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Legal Business

Practice Groups as Part of Organizational Structure

Practice groups have become the driving element for strategy development and implementation. However, experience shows that many firms are frustrated with the effectiveness of practice group operations, with the implementation of practice group planning and with the management/leadership of practice groups. Managing partners regularly lament that they cannot find sufficient numbers of good practice group leaders.
In our experience, practice groups are the most effective means by which a firm can organize its practice and enhance competitiveness while engaging all of its lawyers in the important task of planning and executing to become more valuable on behalf of clients.

[2] Law Firm Practice Groups
There can be a great deal of misunderstanding or confusion regarding practice groups. The following sets forth some basic thoughts regarding their organization and the need for them. These may be helpful to the reader in assessing his/her firm's use of practice groups.
Multi-faceted law firms are akin to large businesses with multiple business lines. Each business line (practice area) has its own unique:

  1. Requirements for specific legal skills;
  2. Staffing requirements, including professional and non-professional;
  3. Client base, with differing service needs;
  4. Markets they serve or hope to serve;
  5. Profit profiles and potential;
  6. Pricing opportunities and options;
  7. Practice development and marketing opportunities and needs;
  8. Different interdependencies within the law firm; and
  9. Contributions to the needs of the firm and other practice groups.

Practice groups, like strategic business units in a corporation, should operate autonomously based upon their market, product, and profit objectives while maintaining focus on the firm's overall objectives and needs. Practice groups primarily have an external focus on meeting the needs of markets, clients, and prospective clients. Groups should be extremely focused in these efforts. Groups can include subspecialties from a single department, i.e., health care, or focused cross-disciplinary teams, i.e., emerging businesses.
It is clear that things happen in law firms (i.e., marketing, market penetrations, profit improvements, etc.) because of individual initiative and efforts. In large firms, in particular, this individual effort may be focused solely on billable hours or other narrowly focused issues because the partners (and perhaps associates) believe that the institution will be responsible for other functions. This is a problem that confronts larger organizations in cultivating an entrepreneurial spirit at the practice group level.
In a stable, non-competitive environment, status quo is acceptable. However, that is not the case with the current law practice environment and likely will not be for a long while. Therefore, there is an absolute requirement that firms recognize the need for planning and other business function activities at the practice group level. For this to occur, there must be committed, focused strategic management at this level. This management level must be accountable to the firm's top management team.
Group size is important. Typically, 15 or fewer active members should be in a group. However, one or two people should not comprise a group. Thought and consultation with partners will be needed to identify or reorganize groups.
A group should always have a clear and precise, externally oriented business purpose regarding its clients, the legal services that it will offer, and its geographic marketplace. A lack of clarity in any of these areas significantly degrades the group's ability to plan and focus its efforts.
Groups are managed by a designated individual who is responsible for group plan development, coaching, communications, and enforcing membership accountability. Increasingly, important management functions will be performed within practice groups. Practice groups will be the source of:

  1. Effective marketing;
  2. Development of effective alternative billing scenarios;
  3. Creation of long-term strategies;
  4. Increased value of services to clients;
  5. Improved staffing methodology; and
  6. Collaboration with individual practice groups.

[3] Practice Group Managers/Leaders

[a] Practice Group Leader Job Description
The Practice Group Leader shall possess an LLB or JD from an ABA accredited law school and be admitted to practice in a given jurisdiction. He or she shall be appointed by the Managing Partner or the Management Committee. Generally responsible for practice group strategic planning, practice management, delivery of services, marketing, and group profitability.
Reporting Relationship
Reports and is responsible to the Managing Partner and/or the Management Committee.
Specific Responsibilities 

  1. Develops practice group goals and objectives each year, with group members participating in the planning efforts.
  2. Presents practice group plan to the Management Committee for discussion and approval.
    Distributes and receives work from other practice groups.
  3. Ensures appropriate coordination and communications among practice groups.
    In collaboration with other Practice Group Leaders
  4. Works to develop strategies for cross-selling and educating clients about the firm's areas of expertise.
    Works with administration to allocate support staff resources.
  5. Conducts practice group meetings to discuss workloads, new matters, and to engage in general exchange of ideas.
  6. Ensures that each lawyer develops an individual business plan, monitors the lawyers' implementation efforts throughout the year, and offers assistance in implementing and modifying the plan as needed.
  7. Is responsible for establishing and ensuring quality work-product control polices and systems and that they are adhered to.
  8. Measures, evaluates, and reports on group profitability issues on a quarterly basis. Where necessary, takes action to ensure short and long-term profitability goals are met.
  9. Leads the development of pricing strategies, including hourly rates and alternative pricing arrangements.
  10. Is a member of appropriate professional organizations. Fees and expenses related to such activities shall be paid by the firm.

[b] Attributes of a Good Practice Group Leader
Following are some attributes of a good practice group leader:

  1. Willingness to treat the practice group as a valued client, meaning that the planning, implementation, and accountability efforts required will be attended to and not "put on the back burner."
  2. Willingness to act as a coach and facilitator rather than a dictator. Leadership in today's environment requires a different type of leadership focused more on building consensus and collaborative execution.
  3. Willingness to hold individuals accountable even though there is ambiguous authority. This will mean development of personal leadership and management techniques calculated to secure practice group members' agreement to help develop plans, execute agreed upon strategies, and the like.
  4. Has the respect, not only as a practitioner, but as a fair individual, of practice group members. This does not necessarily mean the individual with the highest billings or the most seniority.
  5. Takes the time to understand the needs and nuances of developing plans that are not only effective but practical based upon the group's inclinations, resources, and capabilities.
  6. Accepts that managerial efforts and results on behalf of the practice group will be taken into account for purposes of his/her own evaluation and compensation.

[4] Why Practice Groups Fail

[a] Top Management Fails the Group
Experience shows that practice groups are most often not effective when top management has failed the groups. This means that, within practice groups, it is critical that top management commit itself to attend to these groups, hold them accountable, and provide them with the requisite resources and focus. One of the phrases heard most from practice group leaders is that they work hard to develop strategic plans which are not reviewed by management, that there is no feedback or, if there is any, it is often not timely. This leads to significant frustration at the group level and a growing sense that the groups' plans are unimportant. Following are some problems that have been observed in the marketplace.
One of the critical tasks of top management is to ensure that it performs a rigorous review of group plans on a yearly basis. This review and feedback is crucial for the groups, as well as the firm itself. Rationalization of all of the groups' plans is one of the most important strategic needs of any law firm. It leads to improved linkage, interdependency, and collaboration among groups.
Additionally, there must be ongoing linkage and dialogue with the groups through the leaders. Management must have formal, timely means by which it communicates with the group. This would include ensuring that the groups continue with implementation efforts, pursue additional opportunities, and have the resources they need to execute their strategies.

[b] Marketing Focus Only
Practice groups are not marketing teams per se. All of the functions outlined herein should be accomplished by each practice group. Solely focusing on marketing efforts will not improve the group's external competitiveness profile.

[c] Lack of Management and Leadership Training
Practice group leaders need practical training in how to develop a plan, how to manage people, how to coach people, etc. You will need to spend time determining what training is required to assist group leaders in their jobs, and developing the materials necessary to complete the training. The existence of a workbook, coupled with a short training exercise, is invaluable to practice group leaders, especially if they have not developed plans before, or do not know what plans should look like.

[d] Pure Profit Centers
Practice groups that are pure profit centers, meaning the practice group will be compensated based upon its profitability, will not and do not work in a collaborative environment. Although we believe profit data should be developed and shared for managerial purposes, you must guard against an evolution toward pure profit centers.

[e] Forgotten Interdependencies
Firm practice groups are interdependent with other practice groups in terms of doing work, staffing, and cross-marketing efforts. Too often, however, practice groups do not specifically focus on identifying and pursuing those interdependencies. This should be a part of any practice group's planning efforts. In addition, top management's role in the identification of interdependencies is key. To fail to nourish this function is a mistake.

The source of this article is "How to Manage Your Law Office." subscribers can access this publication online.