Practice Groups Are Businesses

Practice Groups Are Businesses

It is common practice to refer to law firms as partnerships and professional service firms.  While these terms are somewhat accurate and fine to use in the normal course of dialogue, they become opaque and ambiguous when examining how strategy and competitive advantage can be created for a law firm.

When getting more specific, many people will refer to firms as service businesses, because they generate value during transactions and interactions with clients (providing services), rather than generating value prior to an interaction/transaction, as in manufacturing a product to be sold later in a store.  But this is an incomplete definition.

To truly pinpoint what the firm is doing and what type of business it is requires an accounting of all of its components and, here is the key, who uses these components and for what purpose.

Large law firms typically have two broad functions, the legal practice and business operations. 

The legal practice component is populated with the people and resources necessary to actually serve and work with clients.  This component consists of lawyers and other fee-earners.  This is the component that clients generally think they are buying.

This component is typically organized by practice group, specialty team, geography, and in some cases, by specific matters. Large law firms house multiple and diverse service practice groups and specialty teams.

Each of these teams and groups has its own strategy (articulated or not) and, whether it is recognized or not, is either aligned, irrelevant, or distracting to the overall firm strategy.

When looked at critically, each of these groups and teams are actually businesses in-and-of-themselves.  They possess all of the elements of a complete business model, which for review are basically skills provided through services that solve distinct challenges for a defined set of clients who pay for these services.

As such, large law firms are housing dozens, if not hundreds, of small to large businesses. Yes, these distinct practice groups and specialty teams are in essence real businesses. Just so few people think of them in these terms.