Co-Leadership of Law Firms Is Tougher at Midsize Shops
There are sound reasons for midsize law firms to split a single leadership role among multiple people, but as a number of firms have learned the hard way, an idea is only as good as its execution.
July 05, 2018 at 01:25 PM
6 minute read
The original version of this story was published on Law.com
Editor's Note: This story is adapted from ALM's Mid-Market Report. For more business of law coverage exclusively geared toward midsize firms, sign up for a free trial subscription to ALM's new weekly newsletter, The Mid-Market Report.
There's a common emotion expressed by many ex-managing partners of midsize law firms when they're interviewed about handing off the reins and getting back to the practice of law: relief.
While the concept of hiring nonlawyers to handle the business affairs is just now starting to catch on among firms outside of Big Law, the vast majority of midsize shops still ask their partners—and very often their rainmakers—to pull double duty as practicing attorneys and business leaders. Unfortunately, even the ones who are good at it tend to get burned out by the administrative work.
It's for this reason that many firms have attempted to distribute the load among multiple attorneys, typically splitting the traditional managing partner role between two or even three people.
But while it's a sensible theory on paper, it can go very wrong in practice, law firm consultants said.
“It's not a great model, particularly in a midsize firm,” said Brad Hildebrandt, an expert in law firm management. “Anything can work. But my own experience with it is it more often doesn't work than works.”
One of the downsides of having two partners in the same role in a midsize firm is the loss of revenue when multiple managers spend less time on their own practices. Neither Hildebrandt nor Lisa Smith, who heads the Washington, D.C., office of Fairfax Associates, think midsize firms need more than one leader.
“I do think more can go wrong than right,” Smith said. “Doing two full-time jobs half time can be more of a challenge than they expect. In the law firm context, clients have to come first.”
Another downside of shared power is when partners play one manager off the other, sowing dissension.
“What you'll see is when the partners don't get the answer they want from one of the managing partners, they'll go to the other. It's like parents,” Smith said.
Law firm consultant Jeff Coburn also said he would generally advise against sharing CEO or managing partner duties among two individuals.
“It could soon become duplicative, confusing, and possibly even competitive,” Coburn said.
Such arrangements only work, Coburn said, when the duties of each person are clearly spelled out. The same goes for dual leadership by a chair and managing partner, Coburn said, noting that is more common than co-CEOs or co-managing partners.
And there are real world examples that seem to bear these concerns out.
In February 2017, Pittsburgh-based Eckert Seamans Cherin & Mellott announced that it had installed partners Timothy Hudak and Dorothy Davis as co-CEOs. A little over a year later, Davis was ousted from the 344-lawyer firm. Sources said Hudak took a decidedly hands-off approach to his leadership role, largely leaving the decision-making to Davis, who made changes without communicating to others in the firm, including changes to practice group leadership that were not received well universally.
In an interview May 4, soon after the firm discontinued its dual-leader structure, executive committee chairman John McGinley said the firm had conducted a survey of its lawyers to get their thoughts on the two-CEO leadership model.
“Most of the lawyers here prefer a CEO model of one voice,” he said. “They thought the duality created ambiguity.”
In 2012, Sacramento-based Porter Scott split its single managing partner role into three co-managers. By 2015, the 36-lawyer litigation firm had reverted back to its previous leadership structure.
“I found the threesome approach to managing the firm an interesting thing to watch,” Nancy Sheehan, one of the former co-managing partners, told the Sacramento Business Journal after the firm scrapped the three-leader model. “It was an eye-opener to me, just doing my one-third part and trying to figure out when the three of us could be in the same place at the same time. Did we repeat stuff because we couldn't do that? With an all-litigation firm, it's probably wiser with one person and advisory input.”
But there are success stories, all of which share a common theme: communication is key.
Murphy & McGonigle name attorney Tom McGonigle said he and name attorney James Murphy have shared power since they started the New York City firm eight years ago.
“James and I kind of made a pledge when we opened the firm that there wouldn't be daylight between us,” McGonigle said. When there is disagreement, it's usually because one of them (“usually me,” McGonigle acknowledges) hasn't listened to the other person's viewpoint well enough, McGonigle said.
When it comes to prickly issues, such as determining compensation at the 55-lawyer firm, the co-founders have a way of working it out. The partner who knows a colleague best serves as his or her champion while the other is more objective. They will likely have to meet two or three times until consensus is reached.
Nason Yeager, a 32-lawyer full-service firm in West Palm Beach, Florida, meanwhile puts the bulk of its decision-making power in the hands a four-member executive board, which reports to a board of directors consisting of the firm's equity partners.
“We've run this way since the 1990s. We had it the other way where there was one person pretty much running things, and when that person left we went to this way,” said Nason, Yeager, Gerson, White & Lioce president Gary Gerson. “Partners feel more advised and more a part of decision-making and therefore feel more vested in the process.”
Gerson handles day-to-day decisions, and the executive board meets about every other month plus as needed. The board of directors gathers at least quarterly, but the sessions can be as brief as 10 minutes.
“We are very transparent. At the end of the day, we almost always have unanimity in our decision-making, and there's often discussion to get to that point, and we have good discussions,” Gerson said. “We typically all are on the same page in terms of how to proceed. That may be a less impulsive way of working, but the firm's almost 60 years old, and I think it's worked.”
Susan DeSantis, David Gialanella, Catherine Wilson and Lizzy McLellan contributed to this report.
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