Building a successful new practice group

Firms of all sizes are creating competitive advantage by building distinctive areas of expertise. But many of these efforts are less successful than they should be

Most firms we know are trying to build at least one stronger practice group.

For example, there are:

• Strong banking firms trying to build a corporate practice, and vice versa
• Firms famous for litigation trying to grow a corporate practice
• Corporate firms trying to build capabilities in support areas such as tax, financial services, competition, employment, IP, etc
• Shipping firms trying to add a ship finance capability
• Commercial firms adding outsourcing and IT practice groups
• Private client firms trying to build their commercial practices
• Oil and gas practices wanting to diversify into the wider energy market

The list is endless. But what we notice is that most firms are finding it difficult to build these new practice groups and are disappointed at the rate of progress. Many blame the fact that their firm has a ‘brand name’ which works against them. But we’ve remained unconvinced by this argument. So we’ve studied the few firms that have succeeded and the many firms that are doing less well with their new initiatives and from this analysis we’ve developed a template of best practice in the form of a phased approach (see diagram).

Phase 0 – Lay the Foundations for Success

Many new practice groups fail before they’ve even started because the foundations for success are not laid. Typically there needs to be a reason for the firm to decide it wants a stronger practice group in a particular field. This might be as a result of a particular event, for example:

• partners joining or leaving
• winning or losing work from a particular client
• profits in decline
• uncertainty in the market
• a competitor firm making a strategic change

The other driver for change might be some kind of strategic review that pinpoints the opportunity for work in a new area. Sometimes this falls out of the business planning process carried out by an existing practice group. Sometimes the opportunity arises from a review of the firm as a whole.

Those firms that succeed tend to have a project sponsor at this stage. This person should ideally have influence within the firm, perhaps even be on the Executive Team or Board. The role of this person becomes more important in the next stage, but one of their critical tasks in this early phase is to ensure that the right group leader is appointed. Again, this makes a big difference in terms of whether the venture succeeds or fails.

Ideally the leader for the new group should be an internal appointment because the next phases are tricky and only an insider will know the ropes. But it isn’t always possible to find a suitable candidate from within. Nine firms in our study recruited outsiders. They were all given a year or so to show signs of success. In all cases this was extended, but all the partners except three were deemed to have failed and these were the only ones to stay with their new firms longer than two years. Indeed, one group made two failed attempts with successive outside partners, and finally achieved success – albeit modest – when they made up a senior associate from inside the firm.

Phase 1 – Project Set Up

Again, the firms that under-achieve tend to put less emphasis on this phase.

The leader has some critical tasks:

• To clarify what the firm expects – too often the Board are vague or unrealistic and this creates scope for misunderstandings. At one level it makes it difficult to measure achievements. At another level it leads to a lack of clarity as to what support the new group is going to need from the sponsor or others.
• To build a profile for the embryonic group internally – at one end of the spectrum, there can be a lack of any knowledge that the initiative is underway. At the other end, law firms being as they are, rumours and misunderstandings can easily spread which may lead to partners blocking progress unnecessarily. The project sponsor needs to be there to support you if this happens.
• To appoint a core team– no single person can grow a new practice by themselves. What can easily happen at this stage is that too many people express an interest. This interest may be positive in intention or negative! Some partners may see the new initiative as a threat to their practice. The ideal core team to initiate a new practice group would comprise 2 or 3 partners and their teams. Any more than 5 partners is frankly unworkable and a huge amount of time will end up being wasted debating a plan and disagreeing about priorities. It may be appropriate to have a wider team who are kept informed of developments, perhaps because the new practice group links with their type of work, the sector/industry they serve or because you might be sharing clients.
• To draft a business plan – typically what happens here is that the leader drafts a plan and shows it to others. Some reply with comments. Many don’t. And if they do, the comments aren’t always constructive. This isn’t the best approach. If you want commitment it’s much better to get the core group to draft the plan. This way it’s everybody’s plan and you will find more things get done that way.
• To agree roles, responsibilities and measures of success – teams tend to perform better with these aspects clear and, though this sounds obvious, it happens rarely. Again, completing this step more rigorously can make a big difference when it comes to getting action. Bear in mind that the leader doesn’t have to do everything. The other partners can take the roles of Marketing, Finance, HR/Recruitment, etc.

We see this phase taking around 6 to 9 months and by the end of this phase you need to have a committed team in place if you are to succeed in phase 2.

Phase 2 – Raise profile and win instructions

Now the fun really starts. And the hard work! The critical success factors appear to be the following:

• Successful business development projects underway – a provisional business plan may already exist (see above). What is needed now is a short list of business development projects. I say ‘short’ because too often groups draw up programmes that are over-ambitious. It can take too long to get complicated projects completed and the group can lose enthusiasm and even become demoralised.
• Team members committed to activity – it helps if the group members sign up and volunteer to be accountable for certain projects, rather than the leader handing out jobs. Commitment and enthusiasm can be a vital factor in getting the new team off the ground.
• Regular team meetings – and the more frequent and more informal, the better. Too often groups assume the best way is to meet monthly and have long boring meetings. Not surprisingly, this puts a lot of people off!
• PR plan – one important aspect of the business development plan is a plan for getting market profile. One successful group put a good deal of emphasis on this and became recognised as a leader in a niche field within two years. Enquiries for work and instructions flowed in as a result. As an embryonic group, the marketing budget might be quite small (many firms apportion budgets as a percentage of fee income), so profile through the web or in leading trade journals can be useful because they are relatively cheap. But profile just by itself is usually not enough:
• Sales visits – you need to get out there and meet potential clients or referrers. Most lawyers find this activity the least pleasant and Sherwood has developed some helpful selling models and training programmes to assist. The key messages are:
  • Work on communicating credibility, rapport and trust
  • Don’t be too pushy – take it slowly, otherwise you’ll risk undermining the trust
  • Develop skills in questioning and listening to enable you to get to know your prospect’s business and their needs
  • Show that you care
• Growing support for group in the firm – too many fledgling groups only focus on the outside world and winning prospective new clients. The groups that work best focus at least as much attention inside their firms. As we have already recognised (see above), some partners will be anxious about the impact of this new group on their flow of business
• Cross selling from other groups - the easiest clients to get are already clients of the firm. If you build good trusted relationships with your partners, work will be referred to you.

It is difficult to put a timeframe on this phase, but in many cases it ought to be possible to show additional instructions flowing into the firm after 12-18 months.

Phase 3 – Growth and consolidation of performance

We’re on a roll now! But probably not achieving the margins that the firm expects. So the focus of attention in this phase needs to move to addressing the following issues:

• Repeat instructions from clients – there’s more work to come from the person who has already instructed you, plus other individuals at the client who can instruct or influence who receives instructions. The groups that do best tend to have clear Client Partner roles and plans for developing client relationships.
• Group is growing in size – and the leader again has a plan for helping ensure that there are sufficient people with the skills and appropriate charge out rates to do the work.
• Knowledge management system set up – as the group gets bigger it gets harder for each member of the group to know who know’s what, so some kind of system with simple processes will help build efficiencies and improve margins.
• Other lawyers show interest in joining the group – perhaps one of the best measures of success.
• Higher rankings in industry surveys – love them or hate them, they play a role in creating a perception in the market and can influence who gets short listed for some jobs. If you’ve achieved the other tasks in our checklist, your rankings are bound to improve.
• Cross selling to other groups – you know you’re doing well when you start introducing other parts of your firm to clients you’ve won in the first place.
• Acknowledged as a success in the firm – this is what it’s all about and other fledgling groups seek out your advice!

You’ll need at least 3-5 years before this new team is achieving the performance levels of the rest of the firm. It will have been a challenge, but for those who have done it, it will have been one of the most satisfying experiences of their careers.

Contact: Tony Reiss, Simon McCall, Des O’Connell or Julian Boardman-Weston