effective practice group...

Effective Practice Group Leadership

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The following chapter, "Smart Collaboration: The Role of Practice Group Leaders" was written by Heidi K. Gardner, PhD, Distinguished Fellow at Harvard Law School's Center on the Legal Profession. Please contact Dr. Gardner for additional information or permission to reprint.

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By Heidi K. Gardner, distinguished fellow in the Center on the Legal Profession at Harvard Law School

Clients increasingly describe their business problems – everything from regulatory compliance to cybersecurity – with the term “VUCA”, meaning volatile, uncertain, complex, and ambiguous. These VUCA problems are so complicated that only a team of experts can solve them. Yet, law firms have carved out highly specialized experts in narrowly defined practice groups, and collaborating across these silos is often messy, risky, and costly.

The crashing together of these two trends – increasingly complex client problems and the drive for specialization – mean that law firms must integrate their lawyers’ expertise in order to deliver high-quality, customized outcomes for their client’s thorniest issues. This form of integrated client service that often crosses practice groups and other siloes is what I mean by smart collaboration. It’s not delegation, sequen-tial teamwork, cross selling, or the mere assembly of experts. While it may not involve face-to-face work, collaboration does require repeated interactions that, over time, allow the creative recombination of different people’s information, perspectives, and expertise.

If you think collaboration is a “soft” skill, think again. For more than a decade, I have examined smart collaboration within professional service firms while I’ve been on the faculty at Harvard Business School and Harvard Law School. My research is based on millions of data records collected across multiple organizations, as well as statistical analyses, case studies, survey results, and in-depth interviews. Both quantitative and qualitative findings reveal that smart collaboration makes organiza-tions more productive and more profitable.

Firm leadership – particularly PGLs – play a pivotal role in fostering smart collaboration within their firm. As a PGL, you possess the power and influence to lead real, positive change for the betterment of your

Chapter 8: Smart collaboration: The role of

practice group leaders

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Chapter 8: Smart collaboration: The role of practice group leaders

firm, employees, and clients. In this chapter, I’ll outline the key benefits and outcomes of smart collaboration, explain possible pushbacks, and offer suggestions on exactly how to achieve it in your firm.

Benefits of smart collaborationWhen firms leverage their solo experts through smart collaboration, the firm, the client, and the individual lawyer win. Firms achieve a compet-itive edge among other industry leaders by becoming indispensable and invaluable to their clients, which inspires greater client loyalty and reten-tion. Clients, in return, pay handsomely for high-quality, customized services and give the firm access to their top executives. Lawyers who collaborate earn higher margins, build trust with their colleagues, gain access to more lucrative clients, and attract more cutting-edge work. As one partner said, “The more brains we have inside the client, the more we can spot opportunities to add value in sophisticated ways. We’ve completely avoided issues going to RFP because we were so far out in front.”

Increased revenues Just like managing partners predict, the financial benefits of multi-prac-tice collaboration are clear: the more practices that serve a client, the more revenue the client generates for the firm each year. As the figure below shows, moving from one to two practices serving a client triples that client’s revenues, and the addition of each subsequent practice continues to grow fees. Clearly, if 1 + 1 = 3, then the lawyers who are

Figure 1: Average annual revenue per client based on number of practices involved

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involved in cross-practice service are doing more than just referring their colleagues to provide their own siloed work. As more practice groups serve a client, each one of them earns more on average, suggesting that they are collaborating to create additional value, not merely cross-selling independent services.

Cross-practice collaboration allows lawyers to gain access to senior executives who have broader responsibilities, larger budgets, and more sophisticated needs. This complex work commands higher margins, revenues, and hourly rates, as one partner said: “The clients are much more generous on fees because if it’s so big, the deal has got to get done, and they cannot waste time negotiating or nit-picking.” While single-specialty is often viewed as a commodity awarded to the lowest bidder, cross practice work is less subject to price-based competition.

Higher profitsSkeptical professionals may wonder if multi-practice service increases revenues without enhancing profits, which would translate to more work for a lower margin. But, fear not. My extensive research reveals that, on average, clients served with multi-practice engagements are more profit-able in the long run. At first, as the account size grows, clients often do exert fee pressure. When firms broaden the scope of their services from one to a few practice groups, discounts rise by several percentage points. After that, however, as the account continues to grow, discounting levels

Figure 2: Average annual number of projects per client based on number of practices involved

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off. Overall, data from both domestic and international law, consulting, and accounting firms shows that the profit margins hold nearly steady (within a few percentage points) as more practices are included in a client’s service mix. The figure below shows how this effect works on profits for one US professional service firm:

Figure 3: More practices, more profits

Naturally the numbers shift, especially depending on which prac-tice anchored the initial relationship. What’s more, the slightly lower margins associated with broader client service are almost certainly offset by the lower cost of generating that revenue from existing clients. Through smart collaboration, firms almost certainly find that it requires less time, effort, and marketing expense and risk to convert an existing client into a one that uses the full breadth of services than it does to woo an equal-sized, brand-new client away from a competitor. The bottom line is this: collaboration helps firms grow their profits.

Client Loyalty and RetentionAcross multiple law firms, our empirical analyses show the clear rela-tionship between collaboration and client retention: the more partners serving a client, the longer that client remains with the firm – even when an important partner leaves the firm. A review of one firm’s relationships with its 300 biggest clients revealed the numbers behind that finding: Of those clients served by a single partner, roughly three-quarters said they’d consider moving their business to a competitor firm if their relationship partner departed. In contrast, for those served by multiple partners – whether it was two or any number higher than that – a full 90 percent said they’d remain loyal to their existing firm. This outcome might sound obvious, but our research also shows that the majority of

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clients in most law firms are served by a single partner – meaning that most client relationships are highly fragile, and that the solo partner who serves them gets more and more power, making them immune to sanctions for anti-collaborative behavior, which furthers the cycle.

Client retention is directly linked to smart collaboration for another reason, too: Firms that successfully tackle their clients’ thorniest prob-lems through smart collaboration are far more valuable to their clients and less subject to price-based competition. With the support of their clients’ senior executives, lawyers can easily seek, propose, and sell more work. Done right, cross-practice collaboration ultimately makes clients stickier by creating switching barriers and boosting client loyalty and retention.

Better utilize firm talentToday’s war for talent is at least as brutal as the battle for clients. Long-time employees and lateral hires greatly benefit from a collaborative firm culture and supportive leadership. Our data shows that unless laterals successfully bring new colleagues onto their own client work and receive reciprocal collaborative opportunities within their first year or so, they are very likely to depart. Why? Collaborating builds interpersonal and competence trust between lateral hires, their colleagues, and new clients.

Firms that foster collaboration better utilize the expertise of their lawyers, their most prized asset. When solo experts are afforded the opportunity to learn, grow, and explore on a multi-disciplinary team, innovation reigns. That is, smart collaboration beckons solutions that are both novel and useful, and which leads to long-term benefits for clients. Getting employees to collaborate across units makes it easier to spread and leverage technology and other kinds of investments, because adoption jumps once people understand how those tools are used elsewhere. Innovation differentiates an organization from the pack, generating higher profits in the near term and more sustainable compet-itive advantage in the long term.

Pushback against collaborationEven as partners recognize the need for greater collaboration in their firm to drive revenues and growth, their intellectual buy-in doesn’t translate to behavioral change. Pushback often stems from a lack of competence or interpersonal trust. The further someone’s technical expertise is from your own, the harder it is to accurately judge their competence and therefore to trust that they won’t make mistakes. Solo operators also worry about their colleagues’ professionalism, responsiveness, and other

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customer-service capabilities. On the interpersonal front, even people who don’t believe that their colleagues would deliberately sabotage them can harbor worries about losing control, not getting enough credit, and so on.

Additionally, collaboration takes time. The financial rewards of collaboration, such as referrals from colleagues after working together, accrue slowly over time. But most of the costs and risks, such as locating an expert and accessing whether she’s trustworthy, available and conflict-free, are borne right away. Fortunately, as professionals gain more experience with collaboration, the costs tend to fall because people discover how to collaborate more efficiently and effectively as they construct a set of reliable collaborators. However, many lawyers give up before reaching the point where the investment pays off, which creates a negative feedback loop that reinforces the perception that “collaboration wasn’t worthwhile.”

The role of practice group leadersPractice group leaders play a pivotal role in leading collaborative efforts within their group and across practices in their firm. Harvard Business School professor John P. Kotter has extensively researched the roles of manager and leader, and argues that firms today are over-managed and under-led. While both leader and manager are vital to the sustainability of a firm and provide complementary, interdependent functions, the differentiation has dramatic consequences for how effectively a firm is run.

These findings are pertinent to role of practice group leaders because leaders drive collaboration, not managers. Managers cope with complexity while leaders cope with change. Change is required for collaboration to take root in a firm.

Fundamental management and leadership tasks for PGLs

Management: Handle complexity Leadership: Handle change

direction Planning and budgeting defining long-term, client-focused strategy

People Hiring, firing, promotions motivating and gaining commitment; holding people accountable for smart collaboration

Execution Quality control and problem solving dealing with politics

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Yet, many of the responsibilities undertaken by PGLs fall under the category of management, not leadership. Managing focuses on short-er-term, tactical coordination tasks such as budgeting and staffing. In contrast, leading is longer-term, more strategic, and inspirational. Although management and leadership are both important for running an effective practice group, your PGL needs to exhibit strong leadership in order to foster smart collaboration. In particular, the leadership tasks fall under two categories: setting direction and motivating people.

Defining long-term, client-focused strategyPractice group leaders must develop a vision of the future and generate strategies for producing change to attain that vision. An excellent approach for identifying strategic opportunities is to focus on the client perspective. Consider what VUCA problems new and high-potential clients face and then replicate successful multi-practice efforts already in place within the firm. When PGLs put on the “client hat,” they increase the likelihood that a collaborative endeavor will be fruitful for both client and firm.

Leaders must develop an evidence-based reason for change. Firms at the cutting edge arrange explicit listening tours with their clients to uncover mutual gains and broader, strategic issues. Through active, explicit listening, firms can identify gaps and opportunities for growth, which is different than merely cross selling (a strategy that clients hate). Pinpoint where and how multi-practice teams benefit the client at hand using hard, data-driven evidence.

Clients want collaboration even if they aren’t directly asking for it per se. Most clients are solely focused on the outcome, and it’s up to the skilled lawyer to determine if and when collaboration will achieve the desired results. What clients want is for their lawyers to understand their issues deeply enough to offer sophisticated advice and to line up the right legal team to deliver it – no matter where in the firm the needed experts reside. Clients recognize and pay handsomely for innovative solutions. Our research uncovered 10 reasons why clients value collaboration.

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Top ten reasons clients value collaboration

1 Access to your best knowledge/experts

2 Deeper understanding of their own business

3 Insights from across their sector

4 Innovation

5 Global perspective

6 Collaborative capacity (Shows you can team with 3rd parties)

7 Consistency (Across teams and over time)

8 One-stop shop

9 Efficiency/economy

10 Relationships/respect (GCs care that you’re willing to invest)

To be clear, clients’ motivations for collaboration vary and may only include a handful of the reasons listed above. As such, it’s critical for PGLs to be at the forefront of their client’s specific demands in order to pinpoint exactly how smart collaboration aligns with their goals and vision.

Ensuring development and adoption of specific client-level plans to deliver strategy Skilled leaders are deeply engaged in the processes that translate their strategy into action. In a law firm, that leadership task is far too often handled with a laissez faire approach – to outcomes that are mediocre at best. “We have an entrepreneurial culture,” many PGLs will say, “and so it’s best left to each partner to decide how best to carry out the strategy in their clients.” What happens then? All too frequently, partners cher-ry-pick the parts of the strategy that are most comfortable for them to deliver (often in lone-wolf fashion), and the practice ends up with a hodgepodge of outcomes that barely resemble the best-laid plans.

PGLs need to make sure the optimal partners are lined up against the right client opportunities, and then help lead partners to map out their current relationship network inside each priority client. PGLs must help partners translate the firm’s potential offerings into clear value for the client, based on lessons learned during client research. This matching exercise should ultimately result in a set of clear, actionable, high-pri-ority steps that lead partners commit to delivering within a certain time period.

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New software packages can help make account planning both powerful and palatable. One that I’ve seen used to good effect is Objective Manager, which is designed to “get the most out of your people and teams with effective objective setting software” and “align people’s objectives to your business plans and client plans.”

With easy updating and accessibility, the online plans turn into a living, breathing part of a partner’s workday and helps people keep objectives firmly top-of-mind. Simply stated, packages like this push objective setting down to the appropriate level – that is, the person who will actually have to hit the goals – and thereby promote both owner-ship and transparency. Leaders can quickly spot areas of lag or provide timely, valuable feedback when necessary.

Motivating people & fostering smart collaboration Firms that actively foster and celebrate collaboration can better retain, motivate, and inspire their employees to perform at their best – a benefit with powerful financial implications. Leaders have the muscle to ener-gize people to overcome the political, bureaucratic, and resource barriers to collaboration. Collaboration doesn’t just make people feel as if they are in the right place. In fact, it’s a self-fulfilling prophecy: Collaboration makes the “fit” better, makes the hard work more efficient and effective, and thereby makes the firm more successful.

Collaboration promotes a strong sense of wellbeing and mutual commitment for lawyers – at all levels – and fosters their creativity, productivity, and fulfillment at work. Effective leaders maintain a vigilant pulse on their team and practice group – their strengths, motivations, and joys. In order to extract and harness the full weight of their collective expertise, leaders must have a thorough understanding of what moti-vates them to perform. Some may be motivated by financial rewards, pure professional advancement, or reputational rewards early on in their career. As seasoned collaborators advance, they may become motivated to collaborate by less tangible rewards in order to derive purpose and meaning, build a legacy, or seek new intellectual challenges.

Committed, collaborative PGLs almost certainly generate positive trickle-down effects, too. When leaders are better at collaboration, they are more likely to coach and involve more junior partners and senior associates in substantive client work. Not just delegation of the “do this discrete task and return it when you’re done” variety, but rather engaging smart minds to help solve complex problems. Not just taking their ideas as background for top-to-top discussions, but exposing those juniors directly to real-life clients. When PGLs expand client relationship teams

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overtime to include junior lawyers, not only does it strengthen client’s loyalty to the firm, but also provides juniors with an increased opportu-nity to learn and demonstrate new capabilities. Each of these aspects, in turn, enhances the retention of both high-performing associates, young partners, and clients.

Coaching boosts productivity, growth, and trust. Strong leaders create the expectation of – and not just a tolerance for – active, constructive, and timely feedback and coaching to the members of their team and practice group. Regular coaching and feedback sessions offer critical touch points for leaders to interact one-on-one with the people they are leading. These sessions serve to highlight a PGL’s accessibility to junior lawyers and their willingness to invest time and resources into the junior’s success.

As business problems become more complex, general counsels are increasingly asked to review broader and bigger business problems as their client organizations consider risks and opportunities. This global trend is a direct response to the VUCA environment. The more aware-ness PGLs have about other practice groups’ specialties, the better they are able to suggest those services to their client when a thorny problem arises. For example, if a client requires an expert on tax law in New Jersey, an effective PGL will know exactly who to contact within that practice group.

PGLs set the stage for how lawyers interact with other practice groups. By modeling desired behaviors and building relationships with other leaders across the firm, you build interpersonal trust, which is the bedrock of collaboration. Reaching out to other practice groups heads and becoming more aware of different specialties secures competence trust.

The PGL litmus testUnfortunately, research findings show that, on average, most PGLs are not focused on the important leadership behaviors, which is inhibiting their performance. The figure below is based on data from seven repre-sentative UK law firms, showing how frequently partners in a typical practice engage in two of the leadership behaviors discussed above: setting direction and motivating people. Each dot shows represents a partner in the practice. Ideally, a PGL’s behavior will map onto the top right of the diagram, indicating that they frequently take both kinds of actions. In reality, however, we find the typical PGL falls into the lower left quadrant, engaging in only modest levels of direction setting and spending even less energy motivating people.

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Figure 4: Practice group leading: frequency of partners’ actual behavior

A truly effective PGL will do both: leading a practice group requires a clear focus on developing a client-focused strategy, and motivating group members so that they’re committed to delivering it effectively.

ConclusionPromoting collaboration to benefit your firm is your responsibility as a practice group leader. To achieve that end, you have to understand the perspectives of your partners (and future partners), and shape your strategy accordingly. If your high-performing professionals are not collaborating effectively today, it’s surely not because they’re stupid or obstinate; it’s often because you are holding them to the kinds of short-term metrics that work against collaboration. Investments in collaboration take time to bear fruit, and you and your leadership team are the only ones who have the authority to demand (and reward) insti-tutional patience.

If you feel ill-equipped to lead in your current role, consider this a growth opportunity. Dig into your role with newfound resilience and seek guidance when necessary from other leaders who are excelling. You – ideally in close collaboration with other practice group leaders and your senior leadership team– need to kick-start a more collaborative approach on the partner level, and then to sustain that approach with subsequent interventions that are well timed and well crafted. The time is now.

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