Peer to Peer Magazine

officer (COO) administrators that fit the mold. For other firms, expert power can be a perception of expertise. Any one of these powers is enough to solidify (or jeopardize) the success of a law firm CEO. A successful leader, however, must be able to balance all three. AN EVOLUTION BLUEPRINT The law firm CEO will not take hold overnight. In fact, since Green's introduction last year, not one Am Law 200 firm has announced the hiring of a CEO. A slow-and-steady approach is commonplace in law firms, and this concept — lawyers ceding power to non-lawyers — faces a lengthy adoption process. According to David Williams, Managing Partner of Harrison Pensa, a midsize law firm in Ontario, Canada that hired its first CEO in 1999, several factors must align: "If your firm is in the right place at the right time with the right mindset, and if your lawyers are focused on top-line growth and believe a changing legal industry requires a plan for the future, your firm may be ready to hire a CEO." Will we be ready by 2020? Two recent trends suggest a tipping point is near. Law firms are creating more business roles. As the business of law becomes more sophisticated, the staffing model grows more complex. The last decade might well be known for the proliferation of professional staff. Recent examples include knowledge management (KM) professionals, pricing professionals and practice group administrators (PGAs). KM professionals and PGAs have established their relevance to firms by improving efficiencies, cutting costs and leveraging institutional knowledge. Pricing professionals — now numbering more than 30 in two dozen law firms — are finding a niche in alternative fee arrangements, procurement scorecards, value pricing and, in some cases, legal project management. Shortly before becoming the CEO of Brownstein Hyatt, Blane Prescott observed in Hildebrandt Baker Robbins' "Top 10 Most Important Long-Term Changes Impacting the Legal Profession:" "Pricing in the profession is evolving. Fixed fees, project pricing and portfolio pricing are the long-term future of alternative pricing." As more professionals join law firms, lawyers will understand better the value business professionals contribute and will trust the firm's operations are in capable hands. The second trend might be the most significant. Law firms have begun to hire chief strategy officers (CSOs). Although the first CSO appeared more than a decade ago, more than a dozen firms currently employ a CSO. The CSO spans organizational divides and integrates knowledge, innovation and best practices from different areas of the organization. In the corporate world, CSOs often partner with — then succeed — their companies' CEOs. A law firm would benefit from a CEO with that kind of perspective and experience. In fact, Pepper Hamilton's Green emphasizes the role of strategy in today's successful law firms. He told the Philadelphia Business Journal he expected to "develop and execute the strategy that will provide both outstanding value and service to our clients and achieve significant growth for the firm." ETHICAL CONSIDERATIONS No matter the progress any law firm is able to make on economics, education, power or staffing, there is one significant piece of the non-lawyer leadership puzzle that must be addressed: ethics. The American Bar Association's "Model Rules of Professional Conduct" clearly states a law firm cannot have a non-lawyer in certain leadership roles. Rule 5.4 states, "A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if … (2) a nonlawyer is a corporate director or officer thereof or occupies the position of similar responsibility in any form of association other than a corporation; or (3) a non-lawyer has the right to direct or control the professional judgment of a lawyer." For business-focused law firms ready for a CEO, Rule 5.4, Professional Independence of a Lawyer, creates a potential roadblock: the CEO cannot direct the professional conduct of any attorney. In fact, the ABA is quite strict about the professional's autonomy, as evidenced by its concern over fee-sharing and a lawyer's professional judgment. However, COOs and administrators have been advising attorneys for years on several client-related issues (e.g., suspending work on delinquent clients). Both Pepper Hamilton and Brownstein Hyatt have been operating with CEOs, so the Model Rules are not necessarily prohibitive. As pricing and legal project management professionals grow their influence in client service matters, lawyers (and the ABA) should see the value in non-lawyer leadership. Until more firms hire a CEO, it is unlikely the ABA will clarify and, if necessary, amend Rule 5.4. LOOKING AHEAD Lawyers are beginning to trust administrators, and the legal industry is slowly embracing a power shift. With economic and educational pressures on the rise, we should not be surprised if 2020 is the tipping point for administrators as CEOs of law firms. Until then, we should be watching for the early adopters like Pepper Hamilton — progressive, revenue-focused law firms that jump out ahead of the curve. Peer to Peer 55

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