Andy Poole interviews one of the legal sectors’ recognised leaders, Charles Layfield, a qualified solicitor who has worked in full-time leadership roles for almost 20 years operating as non-executive director, chairman or board advisor.
Andy and Charles explore the importance of effective decision-making and leadership in a dynamic and rapidly changing legal sector.
How do you define leadership?
There is a wide range of definitions and subjective views on what leadership is, and what it is not. The one phrase I probably use more often than any other is that effective leadership is all about providing positive energy, direction and focus.
This equates to a sharp focus on strategy and people. Establishing a robust strategy for the business is far more about where you play to win than how you play. By this, I mean it is an essential ingredient of success to invest the time to define and focus on those attractive and growth market segments matched to where the organisation can gain a competitive advantage through its core strengths and credibility, as well as identifying where a market may be at the top, or beyond, the S curve and in decline, thereby making long-term success a challenge, no matter how well you perform.
Once the strategy is in place that’s 10% of the job done. The 90% and hard yards is all about having a robust strategic execution plan and supporting internal infrastructure and control framework, which is then delivered and closely monitored and managed.
Everything, good and bad, emanates from the leadership team’s capabilities, approach and cultural style. In the long-term it is impossible for a law firm to be successful, without a high-performing leadership and decision-making body established.
An effective board is accountable for providing (in equal measure) support and challenge to the day-to-day management team and their decision-making. It’s important not to interfere with the typical management activities. Supported by the provision of timely, accurate and high-quality information for board meetings there must be sufficient, but efficient, time made available to discuss the material issues a law firm is facing. This will ensure there is adequate focus on the long-term risks and opportunities for the business.
The discussion is important but the board must have a sharp focus on informed decision-making and at pace take the key decisions which will advance the business towards its long-term goals.
What are the key factors currently influencing the legal sector and how can law firms best navigate their way ahead?
Naturally, the legal sector is not one amorphous collection of legal services providers. Understanding the different external dynamics in any one market segment is critical, as is assessing each market segment in as much granularity as possible, so that services are tailored to the unique needs of those customers.
However, the key issues, affecting most in the legal sector currently are a combination of local and macro environmental factors.
The recent pandemic and the after-effects, combined with the persisting high-inflationary environment we are all operating in has brought significant challenges, but also opportunities to many law firms. While there have been casualties as a result, many firms with solid foundations have fared far better than expected and these significant external factors forced them to face into some tough decisions, especially regarding their operating models and costs bases which should have been addressed well before the advent of Covid. Nonetheless, it has been a testing time for those having to lead firms through such a unique period.
The cost of capital and inflationary environment is naturally presenting a challenge for those firms that do not have a strong financial footing. It is essential firms have a very clear grasp of their financial status, cash control and forecasting and secure long-term access to capital.
From the dozens of conversations, I have had with leaders of law firms in the last 12 months, it is apparent for many that succession planning and retention and attraction of talent is more competitive and important than ever. Going back to my comments on the importance of your people, there are not many things more critical than having a defined strong culture and employee proposition, which provides the best opportunity to attract, train, develop and retain your people.
The advent of “new entrants” to the legal sector, whether as legal services providers, providers of lawtech or otherwise, is increasing competition, as is the ongoing regulatory reforms driven by the Legal Services Board (LSB) and frontline regulators. This requires law firms to consider and adapt how they operate in an environment where capabilities and experiences others are bringing to bear, for many, are not experiences and skills they may necessarily have within their leadership team.
What value can a good chairman or non-executive director (NED) bring to a law firm?
An accomplished chairman or NED will provide independent scrutiny, challenge and support of the firm’s management team and business performance. Without the shackles of being a direct report to a CEO or another full-time member of the firm, and with the express mandate to challenge the CEO/leadership team, they can create a better, more open and incisive debate on the key issues.
Sound decision-making is also achieved through ensuring there is sufficient diversity brought to the debate and facing into those tough issues. Relevant sector, or adjacent sector, expertise is often very useful but at the same time bringing a different perspective to the business through external market insights and different, relevant experiences is often an important component. I work hard to combine my 25 years in the profession with the depth of experiences I have had outside of the sector to bring a broad range of perspectives to a board and to support the key decision-making processes.
Key is supporting a high standard of accountability across the leadership team to make the right calls in an objective but ethical manner, aligned with the culture of the organisation.
It is incredibly important that the chair/NED fits with the firm’s culture, which will vary greatly from one law firm to another. The chair/NED must be able to work closely and positively with the management team and other key stakeholders. Equally, it is vital the management team accept the importance of and are open to having an independent person scrutinising their performance.
