Governance of Legal Businesses

The emergence of the legal profession in recent years as a sector of business activity in its own right has resulted in the adoption of principles and approaches which are more readily associated with the corporate business world. Large law firms are major multinational businesses in their own right. They have had to grapple with apparent conflict between professional principles and the need to remain sustainably profitable.

Those who dislike this new world often characterize the process as a move away from professional values in favour of corporate business norms which threaten those values.  Whilst I can see the need to preserve professional values with care, I do not share the view that this is necessarily inconsistent with the pursuit of sustainable profitability.

I believe that the practices of the ‘old’ world of professional services were frequently lacking in transparency, development of people, investment in training, succession planning and client care.  The ‘new’ world has many deficiencies, but I think it can offer a better environment from which to deliver legal services to all types of client.

I wrote three articles when I was Senior Partner of Allen & Overy which were published well before the financial crisis of 2008.  They sought to show how a large law firm could and should be both a successful business as well as a responsible professional firm.

• Read first article which argued that profit per equity partner was not an appropriate measure of success for a law firm.
• Read second article which argued that law firms should consider their role in society.
• Read third article which considers the influence which clients should have on the development of the law firm’s thinking.

The events of 2008 and beyond have not caused me to change anything in these articles.

Professional services organisations are often considered to be more difficult to manage than corporate entities in other areas of the business world. Whilst there are significant differences between different sectors and between partnerships and companies, I do not believe that professional services firms are inherently more difficult to lead.  It is fair to say, however, that they are what I would term ‘reluctant organisations’ and this may require different leadership techniques.

This article considers the leadership challenges faced by reluctant organisations.  This was written in the context of leadership training proposals for the Anglican Church, but it considers general issues of leadership in professions and companies.