The traditional law and IP firm structure is changing. The traditional partner model is being reshaped to match corporate leadership by introducing C-Suite roles (namely, CEO, CFO, COO, CHRO, CTO roles) to successfully compete in a modern business world, serve the increasing demands of clients, and enhance reputation.
Traditionally, partners covered many roles within the business leadership, from ownership and executive decisions to management of staff and practising. This model has been historically successful, so why do firms need to change now?
The case for C-Suite leadership
To compete with other businesses, firms need to streamline business roles for maximum efficiency. The reality of wearing many hats means that partners can be too stretched across many initiatives, and only be able to focus on the most pressing matters. C-Suite professionals bring a wealth of experience in managing businesses as well as management training and qualifications, including MBAs. The inclusion of C-Suite professionals means that they are solely business professionals and can ensure that operational tasks are covered quickly and effectively by another team, enabling partners to oversee and focus on fee-earning activities.
In addition, the inclusion of C-Suite professionals promotes impartiality. With their sole focus being the success of the business, they can offer alternative perspectives to make decisions based on fact and quantifiable experience.
The benefits of hiring C-Suite roles can also be reflected in the profitability of these firms. According to the ‘The Impact of C-Suite Growth in the AmLaw 200’ research by Colliers, law firms that employ professionals with a business background in the C-Suite improved commercial achievement and profitability. In particular, the existence of a CFO in a leadership line-up saw the average PPEP (Profits Per Equity Partner) increase over $300,000.
Making the executive decision
Hiring the right professionals to join a firm’s C-Suite can be a challenge, as it requires a unique skill set to be successful in a leadership role without being a fee-earner. Whether the incumbent would require prior IP or legal experience is wholly at the discretion of the firm, however, an understanding of the nuances of a traditional partner-led practice would be essential. Further to this, wider skills from a professional services background such as business development, marketing, and management would be highly beneficial to keep partners aligned whilst driving business operations.
Although many firms in the legal and IP sectors have created and hired C-Suite professionals, some firms remain reticent, citing concerns around addition overhead costs and the feeling that changing their leadership structure may create a ‘loss of control’.
Inevitably any new leadership model will require an adjustment period, as firms cannot expect immediate success and will need to invest in the successful integration of these new professionals within the wider leadership team.
The decision of whether or not to professionalise management or remain with a traditional partnership model is a debate which is likely to continue for many years to come. Regardless, IP and law firms will need to consider how to keep their firms competitive and of ongoing value to clients.
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