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Remember when we lived in a world without broadband and Blackberrys? A time when we conducted business without the aid of Google, pod-casts, blogs and Skype? When we communicated, shopped, travelled and relaxed without the aid of iPhones, Facebook, Wikipedia, Amazon, eBay, Sat Nav, iPods and Wiis? Fifteen years ago the World-Wide-Web was just two years old as far as Joe Public was concerned. The world was still driven by people and bricks rather than domain-names and clicks.
Organizations which had operations across the world’s major territories were described as international rather than global. There was no globalization. The West was clearly the dominant economic force. And nobody talked about on-line and offline, or commoditization, outsourcing, co-sourcing and off-shoring.
In the legal industry in 1994, lawyers were supported by staff who were mostly secretaries and back-office administrators. There was only one substantial international law firm. There were certainly no law firm chairmen or chief executives; practice leaders were still senior and managing partners. There were a few early partnership secretaries, practice directors and heads of finance, but that’s about it. There were virtually no LLPs or LLCs. Precious few law firms had web sites or intranets, and there were very few practice support lawyers (PSLs) or “knowledge managers.” No-one talked about Generation X, let alone Y. Law firm panels had not yet taken root and all was calm and cosy in the world of the successful law firm.
15 years ago, Baker & McKenzie was that law firm-- the world’s largest. By then, it had blazed a trail for a largely sceptical legal profession, building a practice with around 1,800 lawyers in 32 countries. The accountancy market was dominated by the “Big 6” (remember Arthur Andersen?), and Price Waterhouse and Coopers & Lybrand were separate firms.
How times appear to have changed.
The world’s largest law firms are now Baker & McKenzie and Clifford Chance. Each has in excess of 3,800 lawyers and some 7,000 staff in total, and revenues of well over $2 billion. Baker & McKenzie now has 70 offices across the globe, whilst Clifford Chance has pursued a less expansive geographical footprint. Nonetheless, a small number of European firms now dominate the global legal services market alongside a similar number of their US-led counterparts.
And yet, legal practices are still relative minnows in comparison with other globalized organizations. PricewaterhouseCoopers (PwC), the world’s largest professional services firm, is 10 times the size of Clifford Chance; Exxon Mobil, the world’s largest corporation, is 200 times its size.
So how valuable are historical comparisons? In order to understand some of the changes we’ve seen and what it means to lead a global firm, I met with a number of current and former senior and managing partners of such firms. We talked about the past, and I also gained an insight into how they see the future.
Strategy, Leadership, Alignment and Management
Their view of the last 15 years can be summarised as the period in which four business concepts slowly evolved in legal practice. These are: the S-word (strategy), the L-word (leadership), the A-word (alignment - thank you McKinsey, Harvard) and the M-word (management). I found a high degree of congruence in these leaders’ views on these four concepts. Konstantin Mettenheimer, joint senior partner of Freshfields, pointed to the liberalization of legal markets in the late 80s that opened the door for international legal practice. Duane Wall, former managing partner of White & Case, cited the consequent explosion in growth, which coincided with the start of globalization.
“Suddenly we had to build an executive team fit for the purpose: a team that could run the projects associated with international expansion (ultimately, outsourcing to India and insourcing to the Philippines); a team that could inspire lawyers and initiate action to achieve the required alignment of strategy, people, teams and processes,” Wall said.
Mettenheimer told me: “During this period, Freshfields underwent a transformation from a collection of individuals to a more structured, more collaborative organization. Then, we went on to become a more classically managed firm.” He explained: “To effect these changes, the secret was to ensure adequate consultation whilst establishing a clear sense of vision, uncompromising standards of performance, and individual accountability. We needed to create a collective sense of pride and direction, and recognise the importance of alignment. The Holy Grail was to develop a firm which was professional, partnerial and managed in equal measure.”
Gary Senior, Managing Partner of Baker & McKenzie in London, added: “The whole concept of leadership has shifted. It wasn’t even recognised 15 years ago. Neither was strategy. In the UK the professionalization of law firms started in the early 1990s. Since then, partners have moved their stance on leadership and management from reticence to recognition to acceptance to requirement! People now expect direction and guidance. Firms have gone from being unmanaged (and unmanageable) to being managed professionally.”
To illustrate the importance and impact of leadership, and of assembling the right management team, Sir Nigel Knowles, Joint Chief Executive of DLA Piper, commented: “Take our business in the Middle East. We started planning a presence in 2005 and within three years we had 130 lawyers and offices throughout the region. That kind of growth doesn’t just happen. It takes strong leadership and courage. Global law firm leaders are now acting just like leaders in other spheres of commerce. There’s been a coming of age in terms of law firm management.”
Return on Collective Individuality
If the art of leadership is the achievement of strategic objectives through others, management is the effective implementation of action plans by those others. In this respect, law firms probably represent the ultimate challenge to senior and managing partners. So just how can they achieve the maximum return on collective individuality (ROCI)? Unsurprisingly, I also found some common ground in how these leaders describe their remit. What emerged were five strands that shape their working lives:
-Developing the vision and strategy
-Assembling the right management team and structure to ensure effective implementation of
strategy and day-to-day operations
-Performing an internal pastoral role to inspire, support and motivate
-Ensuring a constant flow of effective communication
-Acting as external ambassador – the face of the firm
But what of the next 10-15 years? If strategy, leadership, organizational alignment and management had become so important, what was the scale of the challenge that lay ahead? Here, perspectives were more varied.
White & Case’s Wall was clear in his view of the legal landscape: “Larger firms will get even larger, but still there will be no more than nine or ten global firms. The price of market entry at the global level is already too high. Beyond these firms, there will be more stratification of the legal market and consolidation will accelerate. In some jurisdictions there could be big opportunities for change with the advent of external investment and multi-disciplinary practices.” In terms of practice, he said: “Commoditization will become a fact of life, but some firms will deal with it better than others.”
The leadership team at Freshfields concurred. Ted Burke, Chief Executive, said in a recent press article: “Legal Process Outsourcing (LPO) will radically change the legal market. We will see more unbundling of the way legal services are currently delivered.” His colleague, Mettenheimer, added: “Mechanised law will continue to be outsourced to low-cost jurisdictions. More complicated advice, however, will continue to be split between private practice and in-house counsel.” He went on to predict: “Even for this complicated work, companies will increasingly buy an agreed volume of hours at an agreed fixed price.” He continued: “The most complex, bet-the-ranch or highly-specialised work, however, will still be done by the best global practices. In-house counsel, meanwhile, will play a central role in managing the relationships with external legal advisers as well as taking on certain parts themselves rather than mandating firms.”
Market Polarization
Mettenheimer agreed that concurrent with ongoing globalization there would be continued polarization of the market. But on the global stage he said: “The first firms to create truly integrated legal teams across the Americas, Europe and Asia will be the dominant firms. This is a lot easier said than done – I mean truly integrated.” However, he did not see a rash of global MDPs (multi-disciplinary practices) being formed: “I doubt there will be mega mergers between accountants and lawyers,” he said. “Global law firms will pursue strong client demand and productivity rather than a flags-on-map strategy.”
In the light of the recent financial turmoil, Mettenheimer predicted that there would be more regulation (and more complexity of regulation) and added: “Like it or not, this will benefit lawyers, as long as it doesn’t hurt the economy. Risk management will take its rightful place on the boards of many companies. However, it will be a different market, one in which de-leveraging will be the order of the day. It will be difficult for clients to invest money without debt and we will need to acclimatise to this.”
One of the biggest challenges facing law firms is that clients will demand their lawyers finally become truly commercial in the way they think and operate. “Self-governance is an important part of partnership. But I would hope to see us taking advantage of the management skills and experience also available externally to help us run our business efficiently,” said Mettenheimer.
Senior agreed, but added a note of caution: “Firms will structure themselves more like corporate businesses. They will become even more managed and organised, and in the UK the Legal Services Act will fuel these changes. But some international firms will face a challenge to become less imperial in leadership style. British and American senior and managing partners will no longer be able to dominate leadership roles. At Baker & McKenzie, we’ve had a succession of non-US leaders and we’ve learned that the different regions – Asia, Europe and the Middle East, the Americas - need to be properly represented at board level.”
“The way I see it, the bi-polar world of New York and London has gone,” added Knowles. “In future, the financial markets will operate in a more integrated, global way, taking account of other financial centres: Frankfurt, Dubai, Abu Dhabi, Mumbai, Hong Kong, Shanghai and Tokyo.” He went on: “The long-term implications of the liquidity crisis are significant.”
Senior believes that law firm leaders are still likely to be lawyers. “I don’t see a whole spate of non-lawyer CEOs being appointed. However, the main lesson we can learn from other industries is the need to become much more comfortable in a global and multi-cultural environment,” he said.
There was a slight divergence as to what else law firm leaders might learn from successful captains of industry. Senior was unequivocal in his view: “The most successful company CEOs recognise the importance of three things: appointing high calibre people to key positions around them; having the courage to do bold things; and fostering transparency.”
According to Wall: “Corporations operate in a more command and control environment; law firms just aren’t like that. You have to take people with you, somehow. What I can say, though, is that Jim Collins’ book Good to Great is required reading for all of us.” Knowles agreed: "Corporations could learn a lot from successful law firms about alignment.”
Inspiring Confidence and Sustaining Momentum
The importance of “putting the right people in the right senior roles” was recognised by Mettenheimer: “We should do all we can to learn about the complete tool-kit of management from successful organizations in other industries. We need to study how their leaders become the embodiment of corporate vision through sheer drive and personal engagement. And we need to discover how these people take personal responsibility for inspiring confidence and ensuring momentum.”
It was a comment that reminded me of a conversation I once had on a Mediterranean beach with my father-in-law. A retired company chairman in the air travel industry, I asked him the secrets of his success. His answer was swift and deceptively simple: “Personal drive, sheer hard work and never allowing myself to become remote.”
This brings me to the ultimate question: what are the hallmarks of exceptional leaders?
According to the leaders with whom I met, courage was top of the list.
“Leadership involves some degree of friction; you can’t be loved by everyone, but you hope to be respected; it’s not a popularity contest!” said Mettenheimer. “What is important is to establish the right environment in which people can collaborate freely across borders,” added Wall.
The ability to instil a strong sense of direction came next. It is crucial to inspiring confidence and enthusiasm.
Paying attention to the world outside was the third attribute. Wall explained: “Leaders must be adept at observing what’s happening in the market so that they can adapt to change, competition and opportunity. They’d better not be caught asleep at the switch!”
This augurs well because research into the traits of successful business leaders invariably cites the words vision, courage, consistency, listening, communication and energy. Indeed, the latest research by leadership consultancy Whitehead Mann finds that the dominant attributes of effective leaders today are:
-Vision
-Clarity, consistency and integrity of purpose
-Competitive strategies for sustainable success
-Effective development of management team for the future
-Inspiration and engagement of people
-The Whitehead Mann report sums it up nicely:
“The most important factor is vision, which is intuitive rather than something which can be formally learnt. It is this which endows leaders with the ability to provide direction to their employees and which enables them to create a company where people want to work. It is a rare ability – to manage the present and create the future. But if the CEO can pull this off, they can build a lasting legacy.”
Knowles shared his admiration for Bill Gates and Jack Welch: “Both had an idea which they turned into a vision. And both had the courage to turn that vision into a world-dominant reality.”
It seems then that, in spite of the new digital age, some things change very little: having a healthy appreciation of the past; putting the best team in place to manage the present; and, most importantly, creating a future to which people can aspire – this is still what it takes to be an exceptional leader.
Simon Slater, Managing director of First Counsel Consulting Limited.
© E. Leigh Dance. First published in “Bright Ideas – Insights from Legal Luminaries Worldwide”. (Mill City Press) 2009. To purchase a copy please visit www.BrightIdeasGlobalLaw.com
A Foot in the Past, a Finger on the Pulse, and an Eye to the Future:
< Back to full list of articles
1994. Bill Clinton was one year into his presidency. Nelson Mandela was elected South Africa’s first black president. Tony Blair became leader of the Labour Party in the UK, and China had the seventh largest GDP in the world, just behind the UK.Remember when we lived in a world without broadband and Blackberrys? A time when we conducted business without the aid of Google, pod-casts, blogs and Skype? When we communicated, shopped, travelled and relaxed without the aid of iPhones, Facebook, Wikipedia, Amazon, eBay, Sat Nav, iPods and Wiis? Fifteen years ago the World-Wide-Web was just two years old as far as Joe Public was concerned. The world was still driven by people and bricks rather than domain-names and clicks.
Organizations which had operations across the world’s major territories were described as international rather than global. There was no globalization. The West was clearly the dominant economic force. And nobody talked about on-line and offline, or commoditization, outsourcing, co-sourcing and off-shoring.
In the legal industry in 1994, lawyers were supported by staff who were mostly secretaries and back-office administrators. There was only one substantial international law firm. There were certainly no law firm chairmen or chief executives; practice leaders were still senior and managing partners. There were a few early partnership secretaries, practice directors and heads of finance, but that’s about it. There were virtually no LLPs or LLCs. Precious few law firms had web sites or intranets, and there were very few practice support lawyers (PSLs) or “knowledge managers.” No-one talked about Generation X, let alone Y. Law firm panels had not yet taken root and all was calm and cosy in the world of the successful law firm.
15 years ago, Baker & McKenzie was that law firm-- the world’s largest. By then, it had blazed a trail for a largely sceptical legal profession, building a practice with around 1,800 lawyers in 32 countries. The accountancy market was dominated by the “Big 6” (remember Arthur Andersen?), and Price Waterhouse and Coopers & Lybrand were separate firms.
How times appear to have changed.
The world’s largest law firms are now Baker & McKenzie and Clifford Chance. Each has in excess of 3,800 lawyers and some 7,000 staff in total, and revenues of well over $2 billion. Baker & McKenzie now has 70 offices across the globe, whilst Clifford Chance has pursued a less expansive geographical footprint. Nonetheless, a small number of European firms now dominate the global legal services market alongside a similar number of their US-led counterparts.
And yet, legal practices are still relative minnows in comparison with other globalized organizations. PricewaterhouseCoopers (PwC), the world’s largest professional services firm, is 10 times the size of Clifford Chance; Exxon Mobil, the world’s largest corporation, is 200 times its size.
So how valuable are historical comparisons? In order to understand some of the changes we’ve seen and what it means to lead a global firm, I met with a number of current and former senior and managing partners of such firms. We talked about the past, and I also gained an insight into how they see the future.
Strategy, Leadership, Alignment and Management
Their view of the last 15 years can be summarised as the period in which four business concepts slowly evolved in legal practice. These are: the S-word (strategy), the L-word (leadership), the A-word (alignment - thank you McKinsey, Harvard) and the M-word (management). I found a high degree of congruence in these leaders’ views on these four concepts. Konstantin Mettenheimer, joint senior partner of Freshfields, pointed to the liberalization of legal markets in the late 80s that opened the door for international legal practice. Duane Wall, former managing partner of White & Case, cited the consequent explosion in growth, which coincided with the start of globalization.
“Suddenly we had to build an executive team fit for the purpose: a team that could run the projects associated with international expansion (ultimately, outsourcing to India and insourcing to the Philippines); a team that could inspire lawyers and initiate action to achieve the required alignment of strategy, people, teams and processes,” Wall said.
Mettenheimer told me: “During this period, Freshfields underwent a transformation from a collection of individuals to a more structured, more collaborative organization. Then, we went on to become a more classically managed firm.” He explained: “To effect these changes, the secret was to ensure adequate consultation whilst establishing a clear sense of vision, uncompromising standards of performance, and individual accountability. We needed to create a collective sense of pride and direction, and recognise the importance of alignment. The Holy Grail was to develop a firm which was professional, partnerial and managed in equal measure.”
Gary Senior, Managing Partner of Baker & McKenzie in London, added: “The whole concept of leadership has shifted. It wasn’t even recognised 15 years ago. Neither was strategy. In the UK the professionalization of law firms started in the early 1990s. Since then, partners have moved their stance on leadership and management from reticence to recognition to acceptance to requirement! People now expect direction and guidance. Firms have gone from being unmanaged (and unmanageable) to being managed professionally.”
To illustrate the importance and impact of leadership, and of assembling the right management team, Sir Nigel Knowles, Joint Chief Executive of DLA Piper, commented: “Take our business in the Middle East. We started planning a presence in 2005 and within three years we had 130 lawyers and offices throughout the region. That kind of growth doesn’t just happen. It takes strong leadership and courage. Global law firm leaders are now acting just like leaders in other spheres of commerce. There’s been a coming of age in terms of law firm management.”
Return on Collective Individuality
If the art of leadership is the achievement of strategic objectives through others, management is the effective implementation of action plans by those others. In this respect, law firms probably represent the ultimate challenge to senior and managing partners. So just how can they achieve the maximum return on collective individuality (ROCI)? Unsurprisingly, I also found some common ground in how these leaders describe their remit. What emerged were five strands that shape their working lives:
-Developing the vision and strategy
-Assembling the right management team and structure to ensure effective implementation of
strategy and day-to-day operations
-Performing an internal pastoral role to inspire, support and motivate
-Ensuring a constant flow of effective communication
-Acting as external ambassador – the face of the firm
But what of the next 10-15 years? If strategy, leadership, organizational alignment and management had become so important, what was the scale of the challenge that lay ahead? Here, perspectives were more varied.
White & Case’s Wall was clear in his view of the legal landscape: “Larger firms will get even larger, but still there will be no more than nine or ten global firms. The price of market entry at the global level is already too high. Beyond these firms, there will be more stratification of the legal market and consolidation will accelerate. In some jurisdictions there could be big opportunities for change with the advent of external investment and multi-disciplinary practices.” In terms of practice, he said: “Commoditization will become a fact of life, but some firms will deal with it better than others.”
The leadership team at Freshfields concurred. Ted Burke, Chief Executive, said in a recent press article: “Legal Process Outsourcing (LPO) will radically change the legal market. We will see more unbundling of the way legal services are currently delivered.” His colleague, Mettenheimer, added: “Mechanised law will continue to be outsourced to low-cost jurisdictions. More complicated advice, however, will continue to be split between private practice and in-house counsel.” He went on to predict: “Even for this complicated work, companies will increasingly buy an agreed volume of hours at an agreed fixed price.” He continued: “The most complex, bet-the-ranch or highly-specialised work, however, will still be done by the best global practices. In-house counsel, meanwhile, will play a central role in managing the relationships with external legal advisers as well as taking on certain parts themselves rather than mandating firms.”
Market Polarization
Mettenheimer agreed that concurrent with ongoing globalization there would be continued polarization of the market. But on the global stage he said: “The first firms to create truly integrated legal teams across the Americas, Europe and Asia will be the dominant firms. This is a lot easier said than done – I mean truly integrated.” However, he did not see a rash of global MDPs (multi-disciplinary practices) being formed: “I doubt there will be mega mergers between accountants and lawyers,” he said. “Global law firms will pursue strong client demand and productivity rather than a flags-on-map strategy.”
In the light of the recent financial turmoil, Mettenheimer predicted that there would be more regulation (and more complexity of regulation) and added: “Like it or not, this will benefit lawyers, as long as it doesn’t hurt the economy. Risk management will take its rightful place on the boards of many companies. However, it will be a different market, one in which de-leveraging will be the order of the day. It will be difficult for clients to invest money without debt and we will need to acclimatise to this.”
One of the biggest challenges facing law firms is that clients will demand their lawyers finally become truly commercial in the way they think and operate. “Self-governance is an important part of partnership. But I would hope to see us taking advantage of the management skills and experience also available externally to help us run our business efficiently,” said Mettenheimer.
Senior agreed, but added a note of caution: “Firms will structure themselves more like corporate businesses. They will become even more managed and organised, and in the UK the Legal Services Act will fuel these changes. But some international firms will face a challenge to become less imperial in leadership style. British and American senior and managing partners will no longer be able to dominate leadership roles. At Baker & McKenzie, we’ve had a succession of non-US leaders and we’ve learned that the different regions – Asia, Europe and the Middle East, the Americas - need to be properly represented at board level.”
“The way I see it, the bi-polar world of New York and London has gone,” added Knowles. “In future, the financial markets will operate in a more integrated, global way, taking account of other financial centres: Frankfurt, Dubai, Abu Dhabi, Mumbai, Hong Kong, Shanghai and Tokyo.” He went on: “The long-term implications of the liquidity crisis are significant.”
Senior believes that law firm leaders are still likely to be lawyers. “I don’t see a whole spate of non-lawyer CEOs being appointed. However, the main lesson we can learn from other industries is the need to become much more comfortable in a global and multi-cultural environment,” he said.
There was a slight divergence as to what else law firm leaders might learn from successful captains of industry. Senior was unequivocal in his view: “The most successful company CEOs recognise the importance of three things: appointing high calibre people to key positions around them; having the courage to do bold things; and fostering transparency.”
According to Wall: “Corporations operate in a more command and control environment; law firms just aren’t like that. You have to take people with you, somehow. What I can say, though, is that Jim Collins’ book Good to Great is required reading for all of us.” Knowles agreed: "Corporations could learn a lot from successful law firms about alignment.”
Inspiring Confidence and Sustaining Momentum
The importance of “putting the right people in the right senior roles” was recognised by Mettenheimer: “We should do all we can to learn about the complete tool-kit of management from successful organizations in other industries. We need to study how their leaders become the embodiment of corporate vision through sheer drive and personal engagement. And we need to discover how these people take personal responsibility for inspiring confidence and ensuring momentum.”
It was a comment that reminded me of a conversation I once had on a Mediterranean beach with my father-in-law. A retired company chairman in the air travel industry, I asked him the secrets of his success. His answer was swift and deceptively simple: “Personal drive, sheer hard work and never allowing myself to become remote.”
This brings me to the ultimate question: what are the hallmarks of exceptional leaders?
According to the leaders with whom I met, courage was top of the list.
“Leadership involves some degree of friction; you can’t be loved by everyone, but you hope to be respected; it’s not a popularity contest!” said Mettenheimer. “What is important is to establish the right environment in which people can collaborate freely across borders,” added Wall.
The ability to instil a strong sense of direction came next. It is crucial to inspiring confidence and enthusiasm.
Paying attention to the world outside was the third attribute. Wall explained: “Leaders must be adept at observing what’s happening in the market so that they can adapt to change, competition and opportunity. They’d better not be caught asleep at the switch!”
This augurs well because research into the traits of successful business leaders invariably cites the words vision, courage, consistency, listening, communication and energy. Indeed, the latest research by leadership consultancy Whitehead Mann finds that the dominant attributes of effective leaders today are:
-Vision
-Clarity, consistency and integrity of purpose
-Competitive strategies for sustainable success
-Effective development of management team for the future
-Inspiration and engagement of people
-The Whitehead Mann report sums it up nicely:
“The most important factor is vision, which is intuitive rather than something which can be formally learnt. It is this which endows leaders with the ability to provide direction to their employees and which enables them to create a company where people want to work. It is a rare ability – to manage the present and create the future. But if the CEO can pull this off, they can build a lasting legacy.”
Knowles shared his admiration for Bill Gates and Jack Welch: “Both had an idea which they turned into a vision. And both had the courage to turn that vision into a world-dominant reality.”
It seems then that, in spite of the new digital age, some things change very little: having a healthy appreciation of the past; putting the best team in place to manage the present; and, most importantly, creating a future to which people can aspire – this is still what it takes to be an exceptional leader.
Simon Slater, Managing director of First Counsel Consulting Limited.
© E. Leigh Dance. First published in “Bright Ideas – Insights from Legal Luminaries Worldwide”. (Mill City Press) 2009. To purchase a copy please visit www.BrightIdeasGlobalLaw.com