.

The main reasons cited for the change in the management structure were that too much time was spent on management by partners, decisions were slow in the making, and, when made, were rarely fully implemented.

The strategic review determined a five-year strategy, which would see the firm positioned as a strong regional firm, turning over £12m, with profits-per-partner double those earned in 2005. Behind these headlines were a number of other objectives designed to strengthen our people, improve our profile and modernise the firm’s infrastructure.

In my first 12 months we set about making things happen in line with the strategy. Practical measures included developing a structured approach to business development, updating staff performance reviews to incorporate more objective assessments of individual’s skills, updating the financial management processes and fitting out new office suites, as well as all the other day-to-day activities you’d expect to be undertaken.

As the year progressed, it became apparent that the appetite for change wasn’t uniform and that we needed to create more accountability and leverage in the partnership to ensure that ambitious partners could grow and prosper. It was also clear that the robustness of the strategy hadn’t been tested externally and the firm wasn’t strong enough to achieve regional leadership by itself.

Consequently, over the past 18 months, we have agreed to improve accountability and leverage, through the adoption of a partner-performance framework that will tie partners’ earnings to their achievements, and we have also acknowledged that consolidation is likely to happen in the period covered by the 2010 strategy. Neither of these two strategies were core components in the original 2005 strategy.

There are a number of similarities to my role at Tite & Lewis, in particular the enormous number of projects on the go at once – and the sense of urgency. However, the firm’s culture – developed over a number of years – has meant that the execution of change has had to be at a slower pace, and mindful of the differing needs of partners, not used to having change thrust upon them. In this role, it has also been necessary to be an agent of change – even if the role didn’t envisage this initially – in order to overcome major stumbling blocks to moving the firm forward.

How useful is my role at B P Collins? The role, which has functional responsibility for all operations, is a very different existence to my previous one – encompassing internal and external responsibilities, at both strategic and operational levels. The firm’s partners have benefited from my lengthy experience in law firms, and they have determined that our 2005 strategy is less likely to be achieved unless we address partner responsibilities and accountability to one another and the degree of change going on in the wider market – and adapt the strategy accordingly.

What is clear about the two roles is that they have been very different – the former much more internally focused on delivering projects to improve the firm’s operations, and the latter more externally focused, helping to reposition the firm. What lessons can law firms learn from these experiences to help them decide whether and what type of COO might best suit their business?

The most important factor a firm needs to address in relation to the appointment of a COO is where the role will be positioned – in particular, the COO’s relationship with the managing partner, the most senior decision-maker, or the decision-making body of the firm.

Where a firm has a managing partner who is focused on the strategy, then the firm should appoint a hands-on COO capable of executing the strategy, and not someone who has their own agenda: it won’t last and, in the meantime, could damage the firm. Alternatively, where there is no one person focusing on strategy (or it is delegated to a group, and the COO is a member of it), then the firm should employ a COO with experience and interest in strategy. Being a non-lawyer does have its advantages for firms in such situations, not least because it will bring to the firm skills from other organisations, as well as functional expertise.

Another key aspect to achieving success with a non-lawyer COO is for the firm to allow the COO to participate fully in the business of the firm, and on a similar financial basis to partners. This isn’t just about pay, although I do recommend that law firms allow their professional managers to participate directly in the firm’s success when the regulations allow. It is also about aligning performance measurement with that expected of partners. At B P Collins we are introducing a balanced score card that will ultimately be used to determine partners’ pay. It measures financial performance, business development, team-building, leadership skills, professional and technical competencies and client satisfaction. There is no reason why similar criteria can’t be applied to the COO – albeit that some artistic licence will need to be exercised with some of the criteria. In my experience, COOs are anxious to see their contribution to the success of the business being addressed objectively and to be able to participate in the success of the business.

For COOs involved at a strategic level, it is also important not to pre-judge the basis on which the COO will deliver the strategy. There need to be some overall goals, including some key performance indicators, but the means by which the strategy is delivered needs to be worked through by the COO, and he or she should be given wide discretion to work with practice-group leaders in this regard.

Firms also need to ensure that the COO has the right level of support. The people who work for the COO need to be of a similar calibre to associates – successful professionals in their own right, with a range of personal skills that enable them to engage with people at all levels of the business. They also need to be ambitious for the organisation and themselves, and willing to challenge existing service boundaries. This enables the COO to manage projects rather than spend a lot of time undertaking them, and a lot more will be achieved as a result. It is also likely to be cost-effective as there will be less reliance on external consultants.

The relationship between the COO and his/her ‘boss’ needs to be scrutinised from time to time. This is particularly important where the backgrounds of the two people are very different, as they are likely to approach strategy and problem-solving from very different perspectives. Failure to test this relationship will lead to a divergence of opinion, and potential damage to the firm – particularly where differences become public knowledge.

Partners need to recognise that, however they set up the COO role, they will be surrendering part of the leadership mantle to the COO – if they do not, then they are not recruiting a COO. Partners will need to adjust their behaviour and accept that individual’s authority, even if it isn’t written down. Without the ability to push through projects – even against the wishes of some partners – the COO’s authority is undermined, and he/she becomes impotent, unable to deliver and performance will deteriorate – or the COO will leave.

So what is the future for COOs in law firms? At present we are seeing a continuing stream of them. Some are (ambitiously) called CEOs, although I wonder if any of them genuinely have the authority of a CEO in a company?

My view (perhaps unsurprisingly) is that COOs are a good thing for law firms as they offer firms experience of other organisations that isn’t otherwise available (unless expensive consultants are hired), they pay for themselves and they are focused on driving through change. It would be an interesting challenge to ask your COO what he/she has contributed to the business in added value – including cost reductions and creating additional capacity for partners who would otherwise have to do the COO’s work. Not just this, what about building the firm’s reputation through engagement with the business community and ensuring that productivity is maximised?

Consequently, COOs are here to stay. But some words of warning: choose someone who has endless patience coupled with enormous stamina – they are going to need it!

Karl Wingfield is chief operating officer at B P Collins LLP. He can be contacted at karl.wingfield@bpcollins.co.uk