Evolution of the legal COO

The entrance of the Big Four accoun­tan­cy firms to the legal mar­ket in recent years, cou­pled with an influx of nim­ble, inno­v­a­tive star­tups, has height­ened com­pe­ti­tion in an already sat­u­rat­ed sec­tor, forc­ing firms to re-eval­u­ate their busi­ness mod­els. The need to max­imise effi­cien­cies and com­mer­cialise prac­tices has posi­tioned the COO at the fore­front of change.

COOs first began to emerge in large legal prac­tices around 20 years ago, but despite becom­ing an increas­ing­ly com­mon fix­ture, 56 per cent of glob­al firms with more than 500 employ­ees are yet to appoint one, accord­ing to recent research from Big­Hand. Under­stand­ing their val­ue, as well as how their role has evolved, will help firms com­pete.

Chris Bull was among the first wave of legal COOs when he was pro­mot­ed to the role at Osborne Clarke in 2000, hav­ing served four years as the firm’s finance direc­tor. This is a typ­i­cal route into the COO posi­tion, giv­en its focus on dri­ving oper­a­tional excel­lence.

“Legal COO roles have deliv­ered a num­ber of dif­fer­ent ben­e­fits to the firms that have cre­at­ed them,” says Mr Bull, who is now exec­u­tive direc­tor at advi­so­ry firm Kingsmead Square. “At the core is giv­ing rapid­ly grow­ing and com­plex legal organ­i­sa­tions the oper­a­tional man­age­ment back­bone they need to evolve, but had pre­vi­ous­ly lacked.”

The role was orig­i­nal­ly posit­ed as a back-office posi­tion. While the COO man­ages the day-to-day activ­i­ties of the firm, the man­ag­ing part­ner and chief exec­u­tive can focus their ener­gies on strat­e­gy, deal-mak­ing and over­all busi­ness oppor­tu­ni­ties and growth.

The need to max­imise effi­cien­cies and com­mer­cialise prac­tices has posi­tioned the COO at the fore­front of change

Tasked with enhanc­ing the per­for­mance of sup­port func­tions, suc­cess­ful COOs have inject­ed vital man­age­ment skills and oper­a­tional effi­cien­cies into organ­i­sa­tion­al process­es, steer­ing firms through seam­less tran­si­tions into larg­er, more glob­al busi­ness­es.

“When man­aged direct­ly by the man­ag­ing part­ner in firms with no COO,” Mr Bull adds, “the busi­ness sup­port func­tions, on which a suc­cess­ful legal busi­ness relies, often tend to be poor­ly aligned and reluc­tant to oper­a­tional­ly inte­grate in the most effi­cient way.”

Tech­nol­o­gy advance­ments have meant dig­i­tal solu­tions are now the prin­ci­pal dri­ver of effi­cien­cies, build­ing on the COO’s back-office mat­u­ra­tion by col­lect­ing and analysing data to increase vis­i­bil­i­ty across organ­i­sa­tion­al work­flows. This has freed COOs up to utilise the wide-reach­ing knowl­edge they have gained to shape the next phase of their busi­ness.

With many part­ners seek­ing to broad­en the range of ser­vices their firm offers, they can no longer rely on their own tech­ni­cal skills to be the dif­fer­en­tia­tor. Win­ning big oppor­tu­ni­ties will rely on pre­sent­ing the full depth and breadth of the fir­m’s capa­bil­i­ties, as well as adopt­ing busi­ness mod­els and tal­ent approach­es that embrace new ways of work­ing.

“COOs will need to trans­form the busi­ness ser­vices func­tions, so their firms can not only respond to these changes, but be com­pet­i­tive with­in a broad­er mar­ket,” says Rod Har­ring­ton, COO at Nor­ton Rose Ful­bright. “That includes recruit­ing the best non-legal pro­fes­sion­als, devel­op­ing tal­ent, chang­ing pric­ing mod­els and ingrain­ing IT in the com­mer­cial propo­si­tion, as opposed to just keep­ing the lights on.”

100% of top ten law firms iden­ti­fied tech­nol­o­gy as the key chal­lenge to growth in the next two years

— PwC UK, 2018

As tech­nol­o­gy con­tin­ues to shape the organ­i­sa­tion­al design of law firms in the next five years, legal COOs will take on a more proac­tive role in shap­ing strat­e­gy and growth, shift­ing their influ­ence from the back office to the front. Dur­ing this time, Mr Bull fore­sees three “flavours” of COOs emerg­ing.

The legal oper­a­tions COO will see firms fol­low the lead of cor­po­rate legal depart­ments in hir­ing senior busi­ness pro­fes­sion­als with a range of finan­cial, com­mer­cial and oper­a­tional skills to man­age the busi­ness aspects along­side prac­tice group heads. Respon­si­bil­i­ties will include resourc­ing, pric­ing, prof­itabil­i­ty, ana­lyt­ics, project man­age­ment and legal tech.

Grow­ing law firms that deploy a more cor­po­rate approach to build­ing scale are like­ly to opt for a man­aged ser­vice COO to estab­lish a cen­tralised shared ser­vice cen­tre in a low­er-cost loca­tion. While some of these COOs will be home grown, most will come from big cor­po­ra­tions and out­sourc­ing busi­ness­es with a track record of run­ning large, mul­ti-func­tion­al oper­a­tions cov­er­ing finance, human resources, risk, IT and more.

Final­ly, the inno­va­tion COO will become more preva­lent, spear­head­ing tech­nol­o­gy ini­tia­tives that posi­tion the firm for the future. Numer­ous chief inno­va­tion offi­cers have already emerged in glob­al firms in recent years and this trend is only set to grow fur­ther.

“In some cas­es these new roles are being filled by lawyers, often from the part­ner ranks,” says Mr Bull. “But in oth­er cas­es they are a nat­ur­al devel­op­ment for COOs who have cut their teeth man­ag­ing and improv­ing law firm oper­a­tions. They have a greater insight than most for where improve­ment and change is need­ed, and how it can be achieved.”

The com­mon denom­i­na­tor across all three roles is own­er­ship of the inno­va­tion agen­da. As COOs become an increas­ing­ly cru­cial dri­ver of trans­for­ma­tion, poten­tial­ly even tak­ing on a cus­tomer-fac­ing dimen­sion to shape oper­a­tional mod­els around client needs, firms need to ensure they’re able to attract and retain the best non-lawyer tal­ent. This means a seat at the top table and chal­leng­ing struc­tures that have his­tor­i­cal­ly pre­vent­ed non-lawyers from becom­ing equi­ty part­ners.

With oper­a­tional excel­lence cen­tral to legal suc­cess in the years ahead, firms must act now to posi­tion inno­v­a­tive COOs at the heart of their busi­ness.