Biglaw, Partner Issues

Democracy And Law Firm Leadership

Columnist David Perla speaks with three law firm heads about different leadership models.

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David Perla

David Perla

Democracy can be challenging. Anyone watching political conventions for the past two weeks can see that.

I’ve also seen the principle up close in my work, where I’ve spent a career creating and delivering products and services to lawyers and law firms. Previously, as the founder of an outsourcing company, my world involved decision-making on offshoring large-scale legal projects; now, at Bloomberg Law, my world involves research and information tools and technology. In both cases, it has been fascinating to observe how law firms—which traditionally have a flat, democratic structure—go about making big decisions.

As I’ve watched the decision-making function (or, in some cases, dysfunction) of law firms, I’ve picked up a few things. For one, I have seen how frustrating it can be to both internal law firm staff, not to mention vendors, when a firm lacks a clear, identifiable decision maker. I’ve spoken with many exasperated librarians who would like to make purchasing or other decisions, but can’t get their ideas implemented because authority is so diffused or ambiguous. That’s just in my realm. In such firms, those responsible for systems acquisition, training, and similar areas are probably equally frustrated.

Of course, I’ve also learned that some firms are changing their structures. Increasingly, firms are vesting decision-making power with an executive director or chief operating officer. These administrators have varying degrees of authority, to be sure. But in some cases, the authority they hold is significant, and in many cases the individuals in those roles are non-lawyers.

I’ve been encouraged to see this development, frankly. But I only have my own perspective on the issue. For deeper insight on whether it is best for law firms to centralize leadership in a single individual, and if so who that individual should be, I called up three different law firm leaders.

The first leader I spoke to is the CEO of (and a partner at) an Am Law 100 law firm with offices in several major U.S. markets and a small international presence. The CEO’s message was clear: a non-lawyer could never be an effective leader of his firm. Lawyers simply aren’t going to listen to a non-lawyer, he said. Whether due to professional snobbery or the fact that administrators lack a partner’s ownership stake, the CEO took the view that a non-lawyer administrator could never garner the respect necessary to lead. He based this opinion, ultimately, on the fact that the lawyers hold the ultimate trump card: if they don’t like a decision, or series of decisions made over time, they can take their book of business and leave.

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The second leader I spoke with is the executive director of an elite, global firm rooted here in the U.S. Unsurprisingly, the executive director, who is not a lawyer, had a more optimistic view of the possibilities for non-lawyer administrators. He explained that in the 1990s, when the headquarters region of his firm was struggling through the recession, the firm made a conscious decision to operate like a corporation rather than a federation of entrepreneurs. Among other things, the firm decided that when seeking business, it would pitch the firm, not individual attorneys. It defined core principles, like refusing billing discounts beyond a certain level. And it decided, well before most, to vest decision-making authority in a single figure who was, if not above the attorneys in the firm, apart from them.

What accounted for the vastly different experiences of these two leaders? The answer was revealed in my discussion with a third—the non-lawyer executive director of a regional law firm. Our conversation kept coming back to the same word, “culture,” which I realized holds the key. The CEO had acknowledged that a non-lawyer could be strong in a firm with a different culture than his own. He gave the example of a vastly larger firm, with a significantly more corporate feel. But another example is the second firm, which has worked to develop a culture in which partners think of the collective, rather than individual, success.

Each law firm must decide for themselves whether to discard more democratic leadership structures and follow that approach. I don’t have a horse in this race, but it may be instructive to look to the history of the second firm. When it made its management decision in the 90s, there was another equally large, peer firm headquartered in the same city. That firm has retained a more traditional structure. Today, the second firm’s profits per partner are among the highest in the country, and approximately 65% greater than those of its former peer. The executive director I spoke with attributed those decisions, made nearly two decades ago, to his firm’s success in far outpacing the revenue and profit growth of what were then its peer firms. And voluntary partner defections at the firm are among the lowest in the industry.

Finally, on the topic of culture, I was struck by the fact that each of the firms approached culture differently. One let it evolve organically, nudging and nurturing it in a desired direction; one changed it by conscious and deliberate action; and one concluded that it is immutable and had to be accommodated. Each had different results, both on the culture of the firm, its leadership approach, and its financial outcome.

Each of my conversations was enlightening, and I look forward to having more. But this much is clear to me already: what’s possible for any given firm is defined largely by its leadership model and by its approach to its own internal culture.

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David Perla is the President of Bloomberg Law and Bloomberg BNA’s Legal division. Perla plays a key leadership role in the continued growth of the company’s legal business, which includes legal, legislative, and regulatory news analysis and the flagship Bloomberg Law technology platform. You can reach David at dPerla@bna.com and follow him on Twitter at @davidperla.

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