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10 Reasons why today's Law Firms need Independent Directors

View profile for Chris Bull


Strictly speaking, from a statutory and regulatory view, most law firms don’t need Independent (or Non-Executive) Directors.   But from many other perspectives, they certainly do – with that need growing as each year passes.  And there is evidence that many of the larger UK law firms are responding.  In a recent BDO / RSG survey (Law Firm Governance: April 2015) 19% of the national firms and over 33% of the global firms surveyed had appointed a Non-Executive or Independent Director.   When firms were asked to suggest likely changes to their governance models over the next few years the three predictions cited most often were: a move to more corporate models, greater involvement of non-legal business professionals and greater use of Non-Executive Directors.

Based on my work speaking to and advising law firm leaders, both those who have appointed Independent Directors and those who haven’t (as yet), I’ve assembled the top ten reasons for bringing an experienced, independent, external voice onto the Board.  Not every firm will realise every one of these benefits and individual Directors will deliver more in some of these areas than in others.  But, nonetheless, the case is compelling for firms of all shapes and sizes. 

  1. What got you here won’t get you there: With firms transforming in multiple ways - growing, expanding geographically, diversifying, utilising technology and process in new ways, developing online and retail channels for clients - experience in those business-critical areas is often missing from the Board.  For many firms, Board-level experience of steering larger - but not necessarily related - enterprises is urgently needed.

  2. Diversity is a business imperative: Take a look around your Board or Partnership Council and consider just how homogeneous that group is.  Does your team have the breadth of experience and range of insight to deliver the best business decisions?  Independent Directors are used across a myriad of businesses to broaden the experience, skill-set, geography, gender and ethnicity, outlook and client understanding of the Board.  In sectors – like law – where Boards are heavily dominated by one particular discipline, diversity of perspective can be in short supply.

  3. Truly independent judgement: All governance best practice points in the direction of having Board Directors who can stand back from the day-to-day challenges of the organisation and of executive management.  Partnerships, in particular, can find this difficult to achieve, particularly finding Directors with the independence to help steer a course between short-term and individual interests of the Partners and the firm-wide corporate mission of the Managing Partner.  Who on your Board is consistently impartial, balanced, non-aligned?

  4. Trusted Advisor: most Managing Partners report that life at the top of law firms can be lonely, however collegiate the partnership. Even powerful Corporate CEOs depend on the support and ‘wise counsel’ advice of independent NEDs.

  5. Better quality decision making: Quite aside from the insight and experience an Independent Director can bring, they bring know-how about how Boards evaluate options and strategies and make decisions.  In law firms, where debate can easily become prolonged and inconclusive and decisions can too easily be deferred by pleading some client work priority or emergency, this new contribution at Board level can be invaluable.

  6. Building the perfect team: Firms will face emerging gaps in their experience and expertise as they develop and need to change.  And, sometimes, firms have been labouring with obvious missing components at Board level for years.  Non-executive directors should be chosen with regard to the balance of skills and experience on the board and are frequently hired to inject at least one specific new capability to the Board.

  7. Disciplined governance: Independent Directors have often served on a number of Boards and bring with them proven tools and rules that improve the quality of firm governance and discourage bad habits (examples of these cited include failure to prepare and then stick to an agenda, imbalance of time spent on operational rather than strategic issues, discussions side-tracked by day-to-day business and personal bug-bears and failure to document and follow-up on actions).  Better meetings and use of valuable leadership time is one immediate benefit that firms appointing an Independent Director report.

  8. Seeing the big picture: An external Director coming in from a different type or size of organisation can take the lead in ensuring that all board discussions are informed by changes in the wider environment (economic, socio-political etc) and strategy reflects these. Independent Directors who have seen changes sweep over many businesses in the past and who are aware of the dramatic impact of the digital age can be an incredible asset to today’s law firm

  9. Ask the challenging questions: Some firms are lucky enough to have a Board Member, perhaps a Senior Partner, always ready to ask the tough questions.  But adding in someone with more varied Board experience, especially from outside your immediate market, and the ability to challenge from an objective and ‘neutral’ position, has been the primary benefit of an Independent Director for many businesses; and good candidates will be challenging and supportive at the same time.

  10. Who you know is sometimes as important as what you know: Whilst it isn’t a major factor in every appointment, a significant – and tangible – benefit can be delivered by a new Director who can help the firm make connections in their market and utilise the recognition and regard he/she has built up over their career for the firm’s benefit.  Those connections extend beyond potential clients and partners to introducing potential hires and other experts with the skills the firm needs to develop. 

The positive impact of a good Independent Director on any type of organisation can be substantial – and my top ten is by no means an exhaustive list.  For law firms, organised as a partnership and with a highly homogeneous governing body, the positive impact can be bigger still. The combination of experience, insight from beyond your immediate market and objectivity that an external Board appointment brings can deliver very rapid improvements to governance, discipline and decision-making in the short term and contribute to better strategic thinking and execution over the longer term.