BLOWING UP THE BUSINESS MODEL

Like most big law firms, Husch Blackwell had traditionally organized itself around partners, and leaders often were chosen based on seniority.

“We decided to, essentially, blow up that model and instead structure ourselves as industry sector business units,” said Husch’s chairman, Maurice Watson.

Now, six industry groups are each managed by a leader and a director of operations, which are chosen based on experience and skills.

Watson said he’s noticed a trend in the industry of other firms moving toward different, less traditional leadership structures and adding younger partners in leadership roles.

“We’re getting away from the notion that because you’ve been around the longest you’re the most capable of being a leader,” he said.

The trend of changing leadership structure is present at other MOney 20 firms, including Lathrop & Gage, which intentionally chooses younger partners from some of its leadership roles, and Polsinelli, which also has added more diverse leaders in recent years.

Industry insight and expertise

Husch officially implemented the industry model on Jan. 1, 2013.

In that first year, Husch saw its gross revenue increase from the $282.2 million reported for fiscal year 2012 to $302 million reported for fiscal year 2013 and revenue per lawyer increased slightly from $549,000 to $560,000. But for fiscal year 2014, revenue dropped back down, to $289.2 million, and RPL dropped slightly to $559,400.

Watson, however, doesn’t think that drop is related to the new model.

“I think that’s another issue that probably bears some study,” he said. “The whole issue of the industry may be a more volatile industry, or one might more carefully describe it as less stable.”

In the long run, he expects to see an increase in revenue due to a demand for legal services from the new industry-focused approach, which seems to be a unique law firm model.

Under the industry model, the firm is organized into strategic business units that include a range of lawyers, such as corporate lawyers, litigators, tax lawyers and labor employment lawyers, all of whom “have industry insight and expertise in common.”

“You can put together a team that will be viewed by the client as having some great capability to collaborate on a client problem,” Watson explained.

Already, Husch has gotten “really positive responses from clients” when they see Husch has “strong teams and that these teams do bring something distinctive and valuable to the table that other lawyers and law firms don’t bring,” Watson said.

In the first quarter of 2015, Husch has already seen a significant uptick, Watson said. But one quarter does not a year make, he pointed out, and fully implementing the new model is still a work in progress.

“We’re not at the 100-yard line in terms of delivering on the promise of the value in this structure,” he said. “We’re probably at the 75-yard line.”

Younger leaders

It’s also too soon to tell if Lathrop & Gage’s new leadership model has any financial implications. The firm just finished making some changes at the start of the year.

The firm restructured its practice departments into smaller teams in the fall of 2013. In June of 2014 Lathrop also decided to make changes in some leadership roles, specifically its litigation, business and intellectual property division chairs, which would happen after a six-month transition.

“It’s been an ongoing effort to involve more people in the management of the firm and practice areas,” CEO Mark Bluhm said.

The teams, which are made up of seven to 25 lawyers, each have two team leaders and must include one younger leader, Bluhm said. Having younger leaders at the helm has perks both internally and externally, he said.

Lawyers involved in management roles learn more about client service, practice management and business practices of law, he said. It also allows the top management to observe leadership qualities in younger lawyers who could lead the firm in the future.

Bluhm said in general, large law firms are becoming more focused on offering leadership opportunities.

“We anticipate the new leadership and team structure will improve the efficient delivery of legal services, our client service, the attorneys’ job satisfaction and our financial performance,” he said.

Best approach

Polsinelli still has a somewhat traditional model, with three departments that are organized into a number of practice groups. The practice groups report to the department chair, who reports to division chairs.

But the leadership model still has changed some in recent years, Polsinelli Chairman Russ Welsh said.

The division chairs are one of those changes, Welsh said, and were added under the department chairs to help manage leadership as the firm grew to almost 750 attorneys. And all of those leaders are still active practitioners; no one is in a full-time management position in the firm’s structure.

But perhaps the biggest change is that leadership is much more diverse than it was when Welsh started with the firm 17 years ago, he said.

“It’s diverse by gender and diverse by practice but also very importantly diverse by geography and age,” he said. “There’s a lot more diversity within the practice management structure.”

Leadership at Polsinelli has noticed more unique models in recent years, like the industry practice management approach, but leaders decided Polsinelli’s approach works best.

“It helps integrate the firm and helps get people practicing together that understand and that know each other,” as opposed to a more vertical approach, Welsh said.

While it’s hard to say just how much leadership structure correlates to finances, Polsinelli’s gross revenue jumped from $275.5 million to $324.5 million between fiscal years 2012 and 2013 and jumped again to $368.1 in fiscal year 2014.

Still, the firm is always evaluating its structure and whether it needs to make changes, including if it should move away from a three-department model, since its business department has grown to 350 lawyers.

“I think we’ll continue to evaluate,” Welsh said.