The External Edge: Why Firms Are Betting on NEDs

The External Edge: Why Firms Are Betting on NEDs

• NEDs are no longer a rarity, over 50% of surveyed firms have at least one External NED on their board.

• Boards commonly include CXOs (e.g., CFOs, COOs) and elected members, alongside NEDs, suggesting a shift toward more corporate-style governance structures.

• Four core board sub-committees were identified: Remuneration, Audit, Risk, and Nominations/Appointments, showing a growing formality in board oversight.

Non-Executive Directors (NEDs) are becoming an increasingly established feature of law firm governance. According to PSFI’s 2025 Board Report, up to 50% of surveyed firms now include at least one NED on their boards. The trend is gaining momentum, and many within the industry anticipate further adoption in the coming years.

Kevin Hogarth, Partner at PSFI, said: “We can see that many firms are increasingly valuing that external perspective that NEDs bring. They provide governance experience and strategic challenge that internal board members—typically drawn from the partnership—often struggle to provide.”

Why NEDs Are Valued in Law Firms

Historically, law firm boards have been composed of senior partners with little or no outside boardroom experience. NEDs help fill this gap, offering:

• Independence from internal politics and bias

• Sector-specific knowledge that supports strategic goals

• Governance expertise from experience in other commercial organisations

• An impartial sounding board for sensitive leadership issues

As law firm boards become more complex and externally accountable, NEDs are fast becoming essential contributors to robust and effective governance.

Some firms, particularly those with sectoral ambitions, are seeking NEDs with backgrounds in fields such as technology, finance, or life sciences. Others prefer former Big Four partners who understand the dynamics of partnerships and bring complementary expertise in areas like audit, tax, or consulting.

The presence of a second NED is also gaining favour. “It can be quite lonely being the only NED on a board,” Kevin Hogarth notes. “Having a second creates space for confidential reflection and balanced judgement. We often encourage firms to consider appointing two NEDs, not just for support but to bring complementary skill sets.”

Peter Duff, Principal Consultant at PSFI, notes that many NED roles are still filled through informal networks. “We’re often asked to make introductions or help boards shape the role.”

As firms grow in complexity, external voices on the board are becoming essential rather than optional. PSFI is increasingly called on to help firms identify what they really need from their NEDs, build business cases internally, or facilitate partner consultations around the value of NEDs.