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There’s a new breed of law firm manager in town — a nonlawyer with executive decision-making power. Increasingly, firms — from large-market leaders to small boutiques — are elevating and expanding their top-level business positions to include these professionals in their senior management circles. In most cases, the goal is to allow the firm’s top lawyers to focus on the practice of law while the business people focus on profitability. Ideally, the two sides cooperate in making strategic decisions. These new nonlawyer managers differ from traditional firm administrators. The latter typically oversee nonlegal staff and carry out decisions made by lawyers. The new executives are helping to guide firm policy. In recognition of the growing role played by nonlawyers, many firms have replaced their top administrative position with that of chief operating officer — typically the No. 2 spot in a corporation, reporting to the CEO. Whether or not top nonlawyers have snagged the COO title, they tend to have certain things in common: � They are more empowered than their predecessors to make business decisions on their own, and they take the lead in gaining consensus on those that do need approval. � They have MBAs and solid business credentials, often having previously worked in other fields. � They are paid, in a combination of salary and bonuses, more than many of the firm’s partners. � Many are hiring their own executive staffs to oversee firm finances, human resources, technology and marketing. Robert B. Harris, COO of Kansas City, Mo.’s Blackwell Sanders Peper Martin, exemplifies this new breed. Having joined Blackwell Sanders seven years ago as executive director, he has seen his role expand to where the chief financial officer, information technology director, and director of human resources report to him. In addition to overseeing all aspects of the firm, except for the practice of law, Harris plays a strategic role. For example, he was heavily involved in the merger discussions that led to his predecessor firm’s marriage to St. Louis-based Peper Martin in June 1998. “I think the biggest change I’ve seen is really an acceptance among lawyers of the importance of this role,” he says. “This is more than just being a business manager. … It’s seen as a partner-level position.” Getting business advice upfront was key to orchestrating a smooth merger, Harris says, because combining firms isn’t only about adding lawyers. It’s about merging accounting, financial and technology systems, as well as staff. DIFFERENT WORLD VIEWS “If you only worry about the ‘practice of law’ part of it, what happens when you need to file a joint tax return?” he asks. Or what if the two firms vary in their views on the roles of staff — with one taking a teamwork approach while the other sees staff as more of a fungible commodity? “The attorneys have a view of the world that’s completely different from my view,” he says. In addition to his strategic role, Harris has more leeway with operational decisions. “I have the authority and responsibility to run the administrative part of the firm as I see fit, with fairly minimal supervision.” Lawyers and nonlawyers say the trend toward giving business managers more input at the top, while allowing them more authority over day-to-day decisions, is driven by several factors. These factors include the increased competitiveness of legal practice and trends toward growth, consolidation and globalization. Pressured more than ever to bring in high-level business, top rainmakers have less time to spend on management. Yet, as firms grow, they need more sophisticated management advice. Some firms have solved this paradox by putting one high-level nonlawyer on their top management team. Atlanta’s King & Spalding recently installed Patrick C. Glisson as the firm’s first COO. In creating the new position, the firm conducted a national search, looking outside the legal arena for candidates, according to Walter W. Driver Jr., the firm’s policy committee chair and managing partner. “We wanted to bring someone who had fresh views, who wasn’t simply bringing other law firm experience to us,” says Driver. Glisson had been CFO for the Atlanta Committee for the Olympic Games, the city of Atlanta and the Emory Clinic, a university medical group. In his new role, Glisson replaced the former director of administration. “The difference may be in perhaps the expansion of the role and influence,” he says. “I would describe my job as being partner to the managing partner, leveraging him to spend more time … on dealing with clients, particularly larger strategic clients, [and] marketing the firm.” Clinton J. Kendrick, recently hired to serve as executive director of New York’s Shearman & Sterling, is the only nonlawyer on the firm’s four-person executive group, which includes the chairman, managing partner and European coordinator. Kendrick earned his stripes in the investment world, most recently serving as CEO of Matrix Global Investments Inc., a New York-based private equity firm. In addition to overseeing more than 1,000 administrative personnel, Kendrick is expected to advise in the areas of growth, globalization and technology, says managing partner Whitney D. Pidot. “We envision Clint’s role as much more than an administrative director, but really an executive,” Pidot says. “With the heavy competition for young talent, you simply can’t be in all the places you want to be,” he adds, so the firm needs more sophisticated advice on how to leverage its resources. San Francisco’s Brobeck, Phleger & Harrison is run by a three-person team that includes the firm’s chairman; managing partner James E. Burns Jr., who functions as CEO; and Executive Director Abe Isenberg, who functions as COO. “Our positions mirror to a good degree those positions in the business world,” says Burns. The firm created the position of executive director more than a decade ago, he says, but “it really started out as a super-administrative position and it … evolved into a financial role.” During Isenberg’s tenure, the position has evolved further, to where he is looked to for leadership or input on nearly all strategic decisions, Burns says. For example, Isenberg says he has been instrumental in increasing the firm’s focus on the East Coast, particularly in the decision to open an office in Reston, Va., slated for November of this year. When it comes to big-picture issues, says Isenberg, “I am involved in … the initial thinking. … I’m not just executing somebody else’s decisions. I think that’s the distinction [from] the historical role senior managers have played.” Rather than empowering one business guru, other firms have opted for an executive team. When Robert F. Ruyak took over as CEO and managing partner of Washington, D.C.’s Howrey & Simon in 1998, the firm replaced its executive director with a peer group, consisting of a COO, CFO, H.R. director and chief information officer. Since then, the firm has added a chief marketing officer. Some of the positions were new. The others were elevated to higher-paying positions, says Ruyak. “What other firms have done is, they’ve gone to one nonlawyer manager who has to be everything,” he says. “The problem is that you’re not going to find the level of experience that you need for a large firm.” San Francisco’s Orrick, Herrington & Sutcliffe has a similar strategy. The firm upgraded its executive director position to that of COO, who now supervises a CFO, chief marketing officer (CMO) and chief technology officer. Firm Chairman and CEO Ralph H. Baxter Jr. declined to comment on specific salaries, but sources outside the firm say that CMO Norm Rubenstein is the highest-paid law firm marketer in the country. “Orrick has chosen a strategy of high economics in every respect: high levels of service, high levels of compensation and high levels of revenue,” Baxter says. “We’ve been doing this in a progression over time. The partners are increasingly comfortable with the concept that we should delegate responsibility to people who are expert at them.” Similarly, several key nonlawyer staff at Chicago’s Kirkland & Ellis sit as equals with partners on the committees they serve, says Firm Administrator Douglas O. McLemore. They include the CFO, CIO and client service director. “Doug has single-handedly convinced us that lawyers need to be less involved in the business of running the firm,” says Kevin R. Evanich, a senior partner and firm committee member. Large firms aren’t the only ones elevating their business talent. Gary W. Eden, executive director of the 45-lawyer Dallas litigation boutique McKool Smith, says he functions as a COO, although he was hired four years ago primarily to oversee administrative matters. “I’m doing that today, but now I’m also involved in the staffing of cases, recruiting lawyers and strategic planning of the firm,” Eden says. His duties include working out fee arrangements with clients and making decisions about whether the firm is willing or able to enter into alternative billing arrangements. He also makes recommendations about which lawyers should handle cases. Louis S. Bury, COO and director of marketing at Chicago’s Freeborn & Peters, which has slightly more than 100 lawyers, was tapped by his firm recently to make recommendations concerning associate salary adjustments. “It involved more than financial analysis. It involved assessing where our competition was in the marketplace and assessing where we wanted to be strategically,” he says. There is little consensus in the legal industry as to which emerging business model is best. “What law firms are doing on this front varies quite a lot,” says Baxter. But those in the management trenches agree that nonlawyers are slowly gaining credibility and power at firms. “As I look around at my peers, I think, definitely, with globalization and the other issues firms face today, there’s no question that all of the major firms have elevated the senior positions to a higher level,” says McLemore, of Kirkland & Ellis. SOME CONTRARIANS Not everyone is handing over the management reins to nonlawyers. James A. Kurpius, vice president of operations at Palo Alto, Calif.’s Wilson Sonsini Goodrich & Rosati, says that as he prepares to retire, the firm has decided not to replace him. Instead, the firm has gone to a vice president system, with VPs for finance, information systems and administration. But lawyers are still firmly in charge. Lawyer Donna M. Petkanics serves as managing director of operations; her counterpart on the practice side is lawyer John V. Roos. They report to Chairman and CEO Larry W. Sonsini. “We’ve divided it into two positions because our managers have always maintained a viable practice,” Kurpius says. The majority of nonlawyer managers say they aren’t bothered that they’ll never make partner, as long as firms ante up in terms of salary, performance bonuses, responsibility and respect. A few, however, say that the ethical bar to fee-sharing with nonlawyers does create a division between them and the lawyers that doesn’t exist in the business world. “There is some limitation on the ability to make someone like myself part of the group instead of someone who works for the group,” Eden says. “I feel as much a part of the group as anybody could feel; nevertheless, there’s a distinction between the owners and somebody who’s working for the owners.

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