Collaboration Benefits in Professional Firms

| By TMA World

We live and work in an age of complexity which means specialist knowledge is crucial to solving problems. At the same time, one specialist area is inadequate for many problems; specialists must collaborate across their areas of expertise.

We live and work in an age of complexity which means specialist knowledge is crucial to solving problems.

At the same time, one specialist area is inadequate for many problems; specialists must collaborate across their areas of expertise.

Heidi K. Gardner, distinguished fellow at Harvard Law School, conducted a long-term study of collaboration patterns in six global professional services firms.  Her results were published in the March 2015 issue of the Harvard Business Review.

She says, “If professionals better understood the trade-offs, and if firms lowered the organizational barriers to collaboration, then not only clients but also the professionals themselves and their firms would benefit handsomely.”

For the Firm

The more specialist disciplines involved in a client engagement, the greater the annual average revenue generated by the client.  One specialism is treated more like a commodity (less value-added), and is more vulnerable to price-based competition.  Collaborative cross-specialist teams are not merely cross-selling separate services, but are creating value together no specialism could have created alone.

Client projects involving offices in several countries are more lucrative than single-office engagements.  Cross-border work is often more complex.

Multidisciplinary professional service teams engage with a wider range of senior executives and become more indispensable to the client.  As one general counsel of a Fortune 500 firm said, “I could find a decent tax lawyer in most firms.  But when a tax lawyer successfully teamed up with an intellectual property lawyer, a regulatory lawyer, and ultimately a litigator to handle my thorniest patent issues, I knew I could never replace that whole team in another firm.”

Many professional services firms with their highly competitive structures, compensation systems, and cultures place barriers in the way of collaboration.  Gardner says, “Leaders who want to build a culture of collaboration should begin with themselves, modeling the right behavior by contributing to others’ client work and sharing credit with those who participate in their own.” 

For the Individual

The more cross-specialist projects a lawyer worked on a year, the more his or her hourly rate increased compared with lawyers only working on single-specialism projects. 

The average annual hourly rate increase 2004 – 2013 was 5.5% for single-specialism lawyers and 8% for those working across specialisms. 

Involving more collaborators per project increased the hourly rate even further – 9%.

Involving more specialist areas increased the hourly rate further – 11.75%.

Working collaboratively with others in their firm helped the individual lawyers preserve their revenue during economic downturns, and build it up faster during the upturns.

Collaboration is difficult for firms and individuals, but in an increasingly complex world it earns professional firms higher margins, greater client loyalty, and increased competitive advantage.