Due to the very nature of the law firm partnership structure, partners for a long time have remained a rather self-sufficient bunch. With their annual income so integrally reliant on the continued health of the firm, it's perhaps not surprising that they kept a tight grip on the management reins and were reluctant to cede any control to other non-lawyer professionals.

However, with the expansion in the size and complexity of law firms - particularly at the top end of town - partners have gradually come to the realisation that some areas of management have grown beyond the limitations of their skill-set and available time.

Partners of large law firms have gradually acknowledged the benefit of introducing specialised COO and CFO positions, often sitting at the executive level, and they've brought in highly skilled non-lawyer professionals to take these roles on.

Mallesons Stephen Jaques senior executive director (operations) Peter Ireland explains that the impetus for his firm establishing a high level CFO position was the mergers which saw the firm establish a multi-state, and later, national presence. The Sydney and Melbourne offices joined forces in 1987, and for the next five years the firm remained reliant on lower level financial managers.

But, Ireland explains, the recession of the early 90s highlighted the advantages that a high level, CFO position could offer, and in 1992 the role was officially established.

"They realised that they actually needed professional advice and that partners couldn't quite run a sophisticated operation successfully," he says.

At Freehills, the firm's CFO Janet Young explains that the firm undertook a strategic review after nationally integrating in 2000. The desire to establish a high level, CFO position was one of the key recommendations, and Young became the firm's first CFO in 2002.

"Suddenly you had a much larger organisation ... so it was the size and complexity of the business that drove the need to really move away from having, I suppose, an accountant ... to a more strategic role," she says.

“If you fail once with these guys you’re finished – no second chances”

Similarly, Deacons' CFO position, held by Tim Shacklock, was established in 2002 in response to expansion of the firm, both nationally and internationally.

"At the most basic level, the size of firms has changed. When you're talking about national practices generating hundreds of millions of dollars and employing thousands of people, it is only to be expected that good financial management has become more and more important," Shacklock says.

"And if you think, as we do, about law firms operating at a global level, that importance increases still more. It's hard to conceive of a law firm operating successfully at a global level without a strong finance culture to go hand-inhand with the legal one."

Benefits brought

Ireland says that one of the advantages that a non-lawyer CFO can bring is impartiality.

"The partners all grow up [together] - they're mates with each other ... and they're very loathe to make the hard decisions. That's where the CFO and COO really have a role to play. Sometimes you're the doom and gloom and the naysayer, but you've got to actually push the hard commercial realities," he says.

He adds that a specifically trained and experienced non-lawyer professional will also have a more appropriate skill-set to handle the functions of a CFO role than would a lawyer trying to learn the ropes as they go.

"[Lawyers] don't actually have the background and training to make what I would call very good commercial decisions. They're very, very smart people, but it's just not their background."

Young agrees. "I think the main thing is bringing a very particular skill-set and expertise that [lawyers] don't typically have. Clearly accountants are trained differently than lawyers," she says. She adds that a trained CFO with corporate experience will have the benefit of commercial focus that someone with purely legal training may not have.

"I think probably the biggest difference I've made is really bringing more of a commercial focus as to how to run Freehills as a business. Clearly we're a partnership and there are some really, really good things about the culture of a partnership, but I think to be successful these days you have to have both. You have to have the culture that a partnership brings, but you also need to run an effective business," she says.

Shacklock adds that an experienced finance professional coming in from outside the legal fraternity will also bring with them a fresh perspective. "They often offer a perspective on how things are done outside the legal industry and that is important for sustained innovation," he says.

Gaining acceptance

While the benefits of having a specifically trained, non-lawyer CFO are now generally accepted by partners in the top and upper mid-tier firms, Mallesons' Ireland says this acceptance was a long time coming as partners initially had difficulty relinquishing these functions to non-lawyers.

"It's hard for them, and it's probably taken ten years to get out of actually meddling - I would call it - in those areas," he says. "If you go into the top law firms now you would see professional staff running all the functions of shared services, equal to anything you'd see in a corporate, but that's been a long road they've all walked."

In her article in Lawyers Weeklylast week, Swaab Attorneys CEO Bronwyn Pott wrote that some partners in smaller firms are still struggling with the idea.

"With many smaller firms the myth persists that a managing partner is a kind of super-being whose schedule has a magical elasticity to accommodate client work and practice management," she wrote. "Unfortunately lawyers can find it difficult to recognise that merely owning the business does not automatically qualify them to run every aspect of it."

Earning trust

Although things have come along way in the larger firms, Ireland says that a unique challenge that still exists for CFOs in law firm partnerships, as opposed to corporations, is that they need to work hard to earn the trust of the partners before they will accept their authority.

As he puts it, "The shareholders are in the building with you". "You've actually got to have the political skills to build their trust ... and I've seen a lot of very, very good people fail because they didn't have those ... political skills," he explains.

"There's quite a difference in terms of perceived authority and actual authority. Even through they may say, 'Your role gives you this authority' you actually have to earn that. Otherwise you're going to be challenged all the way down the track. So you need to have all these very good technical skills, but if you don't have those people and political skills you'll never succeed in this environment."

Young agrees that earning the respect of partners is essential. "If you go into a corporation, there's an element of [having] the positional power of being the CFO. That formal power doesn't stand for quite so much in a partnership. It's more the informal side of it - you've got to earn their trust and respect to be successful."

Ireland adds that along with these political, trust-building skills, a CFO in a law firm has to be technically excellent to survive.

"If you fail once with these guys you're finished - no second chances," he says. "They just don't tolerate fools lightly, and so I think that the type of individual who succeeds in a law firm now is very, very good. Intellectually, you've almost got to match these partners."