While the debate about the balance on boards between executives and non-executives, establishment (i.e. serial non-executives) and non-establishment members, has been going on for some time, it is only recently that the discussion in legal circles has returned to the role of lawyers on boards. This has been prompted, in part, by the retirement of some high-profile City lawyers and also by the likes of Bill Knight, the current president of the City of
While the dinner attendees were careful not to refer to age as a determining factor (i.e. new does not mean young and experienced does not mean old), the discussion was initially focused on the benefits new talent could bring to more established boards, including creative ideas from new industries, broader exposure in working with modern technology and a better understanding of current consumer trends.
As the dinner progressed, the discussion turned to the current state of the economy and, in particular, the credit crunch. That brought the discussion back to the experience that companies were looking for on boards. One non-executive director explained that he wanted to turn to a non-executive director who had experience in dealing with tough business issues, and who could offer practical advice, while being prepared to make difficult decisions.
Having missed my chance to raise the case for lawyers as non-executive directors during the discussion about new talent, new industries and imaginative thinking, I thought this was the ideal time to raise it. So I did, pointing out that lawyers, particularly senior City lawyers, regularly advise their clients on significant business decisions, often during a crisis. We advise a multitude of clients, in a vast array of industries, so there is a fair chance that we will have experienced working with clients on their most business critical issues.
I extolled the virtues of lawyers as common sense sounding-boards to clients, showing them as people used to dealing with difficult situations and people, under considerable pressure, and often tasked with negotiating unpalatable but essential compromises. Ideal traits, I suggested, for a non-executive director dealing with a board chair or CEO in crisis management mode and, potentially, hostile shareholders.
I was surprised at the unenthusiastic response to my suggestion. Comments that came from around the table about lawyers included “not commercial”, “cannot make decisions” and that they “do not understand business”.
The response was one I would have expected to have received over two decades ago when lawyers were better known for giving arms-length legal advice, unconstrained by commercial considerations. Today, we wouldn’t survive if we weren’t commercial. We are now much more knowledgeable and attuned to our clients’ businesses and, frankly, much better legal advisers because of it. However, the outside world’s perception of the industry does not seem to have caught up.
We also manage our law firms as businesses. That means partners understand how a law firm, which is of course a business, is run and, at all levels, take part in management, whether it be formal roles like managing partner or finance partner or simply managing teams of people as profit centres. Partners are much more aware of the business issues within law firms, which aren’t dissimilar to business issues faced by our clients in other industries.
It would be an exaggeration to suggest that all lawyers can become good businessmen or women or, in fact, good board directors. Equally, it is a simplification to say that lawyers cannot make commercial decisions.
While the view around the table may not be wholly representative of the City, it is an indication of why lawyers face a perception problem in being accepted as anything other than advisers who merely sit on the fence. As a profession, We need to change that perception, so that the value that lawyers can add to the City, is recognised. Many lawyers have the potential to have a place, not only on boards, but also in helping to shape some of the broader business issues that come up in the City. (Why is there only one lawyer on Gordon Brown’s High-Level City Group?)
We need to convince a wider audience of the greater role we can and do play in business, so we get better representation on boards and a stronger representative voice for our industry. Our challenge is positively promoting ourselves as key stakeholders in the City and reinforcing the message that we are good business advisers.
Simon