Finding A Chief Strategy Officer

Good news! According to the U.S. Department of Labor, the U.S. economy is in a growth mode, adding 288,000 new jobs in June 2014 and growing spec­ulation that the economy could return to expansion rates of late 2013 (U.S. Jobs Report: 288,000 Positions Added, The Wall Street Journal, 7/4/14).

Not so good news ... Until there was a hint of a silver lin­ing with the addition of 1,200 legal jobs in June (Legal Sector Adds 1,200 Jobs in June, Am Law Daily, 7/4/14), law firms, facing flat demand, continued in a lean mode through May 2014 with the shedding of 1,200 and 1,100 jobs in April and May, respec­tively (Legal Sector Shed 1,200 Jobs in April, The Am Law Daily, 5/2/14).

The Outlook for Law Firms

Despite the negative statistics until the June report, most Am­Law 200 Managing Partners start­ed 2014 optimistic, at least as to their firms (Firm Leaders Survey: Slow Growth on Tap for 2014, The American Lawyer, 12/2/13), and many remain so (Confidence in Legal Industry Mixed Among Firm Leaders, AmLaw Daily, 7/9/14). Some of those Managing Partners are eternal optimists. Others have a secret weapon: a chief strategy officer (CSO).

The management of law firms has evolved over the last decade, such that most firms have had pro­fessional administrative manage­ment teams for years (“chief” offi­cers in operations, finance, human resources, business development, marketing, information technology and other administrative functions tasked with ensuring professional operations across the board). How­ever, just as chief marketing and business development officers came to the fore following the recession, “chief strategy officers” are making their way to the managing partner’s cabinet. As with other professional disciplines, the role of the CSO is evolving, and it’s happening quickly (to the degree that is possible in a law firm).

What, exactly, do these people do? And where do you find them? As is usually the case when sailing uncharted waters, most firms are making it up as they go.

CSOs and What They Do

In a nutshell, CSOs guide firms to determine how to leverage their two key assets: intellectual property and relationships. Mark Usellis, CSO at Davis Wright Tremaine, contends that a firm must first figure out what it wants to be, and then determine how best to rally the troops to get there. Usellis also adds that the ex­ecution is a lot tougher than the analysis. According to Patrick Jo­hansen, director of business devel­opment at Brinks Hoffer Gilson, a CSO can help a firm articulate its vi­sion, identify market opportunities and execute strategy.

Earlier iterations of the CSO role focused on heavy analytics (usually a backward-facing evaluation of his­torical data) and efforts to get prac­tice groups collaborating with one another. While cross-practice col­laboration and financial metrics are still key to the discussion, mounting pricing pressures and the call from general counsel for negotiated fee arrangements and more transpar­ency around processes, have forced a more holistic discussion surround­ing the full lifecycle of legal work. This lifecycle plays out differently in each firm, in light of that firm’s unique assets (remember, intellec­tual property and relationships) and goals.

Catherine Alman MacDonagh, CEO and Founder of the Legal Lean Sigma Institute, and an adjunct professor of legal process improvement both at Suffolk University Law School and George Washington University, envi­sions a time when all law firms will have CSOs who actively direct R&D and product innovation to develop competitive advantages. For a great example of someone successfully doing this, refer to Chris Trauzzi, chief products officer at Littler.

In collaboration with a firm’s chair, managing partner and key leaders, the CSO should serve as the catalyst for honest discussion and planning around how to reach the firm’s strategic goals. Questions the CSO should ask, include, “What are our assets?” closely followed by, “What resources do we have to put toward achieving our goals?” (Think lawyer leaders.) And then, if the firm can realistically face the new mar­ketplace, the CSO’s next question should be, “Do we have to change the business model to sustain, much less grow, our business?”

Practical Application

A CSO does not have the luxury of spending all of his or her time in the strategic clouds, however. He or she must also get knee-deep in practical application. The full lifecycle evalua­tion must now combine historical fi­nancial and operational (hours, bill­ing, realization) data with how the firm can ensure a more efficient and cost-effective delivery of legal work. This means analytics-based pricing combined with coordinated prac­tice/project management. Even truly bespoke legal work (and there isn’t much of it) can be delivered more efficiently — and therefore more profitably. And all of this should be combined with cross-practice collaboration on business develop­ment. A CSO can direct this whole process while the managing partner or chair leads the firm.

Although some CSOs, like Usellis, do not have direct responsibility for the nuts and bolts of practical imple­mentation, others do. For example, Bea Seravello, CSO at Kaye Scholer, is also responsible for practice man­agement and business development. Shawn Adams, at Gardere Wynne Sewell, also directs marketing as chief strategy and marketing officer. And Steve Petrie, Faegre Baker Dan­iels’ CSO, has office administration and compliance support under his purview.

So, great! you say. Now, where do I find a CSO?

Finding a CSO

At the moment, there are fewer than 20 in the AmLaw 200 with the actual CSO title. They come from different professional backgrounds, and some with no prior experience working in a law firm. Seravello (Kaye Scholer) came up through practice management after a stint with the NYSE. Wendy Bernero, CSO at Proskauer, and Usellis (Da­vis Wright Tremaine) were previous­ly law firm chief marketing officers. Petrie (Faegre Baker Daniels) came from consulting.

But let there be no mistake; these professionals did not just start think­ing about strategy when “strategy” became a part of their title. They were designing and implementing strategies in their prior roles, al­though the lawyers may or may not have been paying close attention.

A rose by another name …

Numerous senior administrative leaders in law firms have been in­volved in strategy for years. Steve Bell, chief sales and marketing of­ficer at Womble Carlyle Sandridge & Rice, has been directing strate­gic initiatives since joining the firm from public accounting. And Greg Dolan, COO at White & Case, and Scott Green, CEO at Pepper Hamil­ton, are clearly key to the strategy discussion at their firms.

Perhaps the greatest benefit to the CSO role is the “chief strategy officer” title, as now they are clear­ly designated as members of the strategic planning team. Your firm might already have a chief strategy officer by another name. If so, em­power him or her to help you. If not, it might be time to give your firm the competitive advantage a CSO can bring.

Read more on Law Journal Newsletter’s Law Firm Partnership & Benefits Report, September 2014, Volume 2, Number 7.