by Patrick J. McKenna

Start out fast and keep picking up speed. Leave skid marks!...

Not suprisingly, one of the more common questions we get asked by various partners is whether this current shift among professional firms toward developing and nurturing strong practice groups is simply another fad, or portends any real measurable benefits for those who work hard to get it right.

You can just imagine what is likely going through these partners' minds. Okay, so did our managing partner wander off on one of those continuing education weekends, at some extravagant retreat site, and get sold a load of crap from some consultants...again?

Instinctively, we may all recognized that the traditional model which placed an almost exclusive emphasis on individual initiative, individual performance metrics, and individual performance-based rewards, cannot create all the capabilities needed to succeed in today's marketplace. But what is still needed is to find some evidence to support the logic and superiority of the practice group model.

Now evidence alone will not change behavior, so let's acknowledge the limitations we are dealing with. For example, there is ample evidence to suggest that sugar is not the best thing for the human body, but it still makes my cafe lattes taste far more palatable. The point here is that if management does not communicate the importance of having strong practice teams and what benefits might then accrue for each individual, there really is little need to go any further.

As we met with groups of partners we began to pose a question for them to think through and respond back to us with their individual and collective views. Our intent was to help them identify what was in it for them. Obviously, if there was nothing in it for them, why bother.

The question we posed was: What benefits should you expect to get (not are you) from practicing with a group of like-minded individuals, pursuing a common purpose, that you could not get if you were practicing on your own, as a sole practitioner; or even on your own in a firm of some magnitude as a lone ranger? Let's make our list together and see what it suggests.

Now when you pose that question, the most common responses that groups of partners are likely to give, include some variation on the following (let me present here one group of partners actual words rather than my own):

• it should allow us to develop a level of critical mass
• practicing together in a group should offer each of us a source of work
• working in a group should make it far easier to train the juniors
• it should provide the means for attracting and retaining good talent
• there should be an enhanced opportunity for intellectual exchange
• we should also be better able to developed common methodologies
• it should allow us to engage in joint marketing
• overall, it should make us all more profitable

Now this list is no way is intended to be exhaustive. What it does do is raise the bar in having partners think through and identify what some of the most obvious benefits for each of them personally, might be. And that is the power of the exercise. You could choose to lecture your partners on what the benefits might be, but having them think it through for themselves has far more impact.

THE BENEFITS OF STRONG PRACTICE GROUPS

But we're not done yet, let's see if we can give a bit more depth to a few of these potential benefits by exploring real marketplace examples. The obvious point here is that as a firm leader or practice leader, your first job is to help educate and guide your partners in a direction that is in the best interests of their personal careers as well as the firm's future.

To Develop A Level of Critical Mass.

In a 1999 research study involving extensive interviews with the senior executives of Fortune 1000 companies, it was discovered that the average company is using 22.8 different professional services firms of all types (lawyers, accountants, actuarial advisors, consultants, public relations strategists, financial analysts, investment bankers, etc.) The relevance of this is that your firm is being measured against all kinds of other professional firms with respect to the value-added, delivery, client servicing, and differentiating aspects of what you provide. Thus, you may think that they are comparing you against some other competitor down the street in the same profession. They are not.

Even the more articulate managing partner tends to stammer when asked what makes their firm different and ostensibly more attractive to clients than some competitor across the street. This became embarrassingly apparent when the editor of Of Counsel, Larry Smith, posed just such a question to a half dozen of the larger law firms across the country as input to an article he was writing. The curious irony here is that most professional firms go to great lengths to look like every other firm. The more relevant issue for clients may be whether there is any distinguishable characteristic that differentiates one practice group from another.

Changes are taking place that give rise to a marketplace demand for strong practice groups. Take the example of today's commercial real estate law practice as simply a microcosm of the emerging developments and trends evident in any number of practice areas and professions.

While the traditional business of buying, selling and leasing commercial space remains the same; there are different ways of owning and managing property, and an ever expanding array of financing options. A client may demand a combination of structured financing, venture capital, senior and mezzanine debt from a range of sources, and securitization of the eventual income stream. The increasing complexity of transacting these deals and the increasing sophistication of client (domestic and foreign) demands places only the most organized practice groups in the position of obtaining the very best work.

There are some very high margin sectors in the practice of commercial property and some sectors like conventional conveyancing, straightforward secured lending and others that just aren't too profitable. The high margin transactions often require a multi-disciplinary expertise involving tax, corporate, banking, capital markets, intellectual property, and estates professionals, in addition to involving specialists in urban planning, environmental, construction and joint venture issues. Firms must have a critical level of expertise, practicing together in a group, to stay in this game.

For the individual professional (irrespective of his or her acknowledged rainmaking prowess) and for the less sophisticated practice group, these developments have profound consequences.

Most clients divide their commercial real estate work among a number of firms. Clients soon get a good idea of which firms have developed a preeminent strength from having a well coordinated practice team that can handle the most complex transactions and distribute their work accordingly. Outside of this select group in any market are those firms unable to provide the required critical mass of expertise. Excluded from the high margin work, these firms (and practice groups) become reliant on the lower margin work and find themselves facing fierce competition. As this continues, firms are likely to polarize between a few top-tier practice groups and the rest, with the leading practice groups attracting an ever increasing share of the most lucrative and high profile work. The remaining firms will face the stark choice of either learning to live with a marginally profitable practice and eventually losing their best talent to the market leaders.

The lesson here is that many of today's clients (particularly large, attractive ones) are actively seeking out firms that have well-coordinated practice teams, so that they can get the benefit of depth from their service providers. These sophisticated buyers of professional services are perceiving critical mass (or bench strength) as a competitive advantage among various practice group, because they believe that, as the client, they will garner:

• Better Perceived Quality.

Obviously the firm with twenty professionals practicing in a specific practice area is likely to be better equipped to handle the client's problems than the firm with just a few. Its very size indicates a degree of success. This issue of critical mass becomes more important as the area of practice becomes increasingly mature and understandable to the client. Conversely, if the area is relatively new, or previously undefined, having even a small practice group is superior to having no group at all.

• Shared / Multiple Expertise.

Retaining the services of one or two professionals who are part of a larger group means that the client (should) get the benefit of the shared expertise of the group. After all, no one professional is likely to possess all of the necessary experience to handle many of today's more complex matters.

• Higher Profile.

The stronger the practice group, the more likely it is going to be active in the marketplace and the more widespread will be its ultimate reputation and profile. As clients, we want to be assured that we are hiring the best available expertise.

As well, we observe that the number of significant corporate mergers taking place over the past few years have resulted in fewer large institutional clients to go around, and more of these institutional clients reducing the number of professional firms that they give work to.

Again in the legal profession, when you look at what has occurred in case after case where major companies have rationalized their selection of outside legal counsel, the final choice usually comes down to splitting the candidates into two camps. The big-ticket corporate work usually gets divided among a handful of large name-brand firms; and the niche area specialty work goes to those firms, irrespective of size, who have developed some notoriety for their specialized expertise - ergo, the strong practice team.

We are struck by the views of many general counsel (from high-tech to low-tech companies) on this issue:

We use a number of groups of lawyers in law firms for their strength as a group.
--Steven G. Juelsgaard, Vice president and general counsel of Genentech

We are trying to use fewer outside firms. Consolidating the work in those firms with the strongest practice groups is the approach our company has adopted.
--William B. Lytton, V.P. and general counsel, International Paper Co.

These clients, and many others, seem to be looking not only to identify a professional with acknowledged expertise, some leading luminary in the appropriate field, but they are also giving credence to selecting a strong team capable of enhancing the expertise available. Within a team, these clients will then obviously want a point person who is personally responsible for their specific matter and who will treat them as though they are the most important client in the world.

It follows then that the way to differentiate and successfully sell your firm is to sell your practice groups. Firms have and will increasingly find that they gradually lose the better quality work to those firms who have figured out ways to distinguish themselves by having better organized, higher profile practice teams.

To Attract and Retain Talent.

When winning the war for talent (recruitment and retention) may ultimately determine marketplace success, we were intrigued to learn recently from one major Los Angeles based firm how significant the cost attached to loosing talent really was. According to their calculations, losing a junior professional in that firm - one that they had not anticipated nor wanted to loose, was costing each partner some $ 23,000 a year (with each loss).

Meanwhile, the managing partner of a National Public Relations firm headquartered in Chicago revealed to us that the costs to his firm, and their ten offices across the country, of losing good people had exceeded $ 12 million during the past year.

All of this prompted me in a discussion with one managing partner to pose the question; Tell me, do you sense that you are losing your best young talent from those groups that you would consider your best organized, or from those groups that are slightly dysfunctional? This particular managing partner paused for all of two seconds, looked at me and said; You know, I think you're on to something there!

My partners and I have since posed that same question to at least fifty managing partners in different professions around the world and without exception have elicited a very similar response. Now while we have no scientific evidence (as yet) to back up this proposition, the gut-level reactions we get from these managing partners suggests that we are absolutely on target. Having dysfunctional groups is costing firms big bucks.

Taking this even further, today in London, many firms are receiving an unprecedented number of applications from partners who fear for their futures. It has been reported that the partners who are actively contacting these firms include some surprising professionals who are highly regarded within their own organizations.

As the managing director of one legal recruitment agency confirmed, You have some excellent people who made what seemed like a sensible choice at the time, now finding that the way the market is going suggests that the only way to satisfy their career aims is to jump ship. Partners are going to become increasingly concerned by an earnings gap opening up between the best practice groups and their other rivals.

What this all suggests for the future is especially alarming and already evident among many firms. In any tough competition for talent, a superior ability to attract, develop and retain professionals (junior and senior) is a key economic and competitive issue. What develops is a rather circuitous chain of events. A firm develops a strong practice group, as a direct result that group gains a market profile, that profile attracts the better client work, and the better client work then attracts the more talented players in the market.

A means of innovatively packaging practice group knowledge.

Finally, the advent of accounting firms, management consultants, law firms and others, being able to offer specialized, practice specific knowledge to their clients through CD-ROM, software systems, training programs, and most recently by way of the Internet, is a testament to the organizational undertaking that had to precede such efforts ever being commercially packaged and introduced.

Witness the recent events at UK law firm Linklaters, where their Financial Markets and Derivatives Practice Group became the first to launch a unique automated on-line legal service, entitled Blue Flag, in response to the group wanting a more effective way of advising clients on complex securities compliance laws in 40 international jurisdictions.

These practice group initiatives may revolutionize the way in which professional services are delivered, not to mention establishing a serious competitive advantage for the firms involved.

A means of providing for highly profitable growth.

Are there firms out there really making significant and profitable progress with their practice groups? Does making the necessary commitment to practice groups translate into measurable growth or higher profits per partner?

Our own search for answers and concrete examples we could proffer took us to Detroit's Miller Canfield Paddock and Stone, profiled recently in the National Law Journal as one of the firms who, some years back, had set about to develop strong practice groups. In an exclusive interview with Robert Gilbert, the CEO of that firm, we learned that this firm was quite prepared to go on record publicly in acknowledging that they had enjoyed a 70 percent increase in revenues per partner over the past few years as a direct result of their serious (and early) commitment to developing a sound practice group structure.

According to Bob Gilbert, Turning the departments into practice groups four or five years ago was a crucial first step. But even more important than creating the groups on the organizational chart were the steps we took to empowering the group leaders and encouraging a focus on the bottom line. And it's all based on the practice group, which is the fundamental entity for delivering and developing legal services. They must be self-managed.

Exploring even further we found Dallas based Jenkins & Gilchrist, with 340 attorneys, has been the fastest-growing large law firm in the US over the past three years, largely as a result of the firm's shrewd tapping of certain practice groups as winners a few years back. Meanwhile in the accounting profession, of the top ten fastest growing firms, the only one to have achieved that distinction without the benefit of a merger was Atlanta's Hyatt Imler Ott & Blount, an example of a firm that developed their distinction by focusing a major practice effort in the Health Care field.

Clearly, loosely organized individuals accountable only for their own performance are less likely to succeed than would a well managed team engaging in collective activities with collective responsibilities.

THE DISCIPLINE FOR MAKING IT WORK

Why is it that getting these practice groups properly structured and operating seems so difficult for many firms?

The real problem here is not the structure or the viability of practice groups working in any firm, but the attention, commitment, and dedication of the managing partner involved. All too often we observe a managing partner approaching the task of implementing practice groups with much the same exuberance that they similarly committed to the notion of getting their people more attuned to business development, instituting client care, total quality management, or any number of the other fleeting priorities that their firms embraced at one time.

While this managing partner may appear committed to introducing some important new initiative or direction within their firm, most later succumb to delegating to others (usually administrative staff) the time consuming, but most important task of implementation.

Over any five-year career spell at any one firm, any one partner is likely to hear five different State of the Nation addresses, each promoting a commitment to some new direction or priority the firm is endorsing. Little wonder that the most conservative estimates of the failures of these initiatives in firms is 60%. And this is surely, exactly that -- extremely conservative; personal experience would suggest a much higher figure. Thus, the positive effect of these promised commitments on the partners rarely lasts out the afternoon, but the cumulative cost of such failures is intangible and immense. It lies not simply in the loss of credibility for the firm leaders involved, but in the growth of a corrosive cynicism among partners about change in the future - even if the need for such a change becomes generally recognized as becoming more and more necessary within the firm.

So what should a dedicated managing partner do?

Be front-and-center, continually letting partners know that this is one of your highest priorities.

We have often asked of a managing partner to please tell us what their three highest priorities are for the coming year -- What three things if accomplished this year would have the highest value-added impact to progressing your firm's future?

They can often give you a list of a dozen, but attempting to isolate only three as their highest priorities, they find nearly impossible - so much to do, so little time! To which we have to politely inform them, that any more than three priorities is chaos (in the eyes of their partners) and usually translates into them really having no priorities that are truly likely to get accomplished.

For an initiative like practice groups to garner the attention it requires, the Managing Partner must continue to provide hands-on support -- to let people know that this is an initiative that the firm is taking very seriously; to provide evidence of why it is important; some sense of the end result that the firm is aiming for and that we will measure ourselves against; and always to be articulating to partners the desirability of high performance practice groups and how they can benefit both the firm and (more importantly) the professionals involved.

You must keep communicating the practice group message until your partners tell you that you are overdoing it. Just when you are sick of repeating the same core message over and over again is when some partners in your firm are starting to hear you. First, they do not hear. Then, they do not understand. Then they do not believe. If you stop repeating the message, they will conclude that you were not serious after all. Good communication does not necessarily guarantee success but poor communication (or managing partner abdication) does guarantee failure.

We are constantly reminded of one firm we know where they tell a story about a senior litigator that everyone in the group looked up to. The story goes that this senior professional had a habit of throwing his tie over his shoulder as he worked at his desk, and then oblivious to his decorum, would leave his office and walk around the firm with his tie thrown over his shoulder. Well, guess with me please, how many of the younger practitioners (partners and non-partners alike) in that practice group would wander the halls with their ties thrown over their shoulders? All of them, of course. We overlook the tremendous cloning effect that we can have on others in our firm and practice group. And that cloning effect can be used as a positive force for change.

Get those who are somewhat reluctant on board.

It is also imperative that some effort be directed to those few individuals (the recalcitrant partners) who others tend to look toward in an attempt to gauge their opinion on various matters. We often refer to those people as the informal leaders. If a managing partner works actively to help them get on board with any new initiative and they become (even passively) supportive, others will quickly determine that this is a good thing to support.

How does a managing partner get them on board, with any change your firm may be contemplating? Find a way to get them involved in the process. Call upon them to participate in some meaningful way.

If trying to get them involved doesn't work, then a personal appeal to having them not become overly critical during the transition period may at least neutralize their disruptive capabilities. Ask them to suggest ways in which to keep the initiative on a positive and constructive course, recognizing that sometimes as professionals we are extremely analytical and critical of every new endeavor.

Volunteer to attend practice group meetings.

Keep in mind that your most powerful management tool, as a managing partner, is -- attention. Whatever it is that you devote attention to, invest time in, are seen to be giving priority, is therefore deemed by all of those who look to you for guidance, as important! Therefore, the next thing you must do is to review your calendar and determine how many of those practice group meetings you can drop in on over the next month. Your presence will signify both to the practice leader and, more importantly, to the team members, that this is something you are seriously interested in. By attending the entire meeting you will gain some first-hand experience at observing how the group reacts and what significant issue are unearthed.

Some firms encourage their practice groups to have regular meetings while others make it mandatory that groups meet at least monthly. Whichever is your firm's policy preference, there is no substitute for the enthusiasm that can result from having the managing partner or some member of the executive committee show interest in the group's activities by volunteering to attend one of their meetings as an outside observer. This can be an excellent means of both observing the group's progress as well as contributing some substantive ideas. Among those firms that are progressing well with practice group, we observe that the executive committee has divided all of the firm's various groups among themselves (so as not to impose any onerous time commitments on any one member) and then suggested to practice leaders (one-on-one) that when they schedule their next meeting, they would welcome sitting-in as an observer.

Be an enthusiastic cheerleader.

Your second most powerful tool is to serve as cheerleader. Talk to other practice leaders about what you observed from sitting in on some practice group meeting. That will both serve to support the view that this is important to you and that they are likely to see you in attendance at their meeting; as well as signal to any practice leaders who are not meeting that your commitment to moving forward is genuine. Shoot an e-mail to the specific leader and the members of the group acknowledging some of the good action ideas that were generated and how you are looking forward to hearing about the progress that has been made at their next meeting. That will provide the additional catalyst to drive team members to progress those activities they volunteered to implement.

Develop a Practice Group Leaders Council.

Increasingly firms have come to realize that one of the challenges we face is to find the means by which to facilitate communications, information and knowledge, among and between the departments, practice groups, and industry teams that comprise our firms. We have discovered that many firms have now initiated some form of practice leaders council that meets for a couple of hours (at least quarterly) to review and discuss what is going on within their various groups. This council can serve as an excellent venue for reporting results that can then be communicated across the firm.

At your meetings with these practice leaders, acknowledge small success (especially any that you can quantify), encourage any leaders who have been reluctant to take action, and spend some time discussing issues that are germane to other practice groups (where some course of action underway in one group may have implications for other groups).

Schedule periodic progress reviews.

As the managing partner, schedule a review meeting every six months, with all practice leaders to discuss their progress, get specific feedback on action plans, and offer suggestions to enhance performance. By setting the date for this review meeting well in advance, this action signals to leaders the importance attached to their being able to report specific results.

MOVING FORWARD

We believe that there is ample evidence that practice groups can serve as a powerful means of distinguishing the firm, enhancing profitable growth, innovatively packaging group knowledge, and improving professional retention; and that those who take a serious approach to the management of their practice groups will inevitably rewrite the rules by which their profession gets practiced.

In many firms the concept of practice groups is floundering. These firms often simply resort to an approach known as spray and pray! The firm sprays training on their practice managers, then sends them back into an unchanged environment and prays that something good will happen. The real challenge is to provide a supporting structure that transcends prayer.

We believe the creation of small practice teams is the only way to move any firm aggressively forward. Practice Groups are that concept for the competitive firm. The concept is not at fault. The challenge lies in thoughtful, consistent, patient and practical application.