For many years there has been a quiet and uneasy controversy within firms on whether to limit the tenure of the firm leader. In fact, a decision to restrict the firm chairman’s length of service to no more than two three-year terms is regarded as one of the reasons for Heller Ehrman’s collapse ["Why Heller Died," November 2008].
For me this has been an amusing debate, given the lack of internal adulation accorded most managing partners. After all, working in management is what smart lawyers are said to disparage. So here we have an important leadership role that people aren’t exactly chasing after (and one that isn’t always accorded the respect that it deserves), and then we impose artificial limits on the tenure of the incumbent. Does that make any sense?
There are good arguments for and against term limits for firm leaders. But after examining them, I think the more compelling question is how, after some years of service, can a managing partner continue to remain enthusiastic about the job and maintain a fresh perspective.
The argument against term limits focuses on experience. Veteran managing partners, whether serving part-time or full-time, will often admit that for a good part of their first year, they were flying blind. I think that is largely due to the lack of guidance and training that most new managing partners receive. Theirs is a sink-or-swim challenge. Those same veterans report that by Year Two they were beginning to feel some confidence, and that only by Year Three were they really beginning to make meaningful progress. Unfortunately, by that point, many firms are looking for their next leader.
The issue, opponents of term limits say, is not how long the managing partner serves. Instead, it is performance-as measured by business savvy, leadership prowess, and ability to execute the firm’s strategy. If a firm has the wrong leader, make a change. But don’t handcuff an effective managing partner, this argument goes. Instead, give him or her room (and time) to lead, maneuver, innovate, and succeed.
On the other hand, the argument in favor of term limits is about freshness. In 1972, sports researchers D. Stanley Eitzen and Norman Yetman reported (in an academic article called “Managerial Change, Longevity, and Organizational Effectiveness”) on a finding that has significance to any debate on leadership tenure. Based on a large sampling of college basketball coaches, they found a relationship between coaching tenure and team performance. The longer the coach’s tenure, they discovered, the greater the team’s success-for a time. But after a certain point-13 years, on average-the team’s performance steadily began to decline.
Nineteen years later, Columbia University professors Donald Hambrick and Gregory Fukutomi built upon this research, outlining five discernable phases in a chief executive’s tenure. In the first phase, the leader is working to develop an early track record, legitimacy, and a political foothold. This is followed by a period in which the leader has achieved small successes and established enough credibility to consider exploring new directions. In the third phase, the leader selects a theme for how the firm should be configured and run from that point on-in other words, the leader selects those elements that seem to work the best and that are the most comfortable. The fourth phase is a period of refinement in which only a few changes are made (and most of these are fine-tuning). Finally, job mastery gives way to boredom, exhilaration to fatigue, strategizing to habituation. The leader’s spark dims, and responsiveness to new ideas lessens. The risk of malaise and lethargy increases.
The disengagement of this final stage occurs even though the leader’s power is at an all-time high. At a law firm, this managing partner may have appointed many of the practice group leaders and office managing partners, and had a hand in selecting committee members. He or she retains loyal supporters throughout the firm, and may even have developed an aura as a senior statesman. None of these constituents are likely to have an appetite for disrupting a good thing.
For the leader, giving up the title is generally an unappealing option, even if the excitement of managing the firm is long gone. As a result, this dysfunctional stage in a leader’s tenure can be protracted. Term limits, their backers say, may be the only realistic way to ensure that the leader leaves office before his or her performance deteriorates.
In other words, a managing partner’s term in office can be either too short or too long. The research seems to show that because of the learning process, a managing partner who spends less than three or four years in office has not had ample opportunity to achieve peak performance. Thus, it may be harmful for firms to have a managing partner serve a three-year term, only to be followed by a new managing partner launching the firm in a new direction before achieving any return from the complete implementation of the previous administration’s initiatives.
One of the questions that this raises is whether the deterioration that purportedly comes with an extended tenure can be forestalled. After all, there are plenty of very successful firms with long-tenured managing partners. I asked several firm chairs and managing partners what they do to recharge their batteries. Among the methods they identified were keeping a personal journal of ideas that they remained excited about implementing, disciplining themselves to delegate certain managerial tasks both to develop other potential leaders and to stave off the boredom of the routine, and reserving specific blocks of their schedules for “think time.”
Brian Burke, who has been the chief executive officer of Baker & Daniels for 16 years, suggests having a coach to confide in and use as a sounding board, as well as making time to read and learn. Thirteen-year management veteran John Sapp of Michael Best & Friedrich says that he kept in touch with new ideas by participating in management forums.
Veteran firm leaders also talked about getting away from “group-think” by hosting monthly partner luncheons where CEOs of firm clients came in to talk about innovations that they were making at their companies. Other techniques included networking with firm leaders from other types of professional service firms and organizing office managing partners into a trends-monitoring committee that reported quarterly on new developments that could affect the firm. Marc Bloom, the long-serving chairman of the Dutch firm NautaDutilh, created an external advisory committee of economists and business executives to challenge him on strategy and general business operations.
Finally, Harry Trueheart III, the retiring chairman of Nixon Peabody, says that “the question of forestalling deterioration is an interesting one but has a bias. It assumes [that] a skilled leader can and should go on indefinitely despite the trajectory of the organization-not a sound premise. Law firms in particular need to renew and refresh themselves, develop talent for the future, assure a continuity of leadership talent and a broader [selection] pool.”
I believe it is really the managing partner’s state of mind that is critical-knowing that his or her identity is not completely wrapped up in the position forever, and that there are new challenges out there. Part of this state of mind is understanding that someone else could be even better at managing the next stage in the firm’s growth-and being content with that knowledge.
Patrick J. McKenna is a management consultant to law firms. His most recent publications include the e-books First 100 Days: Transitioning A New Managing Partner and Passing The Baton: The Last 100 Days. He may be contacted through his Web site, patrickmckenna.com.