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Law firm tap business expertise

The Baltimore Sun

Carolyn Summers, an Ivy League MBA, was surprised when a headhunter contacted her about a job at a law office.

"I thought, 'Why is a law firm interested in me?' " she said in an interview. "The idea of what I was - which was a financial and business manager - being at a law firm, didn't really click."

Even after interviewing at the firm, where the proposed job was explained to her as similar to that of a chief operating officer, or COO, Summers was skeptical.

"I had a whole lot of hesitations about the idea of working at a law firm," she said. "It still struck me as out of my primary role. I kind of took a deep breath and said, "We'll see.' "

Now, from her Mount Washington office, where she is practice group manager for the corporate and securities practice group of DLA Piper nationwide, Summers is a convert to the contributions that someone with a master's degree in business administration can make to law firms.

"DLA Piper was looking for professional management help, because as the firm continues to grow, the firm wants decisions driven by business rationale and understanding," she said. "At the end of the day, my job is to improve the bottom line. I work on both the revenue side and the expense side."

DLA Piper's decision to bring in MBAs to support practice groups - the various categories of legal work that the firm handles - is part of a trend nationwide, one that is starting to trickle down to smaller law firms. A majority of Am Law 100 firms and at least a fourth of the Am Law second hundred firms - the nation's largest law firms as listed in the trade publication, The American Lawyer - now have some version of the position, experts say.

For generations, partners at law firms have handled the decisions on which clients to take on and how to handle those accounts. But, increasingly, firms are choosing to hire business experts to assist with some those responsibilities.

The shift is based on a recognition of the need for management expertise and an understanding that spending hours running a business is not the most economical use of time for top-billing attorneys.

Bringing MBAs in to lend expertise is also being done in other areas where groups of professionals have traditionally been overseen by senior colleagues. MBAs whose training includes a health care component, for instance, are particularly valuable in that field because they come in with an understanding of the environment in addition to the business skills they need, said Lydia Reed, president and chief executive officer of the Association of University Programs in Health Administration.

From her Baltimore office, Summers, 41, manages the business aspects of work for a group of more than 250 lawyers across the country - a shift from her previous job as an assistant vice president of finance and accounting for a benefits technology company.

Nationally, Summers has four counterparts within DLA Piper - all have MBAs and extensive business background, she said. Only the largest of the firm's 11 practice groups have the MBA position, she said. But all of the groups have a practice group leader, a senior partner, who runs the group, she said.

A large part of their job is to break down and summarize information so that practice group leaders - rainmakers, who have the most high-profile clients and bill at some of the highest rates in the firm - can make knowledgeable decisions and be free of day-to-day details.

"It makes complete sense, especially for a larger firm," Summers said. "For a small firm, where the overall management is less complex, I could understand where I'd be unjustifiable overhead."

At least one other large Baltimore law firm is considering bringing an MBA in to manage its practice groups but is not far enough along in the process to discuss it publicly.

Still, the concept is not for everyone.

"We don't have anyone like that here, and I don't expect we would anytime soon" said Barry F. Rosen, chairman and CEO of Gordon Feinblatt in Baltimore, which has about 70 lawyers in about 10 practice groups. "It's hard to imagine an MBA supporting just 15 people. I don't think the economics would work. Maybe if you had 70 in a practice group, or even 35 or 40."

Even from a philosophical standpoint, Rosen said he's not sure his firm would want to delegate such responsibilities to nonlawyers, although the office has MBAs working in other roles. He and another partner traditionally have made the decisions on such matters as which clients to take on, how to manage those accounts and how to market.

"I think it's appropriate that lawyers oversee lawyers," he said.

Part of the reason for that tradition is that the firm has always had the luxury of lawyers with the business skills needed to run the firm, he said.

Despite his belief that a staff MBA is not the right fit for his firm, Rosen understands the value of having one on board to manage practice groups at a law firm of adequate size.

"A law firm has to run as a business," he said. "There are things an MBA can bring to that."

The practice of bringing MBAs into law firms began about 15 years ago at Morgan Lewis, an international law firm, said Susan Raridon Lambreth, a vice president at Hildebrandt International, a legal consulting firm.

Lambreth considers MBAs as practice group managers to be the fastest-growing position in law firms. She notes that one small law firm in Ohio, with about 30 lawyers, has one.

"Firms are recognizing that as they've pushed management down to the practice group level and as they have gotten larger, the job of running practices is more complex," she said. "Lawyers, by their background and training, are not the best suited to handle all aspects of managing a practice group."

But the idea sometimes slams up against tradition.

"It's somewhat firm culture," said Lambreth, who concentrates on practice management issues. "Some firms think it's better to have a lawyer in that role."

Lambreth expects the ranks of MBAs in law firms to swell in coming years.

"As they start to see these positions have value, and as lawyers get more comfortable with letting nonlawyers or nonpracticing lawyers help manage their practice groups, the numbers will grow," she said.

Steven G. Tyler, chairman of the solo and small firms practice section council for the Maryland State Bar Association, said it's not surprising that large law firms have sought the help of MBAs for years - given the earning potential of the partners.

"If they're billing $200 an hour, and they're spending 20 hours a week licking stamps, that's money that's not coming to the firm," Tyler said. "Certainly those services can be hired for less."

Even smaller firms can reap potential rewards, he said.

"Increasingly, for the small firms, it makes sense to hire a professional to manage the firm and let the lawyers do what they do best," he said. "To the extent that a lawyer is not doing legal work, the financial engine is taken out of the game."

Universities don't emphasize these areas in conventional legal training, experts say.

"Law schools do a great job of training attorneys to practice law, but there has never been much attention paid to the business aspects of the practice of law," said Janet Eveleth, a spokeswoman for the Maryland State Bar Association. "But it really is running a business."

Phillip J. Closius, dean of the University of Baltimore School of Law, said many law schools have started offering courses in small-practice business management which teach attorneys skills in accounts receivable, accounting and hiring.

"Lawyers are not particularly trained in running businesses," he said. "But lawyers think they can be trained to do anything, so a lot of times lawyers just take things on."

As law firms have grown, salaries have risen and laws related to human resources have gotten more complex, the appeal of trained business experts has increased.

For now, Summers still has to explain her job to people inside and outside the firm. But she hasn't encountered any resistance from lawyers complaining about her being a nonlawyer in a domain long held by lawyers. "I think the general thought was, 'It sounds like a good idea, and we need the help,'" she said. "We more than make up for our cost by improving the bottom line."

june.arney@baltsun.com

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