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Time after time over recent years businesses, even in some cases big businesses, have found themselves dealing with problems that could have been avoided if only they had made better use of expertise available at their own boardroom tables. In a world in which it is common for the shareholders of businesses to be focused primarily on short-term return on their investment, and for the executives to be focused primarily on their own career path, who are the people exclusively invested in the long-term future success of the business itself? They are the non-executive directors (NEDs).

The role of the NED is becoming ever more valued in law firms globally, with the possible exception at present of the USA where firms are still a little more reticent. Yet, worryingly, a recent McKinsey study of the role of NEDs in business in general found that 60% of those interviewed admitted to just nodding strategy through in the boardroom. The successful law firms of the future will almost certainly be those who recognise the need to use their NEDs in much more effective ways.

Firstly, remember that NEDs have the same duties, responsibilities and liabilities as executive directors. They are, therefore, personally invested in ensuring the success of your firm. Firms have a responsibility to be what their shareholders believed them to be when they invested. To ensure this NEDs may need to exercise restraining influence if they feel that a proposed strategy is too radical, or fundamentally at odds with the established ethos of a firm, and it is essential that they are empowered to apply brakes as necessary. How many NEDs you appoint may be of great significance here – there is little point in having one lone voice sounding the caution that turns out to have been correct, if it is shouted down easily by every other voice.

Much of the time NEDs are above the day-to-day running of a firm and separated from the politics within it, and it is vital that this degree of separation is maintained. The NED must be able to focus on the things to which everyone else can give only partial attention, and they must be able to see a broad perspective. The closer to the day-to-day minutiae that the NED becomes, the less effective they will be in doing what you appointed them for in the first place. They must be independent.

An NED should be at the heart of your firm’s strategising. Their commercial acumen may prove invaluable when it comes to making a business profitable. On occasion, this may involve reigning in enthusiasm for diversification as a route to commercial success. If your firm is weak in expertise within a certain area of the law, for example, and some argue that the answer is to recruit and, thereby, expand, the basic idea may be right but it will require money. The NED’s role is to ensure that you don’t spend money you don’t have, and they will assist you in first maximising revenue from what you offer already in order to prepare for the expansion further down the line.

If, as a firm, you are considering going international, having NEDs with first hand experience of the countries in which you are considering options will be essential to the avoidance of pitfalls. They may not always provide popular advice here, especially if they pour cold water on an apparently exciting suggestion, but they might just save your business.

Any firm looking to appoint NEDs needs, having identified potential appointees, to ensure that the people in question have a thorough understanding of the firm and assist them in any way necessary with their due diligence. It will be for an NED, having joined a firm, to ensure that they keep up-to-date and train where necessary, but it is for the firm to ensure that nothing makes that unnecessarily difficult.

A successful appointment will provide a firm with a source of independent, impartial advice, specialist knowledge, experience and important contacts. More than that, the best NEDs will be invaluable and confidential sounding boards when things aren’t going smoothly, and senior members of a firm should be able to lean on them when support is needed. They should monitor the performance of the executive management and be involved in appointing and removing as necessary, they should be a core part of the financial management structure, and they should challenge the executive directors whenever there is cause for concern, even if only to ensure that the potential pitfalls of a proposed strategy are fully understood.

The nature of an NED and the complexity of the relationship any law firm has with its NEDs can make their appointment seem somewhat daunting. But, if handled correctly, the appointment process need not be unduly difficult and the resulting benefits huge.

Considering appointing an NED at your firm or chambers? Speak to Helen directly on helen@elephantcreative.co.uk for more information.