The Internal Client: Holding Your Own Firm to the Standard You Sell

Advisory firms are in the business of telling other organisations how to govern themselves. They write board packs, design decision rights, champion independent challenge and warn against governance by diary. The counsel is usually sound. The difficulty is that the firm's own affairs are often exempted from it.

That exemption is rarely deliberate. A partnership or LLP grows around client demand; the management board meets when it must; decisions are taken in corridors and confirmed later. The result is a firm that can describe good governance fluently but cannot easily prove that it practises it. For UK professional-services leaders, the gap matters commercially as well as culturally: clients increasingly ask about internal oversight in tenders, insurers ask about risk control, and the best recruits notice which firms hold themselves to their own advice.

The answer is not to import the UK Corporate Governance Code wholesale. A private advisory firm is not a listed company, and a heavy board apparatus would be a second job for people already serving clients. What is needed is a proportionate cycle that fits the firm's size and tests whether governance changes decisions. Three instruments are enough to begin: a decision log, a standing independent voice, and a quarterly review of the firm's own counsel.

The decision log: a record of choices, not a diary of meetings

Most firms keep minutes. Few keep a decision log. Minutes record what was discussed; a log records what was decided, who owns delivery, what evidence was relied on, and when the decision will be reviewed. It should be one page, not a binder. Entries might include a pricing change, a new service line, a client acceptance call, a partner promotion, or a write-off.

The discipline lies in the fields. If a decision cannot name an owner and a review date, it is probably not yet a decision. If it cannot name the evidence, it may be instinct wearing a suit. The log also gives the firm a way to see patterns: decisions taken outside the board, decisions reopened within a month, decisions that were never reviewed at all.

Keep the log visible to the management board and review it at every meeting. Do not let it become a compliance artefact completed after the event. The test is simple: can a director who missed the meeting understand what was decided and why? If not, the log is not working.

A standing independent voice, proportionate to the firm

Advisory firms often have non-executive directors or independent members on their boards, but the role can be decorative. The standing independent voice should have a defined remit: to ask, on the record, what the firm would tell a client in the same position. That question is more useful than a generic challenge because it uses the firm's own professional standard as the benchmark.

The voice need not be a full-time non-executive. It could be an external chair who attends quarterly, a retired partner with no client conflicts, or a non-executive director with a formal right to see the decision log in advance. What matters is continuity and permission to dissent. The independent voice should see the log before the meeting, not after; should be able to add a note to the record; and should have his or her challenge minuted, not softened into consensus.

For smaller firms, a part-time independent chair can be enough. For larger firms, the role should sit alongside the audit or risk committee rather than duplicate it. The point is not to create a shadow board. It is to ensure that at least one person in the room is paid to ask whether the firm is applying its own advice.

The quarterly review of counsel

The third instrument is the most distinctive and the most easily misunderstood. A quarterly review of the firm's own counsel is not a technical file review and should not become a second compliance function. It is a sample-based conversation about consistency: where did the firm give clients advice that it has not given itself?

Take three or four recent engagements, anonymised if necessary. Ask a small group, including the independent voice, four questions. What did we tell the client about decision-making, risk, succession or pricing? Did we follow that counsel internally? Where did we grant ourselves an exemption? What would we change?

The review should be short and evidence-led. It might examine a client board pack the firm produced and compare it with the firm's own pack. It might look at a succession plan written for a client and ask whether the firm has one. It might take a pricing decision and ask whether the firm applied the same clarity it recommends to clients. The output is not a report; it is a short list of adjustments for the next quarter.

Testing whether it changes decisions

Governance that cannot be shown to change decisions is just stationery. Before adopting the cycle, agree three or four behavioural tests. How many decisions were deferred, amended or reversed after the log review? How often did the independent voice record a challenge? How many decisions were revisited on their review date? Did the quarterly review produce a change to a live decision, a policy or a client-facing process?

Review the tests after two quarters. If the log is complete but no decision has changed, the firm has added paperwork. If the independent voice never dissents, the role is ceremonial. If the quarterly review produces only compliments, it is not a review. Adjust the cycle rather than defend it.

The aim is not to make an advisory firm look like a listed company. It is to close the gap between what the firm sells and how it behaves. A decision log, an independent voice and a quarterly review of counsel are modest instruments. Used properly, they give the firm something more valuable than a governance policy: evidence that it takes its own advice.