Pepper Hamilton names nonlawyer as CEO

Posted: February 07, 2012

Pepper Hamilton said Tuesday that it had named a nonlawyer as its chief executive officer, a sharp break with tradition reflecting both increased competition for business and a heightened interest among firms in reevaluating the way they are managed.

Scott Green, a 49-year-old Harvard MBA and former executive director of WilmerHale, a large law firm with offices throughout the U.S. and overseas, was named CEO. Pepper Hamilton, with more than 500 lawyers, said both partners who serve as practice group chairs and heads of nonlegal departments such as information technology, finance and marketing will report to Green.

Robert Heideck, executive partner, who has been managing the firm since 2003, will return to practicing law as a litigator.

Only a handful of firms nationally have nonlawyers in the most senior management positions, most of them focused on business operations. The Pepper Hamilton announcement seems to take that approach one step further by naming a nonlawyer to take responsibility for both operations and strategic planning.

"This is another step on a continuum that began decades ago in which law firms began to look more like their clients," said Ward Bower, an analyst at the Newtown Square based legal consulting firm, Altman Weil.

The decision followed a yearlong analysis of the firm's business and organizational structure, said Nina Gussack, chair of Pepper's executive committee.

"We did not set out to look for a nonlawyer; what we looked for was the skill set that we wanted," she said. "This is truly a strategic position. Clients who have shared their views say this makes so much sense."

Pepper has broken the mold before. Gussack is one of the few female law firm chairs in the country. Another for a time was Christine Lagarde, who chaired the Chicago based Baker & McKenzie law firm before returning to her native France to serve as finance minister and then head of the International Monetary Fund.

The announcement came as law firms in Philadelphia and around the country shake off and adjust to the fallout from the legal market collapse of 2008 and 2009, when firms shed thousands of lawyers, canceled incoming classes and greatly trimmed their administrative staffs. That retrenchment has triggered an industry wide reevaluation of traditional law firm organization and management techniques, all in an effort to bolster profits while assuring clients their money is well spent.

Apart from the downsizing that began four years ago, the most profound adjustment for many firms has been the expanding use of alternative billing systems such as flat fees for service in place of hourly rates. Firms also have sought to respond to the retrenchment by aggressively recruiting partners with large books of business from competitor firms and outsourcing work to contract lawyers, both domestically and overseas.

But, reflecting the insular culture that still pervades much of modern law, very few have turned over senior management to nonlawyers. Bowers said this has partly to do with legal ethics rules and traditions that weigh heavily against sharing decision making functions - and revenue - with nonlawyers. While ethics rules still bar lawyers from sharing revenue with nonlawyers, Bower said law firms are becoming increasingly open to management innovations, as competition becomes keener, clients demand more and firms modernize in response.

Green, who also is a CPA and has served in various roles at Goldman Sachs, Deloitte Touche and elsewhere, drew notice at WilmerHale for establishing a separate discovery unit in Dayton Ohio to handle requests from litigators from throughout the firm. In Dayton, a staff of 50 firm lawyers handled the arduous and time consuming work of document review, using proprietary technology that greatly reduced the costs of litigation. Dayton was a cost effective option because lawyers work for less there and overall expenses are lower.

In a brief interview Tuesday, Green, who grew up in Idaho and worked on a ranch there in his youth, said it is too soon to talk about how the firm might retool its long term strategy; he says he will be meeting with partners throughout the firm to get their thoughts. One subject is likely to come up repeatedly, though - how to stay ahead of peer law firms.

"The legal landscape is changing," he said. "It is becoming more competitive."


Contact staff writer Chris Mondics at 215 854 5957 or cmondics@phillynews.com.

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