The Practice Group: A Firm Management Tool Or an Anchor?

The evolution of the practice group as a management tool is, on its face, logical. It meets the need to manage and focus the specific skills inherent in each practice. And as the concept has evolved and grown in popularity, its advantages dominate any possible disadvantages. The clear advantages, to both the firm and its clients, are:

• The skills are honed by peers, and quality of performance is easier to sustain;
• It allows the firm the opportunity to enhance the skills of the practice in presenting those skills to clients and prospective clients. It enhances the ability of a firm to stay abreast of not only legal practices in a specific area, but better client management practices as well;
• The consummate experience of all the lawyers in the practice make those skills and capabilities highly marketable;
• In some cases, it segments the firm in ways that improve the practice of each area of the law, and then allows the improvements to pertain to the entire firm;
• If each group is made a profit center, billable hours, margins, and profitability are easier to measure;
• It enhances internal communication, a particular problem in any active firm.
• By holding frequent meetings of all practice group leaders, with information sharing as a key factor on the agenda, internal communication is further enhanced. These meetings also become a reality check on the firm's overall objectives, by assessing both adherence to the objectives and the need to adjust them where necessary. This is particularly important in the new dynamic of today's business world;
• It facilitates the process of creating a marketing culture within a firm, an end much to be desired. More than a popular clich', the marketing culture is very tangible. In a successful marketing culture, the members of a firm understand the vital role that marketing plays in practice development, and the role that each professional plays in marketing the firm; and
• It facilitates forming effective client service teams, an increasing popular and successful method for improving client service.

Law firms, which were constrained from doing frank marketing before 1977 (Bates v. State Bar of Arizona) have no tradition of marketing comparable to product manufacturers. Marketing requires a skill set not traditional to the practice of law. It is a skill set that must be generated, learned, and practiced, and then integrated into the practice.

In today's economic environment, the marketing process is as integral to professional firm management as is any other firm management tool, such as cash flow management or bookkeeping.

On a broader scale, the practice group is the key to building a marketing culture within a firm. This is done by assigning different marketing tasks to individuals, with responsibility to meet deadlines. For example, by assigning each member of the group the responsibility to provide, once each one or two months, an article for the group's newsletter or Web site, the burden is not too great for each of them, while the sense of participating in the marketing effort helps the individual as well as the firm. There are, of course, other functions that can be assigned and shared, such as networking events and participation, running seminars, and so forth. This approach has had amazing success in many firms.

For the growing firm, it seems an easier and better way to go. But as with any good idea, there is a potential for a downside as well. Emerging experience shows that:

• Practice groups can become insular, moving away from the strengths of the entire firm;
• The practice group must be managed. The effective practice group can be complex, and depends to a large extent on its management. But too often, lawyers are not trained as managers, which is a skill not frequently gained naturally. It must be learned. The practice group is only as good as its leader, and not all fine lawyers are fine managers;
• Practice groups can become competitive within the firm;
• Practice groups can become entrenched in declining or static practices or industries; and
• Practice groups can lose their focus on the overall firm objectives.

How can these pitfalls be avoided, without losing the advantages of the practice group concept? These guidelines might help:

Look at the market. Evaluate your clientele in three general categories ' those in declining industries, in static industries, in growth industries. If the preponderance of your clients are in static or declining industries, you have to make decisions about potential return on investment in seeking clients in those industries. While they may be very profitable, they offer limited growth potential.

Practice groups are specifically relevant to the firm objectives. What does the partnership want for the entire practice? What size firm? What kind of culture? What kind of growth?

How does the group's marketing effort fit with the firm's marketing efforts? Devoutly to be avoided is a practice group's marketing efforts that sell a different firm than the firm's marketing program is selling.

The practice group should be real, and not just a marketing gimmick to imply that a firm has more depth or skill than it really does have. While it's true that in both small and large firms lawyers will practice in several different specialties, and thereby function in more than one practice group, the skills within each group should nevertheless be substantive. The clients ' and the marketplace ' are quick to discover sham.

Ultimately, the practice group is a managerial structure. But clients are not concerned with managerial structures ' they are concerned with your ability to serve them ' to solve their problems. What the practice group must say to a client is not that it's a function of your organization ' but that it's a structure to better serve the clientele.

The decision to organize a firm into practice groups, then, requires thoughtfulness that takes it beyond a fad. The alternative, of course, is to focus on a full-service concept, and certainly, with or without the practice group structure the client should see the firm as a full-service firm. But given the advantages of the practice group, and with full awareness of the possible downside, the practice group may be the better way to go.

Bruce W. Marcus is a Connecticut-based consultant in marketing and strategic planning for professional firms, the author of CLIENT AT THE CORE (with August Aquila), and the editor of THE MARCUS LETTER ON PROFESSIONAL SERVICES MARKETING, now on www.marcusletter.com. His e-mail address is [email protected]. ' Bruce W. Marcus. All rights reserved.

The popularity of the practice group ' an entity within a firm comprised of those who practice a specific area of law or serve a specific industry ' is well grounded, in that it opens a number of advantages to managing a practice and better serving clients. But so complex and management sensitive are practice groups that they open, as well, the easy propensity to misuse the practice group concept in a classic case of poor management canceling the value of a good concept.

The business environment faced by lawyers today is very different from that of just a decade ago. The practice of law is changing rapidly before our eyes, and increased competition calls for stronger and more imaginative competitive measures. Other factors responsible for this new environment comprise a long list that includes globalization, new regulation, increased client sophistication, competition, and substantial technical advances. The practice group, and its ability to focus on the singular needs of an area of legal practice served by specific practices and client groups is, therefore, an effective contributor to a firm's ability to compete and function in this decade and beyond. It's both a tool and a weapon for effective firm management. It changes the traditional concept of firm and practice management, for the good of the firm and its clients. If properly managed, it's both a tool and a weapon for firm management on many levels. And ultimately it offers the firm greater transparency of all of the firm's practices.

Where once the practice of law was performed essentially by as many entrepreneurs in a firm as there were lawyers, with the practice group structure, the group creates a synergy that allows the firm to function with the full force of a firm's skills.

The evolution of the practice group as a management tool is, on its face, logical. It meets the need to manage and focus the specific skills inherent in each practice. And as the concept has evolved and grown in popularity, its advantages dominate any possible disadvantages. The clear advantages, to both the firm and its clients, are:

• The skills are honed by peers, and quality of performance is easier to sustain;
• It allows the firm the opportunity to enhance the skills of the practice in presenting those skills to clients and prospective clients. It enhances the ability of a firm to stay abreast of not only legal practices in a specific area, but better client management practices as well;
• The consummate experience of all the lawyers in the practice make those skills and capabilities highly marketable;
• In some cases, it segments the firm in ways that improve the practice of each area of the law, and then allows the improvements to pertain to the entire firm;
• If each group is made a profit center, billable hours, margins, and profitability are easier to measure;
• It enhances internal communication, a particular problem in any active firm.
• By holding frequent meetings of all practice group leaders, with information sharing as a key factor on the agenda, internal communication is further enhanced. These meetings also become a reality check on the firm's overall objectives, by assessing both adherence to the objectives and the need to adjust them where necessary. This is particularly important in the new dynamic of today's business world;
• It facilitates the process of creating a marketing culture within a firm, an end much to be desired. More than a popular clich', the marketing culture is very tangible. In a successful marketing culture, the members of a firm understand the vital role that marketing plays in practice development, and the role that each professional plays in marketing the firm; and
• It facilitates forming effective client service teams, an increasing popular and successful method for improving client service.

Law firms, which were constrained from doing frank marketing before 1977 (Bates v. State Bar of Arizona) have no tradition of marketing comparable to product manufacturers. Marketing requires a skill set not traditional to the practice of law. It is a skill set that must be generated, learned, and practiced, and then integrated into the practice.

In today's economic environment, the marketing process is as integral to professional firm management as is any other firm management tool, such as cash flow management or bookkeeping.

On a broader scale, the practice group is the key to building a marketing culture within a firm. This is done by assigning different marketing tasks to individuals, with responsibility to meet deadlines. For example, by assigning each member of the group the responsibility to provide, once each one or two months, an article for the group's newsletter or Web site, the burden is not too great for each of them, while the sense of participating in the marketing effort helps the individual as well as the firm. There are, of course, other functions that can be assigned and shared, such as networking events and participation, running seminars, and so forth. This approach has had amazing success in many firms.

For the growing firm, it seems an easier and better way to go. But as with any good idea, there is a potential for a downside as well. Emerging experience shows that:

• Practice groups can become insular, moving away from the strengths of the entire firm;
• The practice group must be managed. The effective practice group can be complex, and depends to a large extent on its management. But too often, lawyers are not trained as managers, which is a skill not frequently gained naturally. It must be learned. The practice group is only as good as its leader, and not all fine lawyers are fine managers;
• Practice groups can become competitive within the firm;
• Practice groups can become entrenched in declining or static practices or industries; and
• Practice groups can lose their focus on the overall firm objectives.

How can these pitfalls be avoided, without losing the advantages of the practice group concept? These guidelines might help:

Look at the market. Evaluate your clientele in three general categories ' those in declining industries, in static industries, in growth industries. If the preponderance of your clients are in static or declining industries, you have to make decisions about potential return on investment in seeking clients in those industries. While they may be very profitable, they offer limited growth potential.

Practice groups are specifically relevant to the firm objectives. What does the partnership want for the entire practice? What size firm? What kind of culture? What kind of growth?

How does the group's marketing effort fit with the firm's marketing efforts? Devoutly to be avoided is a practice group's marketing efforts that sell a different firm than the firm's marketing program is selling.

The practice group should be real, and not just a marketing gimmick to imply that a firm has more depth or skill than it really does have. While it's true that in both small and large firms lawyers will practice in several different specialties, and thereby function in more than one practice group, the skills within each group should nevertheless be substantive. The clients ' and the marketplace ' are quick to discover sham.

Ultimately, the practice group is a managerial structure. But clients are not concerned with managerial structures ' they are concerned with your ability to serve them ' to solve their problems. What the practice group must say to a client is not that it's a function of your organization ' but that it's a structure to better serve the clientele.

The decision to organize a firm into practice groups, then, requires thoughtfulness that takes it beyond a fad. The alternative, of course, is to focus on a full-service concept, and certainly, with or without the practice group structure the client should see the firm as a full-service firm. But given the advantages of the practice group, and with full awareness of the possible downside, the practice group may be the better way to go.

Bruce W. Marcus is a Connecticut-based consultant in marketing and strategic planning for professional firms, the author of CLIENT AT THE CORE (with August Aquila), and the editor of THE MARCUS LETTER ON PROFESSIONAL SERVICES MARKETING, now on www.marcusletter.com. His e-mail address is [email protected]. ' Bruce W. Marcus. All rights reserved.