A “transfer market” of law firm chief executives should emerge in the post-Legal Services Act world, Professor Stephen Mayson has predicted.
Addressing the annual luncheon of the Institute of Legal Finance & Management in London, Professor Mayson said that while senior administrators and support staff have been moving around law firms for many years, “the new world will probably see movement at the most senior, chief executive, level as well, in ways that we have not yet seen”.
He pointed to the requirement for alternative business structures to appoint approved heads of legal practice and of finance and administration (HoLPs and HoFAs, but known as compliance officers – COLPs and COFAs – in law firms). “Success in these roles might encourage the development of a headhunters’ market where either commercial achievement or regulatory compliance is presenting challenges,” he said.
Professor Mayson continued: “There is also a growing realisation and acceptance that, although the legal and regulatory obligations on lawyers make the nature of legal practice a different vocational pursuit than many other commercial activities, the nature of the firm as a business entity is not so far removed from the rest of the business world as some would prefer to think.
“The new world will require a shift to building a valuable entity or institution that will be attractive to investors and financial markets, or that will enable the smoother accumulation and transfer of ownership interests.
“The ability and experience to do this is not yet prevalent in the legal sector, and the transfer of successful chief executives and senior managers will play a part in the distribution of this know-how among firms. Indeed, some lenders and investors might well insist on the appointment of their own choice of management team as a condition of their financial support.”
The academic, who heads the Legal Services Institute, deprecated the decision to change the titles of HoLPs and HoFAs to compliance officers for law firms: “There’s a world of difference in status and credibility in a lawyer’s mind between a head and a compliance officer, and a real risk that the latter will be a downgraded function.”
He suggested that members of the Institute are well placed to become HoFAs/COFAs and take other senior non-lawyer roles within practices.