In our prior post, Industry Group Strategy Part 1 – What are They and Why Have IGs? we clarified the difference between sectors and industries and discussed the benefits and goals of having them. In law firms, Industry Groups, like client teams, straddle multiple practice groups and lawyers may be members of several practice groups and industry groups. This raises numerous issues, for example:
- How should firms select which industry groups to focus on?
- Who will lead them and what are the responsibilities of the Industry Group Leader?
- What is the relationship to practice groups?
- How do you budget for these?
- How many groups should any lawyer be allowed to participate in?
- How will you measure and allocate credit for new business? Won’t this result in “double counting” of credit since PGs also track new business outcomes of the same clients?
- How will you reward for success?
In order to effectively manage industry groups, firms must identify and empower effective leaders to run them, establish goals and metrics to measure and reward results, allocate budgets and measure ROI, and direct and support business development and growth strategies.
Be Strategic and Selective in the Industry Groups You Form
Industry groups must be carefully selected and well-defined particularly since law firms primarily manage now by practice group or business unit. No law firm can effectively manage too many industry groups at once unless it has shifted to an industry focused, business unit governance model over the traditional practice group/service area model.
To determine which industry groups your firm should form, you will want to take a look at three key criteria and take these steps:
- Do an analysis of your top clients – those that represent 80% of your revenue. Using the SIC or NAISC (see Industry Group Strategy Part 1 – What are They and Why Have IGs?) classifications, code your clients by industry and then group clients by industry.
- Look at the relative maturity of clients’ industries and the degree to which the industry inherently generates legal issues and controversies. It will be best to balance “mature” or “in decline” industries with some that are emerging or in growth mode. To this latter point, you may want to look at some of your smaller, newer clients who may be on the front end of the maturity curve and not yet generating top revenues for the firm but represent a future growth opportunity.
- Assess your lawyers’ depth and breadth of expertise that will be required for differentiating in each of the industry sectors – some will require substantial and specialized regulatory expertise, e.g., FDA, ITAR, CFIUS, etc. You’ll want to be sure to have most of the skills and proven track record in your current talent pool to credibly sell your expertise.
- Assess the competition to be sure you have a distinct advantage. You want to differentiate your capabilities as a law firm, not be just one more firm that does the same thing as its competitors. If a competitor has similar industry groups as you do, consider focusing on those that could really distinguish your firm.
- Determine how IGs, IGLs, and IG members will be governed, funded and monitored/measured.
What to Do Once Industry Groups are Established
Once you have determined the Industry Groups you will launch or formalize, there are a number of steps to take to accelerate success:
- Identify at least several core partners who would be members of this group to confirm their interest and commitment in participating. These would be partners who are responsible for or at least do a lot of work with the top clients identified with his industry who are marketing and market-savvy.
- Select and train the Industry Group Leaders (IGLs); develop job/role descriptions. In addition to leadership traits needed in PGs or other key management roles, IGLs should be market-oriented and have deep knowledge of their industry, be considered in the marketplace as an industry expert/thought-leader and be entrepreneurial in looking ahead to trends and opportunities.
- Hold regular meetings at least on a monthly basis, with a focused and regular agenda. Follow-up tasks should be summarized and circulated after each call/meeting.
- All active members should be given specific tasks and responsibilities for the IG and these should be added to or built into their personal business development plan.
- Appoint a designated person from the business development team to support the group, preferably someone who has had experience in this industry.
- Identify all external resources and conduct research; look at leading Big 4 and management consulting firms’ industry literature: surveys, white papers, blogs, and hosted conferences.
- Talk to clients in these industries and ask them to provide input into your strategy, what would deliver the most value to them as well as what conferences/events, associations and publications to focus on.
- Ask a few clients to serve on an Industry Advisory Board to seek ongoing feedback; alternatively, systematically seek clients’ input on your IG initiatives.
- Develop a list of the best type of referral sources for the industry and a list of current contacts who match criteria.
- Conduct further research of your competitors: their marketing strategies.
- Look at industry associations, conferences/events and publications.
- Identify blogs, LinkedIn groups.
- Review each geographic market where you have offices to identify top 100 companies in the industry and develop a list of targets.
How to Internally Manage/Govern Industry Groups for Optimal Results
Because law firms manage by department and practice group, many firms don’t know what to do when it comes to managing an industry group. Rarely are IGs given the budgets or authority to run like a practice group business unit but this will have to change if IGs are to be successful. IGs also share other issues that practice groups have, for example, reviewing and resolving conflict issues.
In firms that run industry groups effectively, IGLs usually report to a partner in charge of industry groups who serves on the Board/Management Committee. Some industry groups are larger than PGs, from 20 – 200 lawyers, and therefore may operate in subgroups or by a steering committee. Due to a focus on market trends and industry knowledge, it is critical to have internal communications and resources available and visible on a firm’s intranet. Many firms now integrate external market data into their intranet often provided by market intelligence and knowledge aggregators like Manzama and Shift Central. Some firms make this timely trend data available to clients as a value add.
To ensure that IGs don’t compete with PGs and vice versa, each IG should appoint a member of the steering committee as a liaison to key practice groups who will report back on areas of synergy, and each IG business plan should include a section on outreach and collaboration to/with PGs. Conversely, each PG should identify key industry groups and appoint a PG member to serve as liaison to those industry groups.
Characteristics of Best Practices
Law firms in the UK have been ahead of US law firms in industry or sector management and marketing. Many have been doing this for well over ten or even twenty years. There are US firms that have understood the value of marketing through industry groups, including Hogan & Hartson (now Hogan Lovells) that had two subsidiaries in the Higher Education and Health Care industries back in the 1980s, Squire Patton Boggs that has had a well-run industry initiative for at least ten years, Foley & Lardner that launched a very robust Legal Innovation Hub for NextGen Manufacturers several years ago, and many others. Most AmLaw 100 and 200 firms have formed some industry teams and list multiple industries on their web sites. Many firm leaders confess, however, that their IGs are not well-organized or functioning effectively, in part because they don’t know how to manage them relative to practice groups.
Firms that are most effectively managing industry teams to grow clients and market share often execute the following best practices for each industry group:
- An annual business plan with a budget that is tied to the measurable objectives.
- Specific metrics for establishing revenue goals, measuring new revenue and other successes, and built-in compensation rewards and/or team bonus.
- A strong and committed leader who has political clout.
- IG Leaders who are incorporated into firm wide strategic planning discussions.
- Annual planning retreats to assess results, review trends, identify strategies and develop strategies.
- Regular bi-weekly or monthly meetings with set agendas and follow-up.
- A dedicated Business Development Manager for each Industry Group (who likely will be responsible for a few other PGs and/or IGs.)
- Get and stay out front in market leadership with industry surveys, white papers, conferences, micro-sites that are distinctive and not what everyone else is doing.
- Co-market and co-sponsor with a client, Big 4 or consulting firm that has a strong brand and strategy in the industry.