Editor's comment: The leadership test

Management at law firms is better than many assume

Are law firms inherently bad at management? This argument was voiced at a panel debate I attended last week and it's certainly not the first time I have heard such sentiments. The essence of the claim is that even large commercial law firms come up badly when compared to most public companies or other industries.

Yet I find myself unconvinced. Not because law firms are beacons of leadership, but because these claims are often made with little to back them up. In addition, I suspect that some are giving rather too much credit to the standard of management outside the legal profession.

Having been a business journalist for 14 years I have come to the considered conclusion that there is nothing remotely unusual about poor management in Britain plc. Not only are plenty of companies badly run, the plain fact is that shareholder governance has at best had mixed results at delivering management excellence, including both rewarding genuine performance and punishing executive failure. Indeed, it strikes me that one of the greatest strengths in law firm governance is its avoidance of the separation between ownership and management that in so many cases has failed to deliver at plcs.

There is another element in which law firms have tended to deliver rather better than some give credit: managing talent. True, their ability to get the best out of non-legal staff is still generally woeful but law firms' obsession with attracting, developing and retaining the best lawyers is a strength that many other 'people businesses' could learn from.

And there is another factor that should be remembered when judging law firm management: it has improved considerably over the last decade. Effective communication with staff and clients and operational clarity are no longer rare qualities among law firm leaders, even if long-term strategic thinking remains less developed. There are some very effective operators now at the helm of major commercial firms, not just in the top tier but at many middle-market players as well. Indeed, when you encounter some of the less credible personalities leading major firms it is all the more jarring given that they are now the clear exception.

To be sure, management at law firms isn't perfect. It tends to excel at understanding and refining its existing model. As such, managers are often unimaginative or flat-footed at considering genuinely new or ground-breaking initiatives. There is still too much instinctive conservatism that leads firms to continue doing ineffective things because they have been done for years, and resisting promising ventures merely because they are new. But commercial law firms didn't get to drive one of the UK's most successful industries by pure luck. Perhaps it's time that achievement got its due.

More comment and analysis