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Only a few decades ago, even the largest, most respected law firms had a relatively small number of lawyers. For example, Baker & McKenzie employed 500 attorneys in 1979. By 1987, that number jumped to 1,000, and in 2001 the firm boasted over 3,000 attorneys. Today, Baker & McKenzie employs more than 4,100 lawyers. In the past 30 years, law firms have focused their efforts on global expansion and opened offices everywhere from South Africa to Turkey to South Korea. Correspondingly, the law firm structure has shifted to accommodate practices’ growing international demand and large staffs. Previously, top law firms were a true partnership: all for one and one for all, with a managing partner who was more involved in running the firm. Firms frequently sought out retired military personnel or public accounting professionals to manage the “back office” of the firm. The role was certainly not a strategic one. Tools of the COO Over the years, the structure of law firms has shifted from a geographical model to a practice group model. Rather than placing leaders in each geographical office, law firm practice group leaders have more power. As law firms have evolved in size, reach, and complexity, so too has the need for seasoned executives to manage the business of law. The Alexander Group conducted its first search for an executive director of a law firm in 1985. Since then, we have completed countless searches for executive-level positions in law firms. The list is certainly longer than this, but here are five necessary tools that today’s Am Law 100 Chief Operating Officer (COO) is expected to bring to the role. 1. A Law Firm COO Runs a Global Business International business experience is an important quality of law firm COOs. Large firms regularly open several new global offices a year to better serve their clients. Opening and sustaining an international office requires familiarity with that country’s government, culture and economy. A deep, thorough knowledge of currency, employment regulations, and partnership requirements is necessary to guide a law firm through the process of recruiting talent and developing the business. A well-worn passport also helps a COO candidate obtain cultural sensitivities that can be crucial for running an international business. 2. A Law Firm COO Must Understand Competitive Pricing Models A growing number of law firms are being pressured by clients to take a more pragmatic approach to fees or consider an alternative pricing strategy. Today’s COO must have the adaptability to evaluate various pricing and staffing models. Now more than ever, law firm leadership must be flexible, nimble, and creative with regard to attorney productivity and budgeting. 3. A Law Firm COO Must Have Experience with Mergers, Joint Ventures and Alliances Today, law firms grow by mergers, acquiring new practices and affiliations. A law firm COO must have the financial acumen to evaluate these growth strategies, both domestically and globally. Following a merger, chief operating officers lead the due diligence to bring two firms together and integrate culture, clients, practices and, ultimately, profitability. Additionally, more law firms today, such as Dentons, are becoming Swiss Vereins, meaning that firms operate independently even though they all belong to one overarching association. According to Ed Shanahan in The AmLaw Daily: “The member law firms independently render legal services and severally accept the rewards and liabilities that accompany such work.” An effective COO must have the business acumen, political savvy, and cultural sensitivities to evaluate such a decision and function in a new business environment. 4. A Law Firm COO Must Be Able to Manage a High-Performing, Specialized Senior Management Tea The modern law firm’s senior management team may include a Chief Financial Officer, a Chief Marketing Officer, a Chief Human Resources Officer, a Chief Information Technology Officer and/or a Chief Knowledge Officer. In the last decade, law firms have increasingly reached outside the legal industry to recruit qualified, strategic, business-minded individuals for C-level positions. For example, years ago The Alexander Group was retained to conduct a chief financial officer search for an Am Law 100 firm. The successful candidate had previously worked in the top financial role at Playboy Enterprises. And most recently, The Alexander Group completed a Chief Marketing Officer search for another Am Law 100 firm. The firm’s new CMO was previously the top marketing executive at Morgan Stanley. Sometimes, you can find the best fit for a position in unexpected places. A successful, strategic Chief Operating Officer should understand how to recruit and lead a highly talented executive team with diverse backgrounds and skill sets. 5. The Blocking and Tackling That Goes with the Day-to-Day Running of a Large Business In addition to the four traits listed above, a COO must, as has always been the case, ensure that the firm is adhering to best practices and providing a robust and efficient infrastructure so that their lawyers can provide the best legal representation to their clients. Tactically speaking, this means that the COO should have a working knowledge of technology trends, talent development and retention, financial planning and budgeting. Conclusion How can growing law firms find an individual who can navigate the challenges of a rapidly changing legal industry? Although we use these standards to help discover incredible leaders for our clients, there is no cookie cutter recipe for law firm COOs. Each firm requires a different type of leader with different specialties, and finding the perfect match for a firm’s unique culture requires hard work, research, and search expertise. The challenges and demands of this role will undoubtedly continue to evolve as law firms themselves change.
By Marcus Dyer
As law firms endeavor to survive in an increasingly competitive world, one strategy picking up steam is the law firm merger. In this article, we recap law firm merger activity in 2018 and consider the economic outlook for law firm mergers for 2019.
By Lawrence L. Bell
Planning for executive benefits for top hat employees at non-profit organizations has undergone a frenzy of regulatory roadmap changes. Nonprofit NonQualified Benefits are largely directed and controlled by IRC §457.
By Kevin Harris
Prebilling, the process of generating invoice drafts and circulating them for annotation/adjustment, is one of the most important monthly tasks a law firm conducts. Since prebilling involves bringing money into the firm, the more efficient the process becomes, the better off the law firm is financially.
By Stephen Cole
Information governance and the protection of corporate data are top concerns for law firms. To ensure standards are met, some clients are now tying payment to compliance with Outside Counsel Guidelines (OCG). OCG have moved from guidelines to actual contracts that provide for indemnification of the client for cyber breach and violation of privacy laws.