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In: executive directors. Out: committee meetings. As law firms increasingly style themselves to look and act more like their corporate clients, some of the profession’s most time-honored customs are being transformed. Many of Washington, D.C.’s biggest and most-profitable firms — including Shaw Pittman and Howrey Simon Arnold & White — are moving away from the traditional committee-centered decision-making system and passing on more power and responsibilities to high-paid, nonlawyer executive directors. While firms have long employed office administrators to handle everyday operational duties such as ensuring the payroll department runs smoothly, over the past five years these administrative professionals have become increasingly important and well-compensated figures within firm management. Take John Watters, executive director of Covington & Burling. Not only is Watters involved in all of Covington’s major administrative decisions, but he’s also shaping the firm’s strategic moves, acting as a senior adviser to chairman Jonathan Blake and the management committee. It wasn’t always that way for Watters, a licensed accountant and former administrator at San Francisco’s Brobeck, Phleger & Harrison and D.C.’s Howrey & Simon. When he first landed at Covington three years ago, he was busied with such banal chores as wiring money and conducting termination interviews. Now Watters’ routine includes talking with practice group heads about how best to cross-sell services and target possible lateral hires. “I have made enormous inroads that a lot of old-timers didn’t think I could make happen,” he says. Case in point: Watters says that the firm’s committees — once the nexus of decision making — behave more like “advisory groups than policy-setting groups.” Still, Blake says that final policy decisions “are being made ultimately by lawyers.” He adds, “The recommendations — the pros and cons — are being developed to a much greater extent by the [professionals] in consultation of course with the lawyers.” “It’s sort of like moving [the lawyers] off the front line to being more like a board of directors,” says Watters. Covington, which has a reputation for being one of D.C.’s most conservative firms, might be the least likely candidate for the kind of corporate overhaul that Watters has been quietly conducting over the past few years. But according to Watters, the firm “was ready to embrace the corporate mentality.” Not all law firm partners are ready to lay down their swords. At some local shops such as Arnold & Porter; Dickstein Shapiro Morin & Oshinsky; and McKenna & Cuneo, core issues including partner compensation and client conflicts are still handled by committees. At Dickstein, what is known as the Group of Five — the directors of marketing, information, human resources, facilities, and finances — meets regularly with managing partner Angelo Arcadipane and his deputy, Michael Nannes. According to Nannes, the group functions collectively like an executive director but doesn’t do any strategic planning — that’s still the domain of the practice heads and the executive committee. At Arnold & Porter, executive director and CFO Judith Hurley has served on the management committee since 1990 — longer than any of the partner members. “There’s no significant issues she isn’t involved in,” says managing partner James Sandman. Yet he acknowledges that Hurley doesn’t play a role in setting partner compensation, which continues to be handled by a committee of lawyers. As for Christopher Lyman, who is stepping down as chief operating officer at McKenna & Cuneo after 17 years, he says his role has evolved to include more substantive responsibilities. But his decision-making power is limited to having a seat — but no vote — on the firm’s management committee. Firms that hesitate to turn over the reins to nonlawyer administrators may soon find themselves in the minority, as the corporate model of governance becomes the latest gotta-do-it obsession for efficiency-driven law firm managers. “Many years ago, astute managing partners recognized that having a professional business manager was a key element to running the financial aspects of a firm,” says Paul Mickey Jr., chairman of D.C.’s Shaw Pittman. “It really was only in the last three to five years that partnerships as a whole have come to that realization.” Mickey recently tapped Karen Knab, an economist by training who worked in similar capacities in the D.C. offices of Sutherland, Asbill & Brennan and Philadelphia’s Pepper Hamilton, to serve as the firm’s executive director. TIME IS MONEY As lawyers become busier and face greater pressure to build books of business, they are becoming less and less interested in spending hours in a boardroom arguing over wallpaper and office assignments. “They see the wastage involved with lawyers sitting around a table making decisions a professional could do more quickly,” says Mickey. Not only that, many professional administrators note, the lawyers tapped to sit on committees tend to be the firm’s rainmakers, the last people who should be pulled away from doing what they do best — nabbing high-end legal work. The rise of the executive director in law firm hierarchy also comes as firms merge or grow organically into ever larger partnerships, expanding into new markets in the United States and overseas. “[Running a firm] is more complex; we’re more spread out in more geographical locations, we have more people, and we are trying to develop a practice-based management system,” says Robert Ruyak, chairman of Howrey Simon Arnold & White. Two months ago, Ruyak hired the firm’s first chief operating officer, Robert Pivik, who left his post as COO of accounting firm Deloitte & Touche to head up Howrey’s administrative team. Although Howrey Simon had non-lawyer professionals managing back office functions prior to the merger last year with Texas IP boutique Arnold, White & Durkee, Ruyak says they’ve never hired someone with as much executive-level experience as Pivik. Patton Boggs has also recently added an upper-level administrator. To meet the growing demands of running numerous regional offices, the firm brought on Marion Baker, a former senior manager at KPMG. Baker occupies the No. 2 slot as deputy executive director at the firm, allowing the executive director, John Abernathy, to get more involved in such strategic decisions as lateral hiring and conflict clearance. SUBSTANTIAL SALARIES Law firm consultant Lisa Smith, who is based in Hildebrandt International’s newly opened D.C. office, has taken note of the increased importance – and compensation – of law firm administrators. “It’s not that it’s so revolutionary to hire a nonlawyer,” says Smith. “What is different is the level of the hire.” Executive directors and chief operating officers make anywhere from $200,000 to $500,000 per year, she says, and the rates are even higher in New York. Watters, for example, earns a salary on par with the average draw for a Covington partner. Lawyers may not like dipping into profits to pay for an executive-level administrator, but considering the enormous jump in revenues and profits in recent years, the salaries may not seem so unreasonable. As Shaw Pittman’s Knab notes, “This is a $150 million company and has all the issues of a big and, in Shaw Pittman’s case, growing company.” Making a growing firm run more smoothly is also a top priority for James Leary, who left Shaw Pittman to become executive director of Akin, Gump, Strauss, Hauer & Feld at the end of last year. “Akin, Gump has grown so incredibly in the last five years that we haven’t really taken advantage of our size,” says Leary. “Because the offices grew up under the Akin, Gump umbrella, but somewhat separately, we never pulled them together.” For example, Akin, Gump currently has banking relationships with 13 different financial institutions, making a simple task like finding out the firm’s cash position a day-long chore. “I haven’t been afraid to say, ‘This is kind of crazy the way we are doing it,’ and then put changes in motion,” says Leary, who adds that firm chairman R. Bruce McLean and the management committee have given him the authority to restructure firm operations. Not surprisingly, it is the managing partners who tend to be the biggest cheerleaders of strong executive directors. “It’s important to be able to have someone who understands operations,” says Ruyak of Howrey Simon. “Otherwise, a managing partner gets pulled into those things that, quite frankly, are not what a managing partner should be doing with his time.”

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