Putting Your Practice Groups to the Test: A Strategic Assessment
Organizing a new practice group is like starting a new business. Champions of the group should treat the opportunity in the same manner as entrepreneurs, ensuring that they evaluate all key considerations before making a proposal. By the same token, senior leadership should act like bankers or venture capitalists, holding aspirants to high standards before allowing new groups to be formed.
Assessing the viability and vitality of your current practice groups is of equal or greater importance – and the same standards should apply.
Too often law firms of all sizes have ineffective practice groups that do not meet the test of highly effective groups in terms of organization, operations and market brand. Many firms list dozens of practice groups on their websites that in reality don’t do much beyond possibly establishing a marketing profile for the firm.
Having too many groups degrades a firm’s overall practice group structure and effectiveness. Senior leadership does not focus as it could or should on those groups that truly drive the firm’s business and brand. In addition, firms that allow partners to be members of multiple groups, sometimes six or seven or more, are diluting the effectiveness of those partners and their groups.
Your goal should be threefold:
- To add groups only when a compelling business case can be made,
- To weed out groups that don’t meet the standards set forth below, and
- To focus the firm’s energies on improving the performance of essential groups that serve your clients, support your brand and drive profitability.
Following are some key issues that should be considered when organizing a new practice group or reevaluating your current groups for focus and effectiveness.
Business Purpose Statement
Each group should have a business purpose statement that includes a clear articulation of the clients or type of clients the group wants to serve, the specific services that the group will render, and the geographic scope. Investors in a business are most interested in what the business intends to do, who its customers will be, how it will differentiate itself from competitors, and where it will conduct commerce. The same can be said of a practice group.
A clear business purpose statement might read, “The group will provide regulatory, general corporate, financing and litigation services to healthcare and healthcare-related entities doing business in the Northeast.”
A group can then elaborate briefly on its focus and value proposition (e.g., expertise-based, focus upon a particular industry or group of clients, etc.). The group can also describe in some detail the type(s) of clients it aspires to serve, including a list of current clients or targeted new clients on whom the group will focus.
Strategic Alignment
There should be a short but clear statement regarding why this practice group is aligned with and facilitates the firm’s overall strategic focus. Some practice groups are inconsistent with the firm’s strategic focus or simply occupy a neutral position. Neither of these scenarios is beneficial to the firm long-term and should be rigorously screened.
For example, one firm’s strategic aspiration is to be the clearly dominant business firm in a tri-state region. The region’s economy is fast growing, attracting both domestic and foreign business investment. The firm has few relationships or ties with state governments, something that can benefit businesses looking to develop operations in the area. A group in the firm that pulls together lawyers with government ties and recruits others, forming a powerful lobbying and legislative affairs capability, will directly support the firm’s overall mission by adding capabilities that will benefit businesses.
Competition
The group should articulate its major competitors — both firms, practice groups in other firms and any alternative service providers, setting forth competitive information such as practice styles, composition of professionals, clients, and the like. This is where competitive intelligence and business research is useful. Many groups fail to consider such information, making it difficult to determine where the group is competitively positioned and what its longer-term prospects are.
Social, Economic or Legislative Data
Groups may come into existence in response to external factors representing a significant opportunity. Where this exists, a new group should indicate whether it is in the first wave of movers or lagging behind other competitors. It is not necessary, however, to be the first mover in order to be successful. Practice groups, by and large, are successful because of their superior leadership and execution. Just because a firm organizes a group first by no means gives it a sustainable competitive advantage.
Leadership
The group should clearly set forth a leadership cadre — those partners who pledge to make a significant investment in the group’s success. This should include more than just the practice group leader. If a group does not have at least three or four partners who are willing to invest significant time and effort in development and maintenance of the group, it is unlikely to be highly effective.
In addition to its leaders, the group should set forth other members of the firm, both partners and associates, who are, or would be, members of the group, identifying them as full or part-time members. The more there are full-time members of the group, the greater the likelihood of its success. Groups organized with too many part-time members tend to implement and execute in a hit-or-miss fashion.
Competitive Advantage
Each group should clearly set forth its differentiators and how they create competitive advantage. It should articulate how it is positioned to better serve or attract clients. This could include better depth and breadth than competitors, better lawyering (but be careful here, as this is difficult to measure), extraordinary client service, greater expertise in the market segment, demonstrably better efficiency in service delivery, better value (cost of services versus what is delivered), etc. Some indication of why the group can do better than competitors is necessary to ensure that the group has thoroughly evaluated its position, what it needs to do to rise in the ranks of competitors and ultimately be externally viable.
Investment Needs
Groups should set forth investment needs such as business development/marketing dollars, technology support, management assistance and the like. Although pro-forma budgets are seldom totally accurate, they are necessary to understand what sort of investment is needed over a 12 or 24 month period. A group that underestimates its investment needs may be unable to pursue market opportunities because of under-capitalization.
Internal Interdependencies
The group should set forth any interdependencies with other practice groups within the firm. Ideally, practice groups will share clients, knowledge, business development/marketing efforts and the like. The group should set forth where it can exploit interdependencies and draw upon the resources of the other groups. Joint marketing efforts and sharing of professional resources should be outlined.
Summary
By rigorously following these guidelines at the outset, a firm can ensure that all of its practice groups have the best chance of attaining a high degree of performance that is sustainable over time. And by ‘testing’ your current groups against these standards, leadership can affect rational changes calculated to improve groups’ overall competitiveness.
Download a copy of Altman Weil’s Practice Group Assessment Form.