It would be fair to say that the concept of managing a professional partnership was a fairly alien concept until the 1980s when there was a dramatic growth in the size and scale of legal and other firms. This meant that the days of all partners meeting weekly to take decisions on matters ranging from the admission of new partners to the colour to be used when reception was redecorated were not only numbered but beginning to create a competitive disadvantage.
Role of managing partner
Slowly the role of managing partner emerged, initially working as part of a committee of partners who would have delegated authority to take routine decisions on behalf of the wider partnership. During the 1980s and 1990s it became clear that those firms which mirrored the sort of structures which were used by companies and many of the firms’ clients were able not only to react more quickly but also to give greater focus to their businesses and strengthen their reputations not only for quality of legal advice but also for sector specialisms.
As a business model I have always felt that a partnership is difficult to beat if its partners are highly motivated and able to attract the best staff in their local markets. It is a model which has suited the legal profession well. One of the selling factors of a legal career is the scope it offers for a degree of individuality and independence which would not usually be found in a corporate structure, where the emphasis on command and control is greater.
Consequently you will understand why there is a delicate balance to be struck, even now. On the one hand this is a need to ensure that the partners in a law firm enjoy the professional freedom which attracted them to the profession in the first place. On the other hand the firm has to be managed in such a way that it delivers the appropriate return to the partners as quasi-shareholders and it develops its reputation in the markets and sectors in which it chooses to operate.
Three year strategic plan
The approach we adopt within Mills & Reeve is to develop a three year strategic plan, approved by the full partnership, which then delegates responsibility for delivering it to an Executive Board chaired by the managing partner. It includes the heads of the four practice groups – corporate services, real estate, private client and insurance – and the directors of HR, finance and marketing. The Board meets monthly and minutes of its meetings are circulated to all partners and in bulletin format to all staff. Partners have the opportunity to challenge the managing partner and board members at monthly sessions in each office and those sessions are also a helpful opportunity for the firm’s management to highlight those projects and initiatives which will depend heavily for their success on the leadership given to them by the wider partner group.
The firm’s governance structure also includes a Partnership Council which the senior partner chairs and which comprises six elected partner members. It is a sounding board for what might loosely be called shareholder issues and can debate those issues in greater detail on behalf of the whole partner group before they are considered by the full partnership. The result is that the partnership meets no more than three times a year, once for a business weekend in February and again in the spring and autumn.
Conversion to LLP
We propose converting to a limited liability partnership with effect from 1 June 2007. This has become the established business model for professional services firms as they seek to balance their increased scale against an individual partner’s exposure to risk without at the same time shifting the culture entirely to that inherent in the full corporate model.
Our current strategy takes us through to the end of 2007 and we have started the process of thinking beyond that. We are looking at the likely impact of the Legal Services Bill which is currently working its way through Parliament. When enacted, it will permit alternative business structures for the delivery of legal services and enable law firms to raise external capital. We are therefore taking a long view and asking ourselves what the legal profession is likely to look like in 2016. Using various scenarios to test our thinking we can then work back to formalise our 2010 plan which should give us the best chance of rising to the challenges ahead.
For all the external change we need always to remind ourselves that in many respects the business model to which we operate is much simpler than that of many of our clients. The virtuous circle which determines our success begins with the quality of the people we attract to undertake the quality of work our clients need. In turn the quality of client base improves and that makes us increasingly attractive to the brightest and best lawyers and business support staff. Developing the underlying collective will to keep that circle turning can be highly infectious!