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Todd was born in Anchorage, Alaska, and was raised in Laguna Niguel, Cal-
ifornia. Todd earned his BA degree with honors from Michigan State Univer-
sity and a law degree from Southern Methodist University School of Law.
After graduating from Southern Methodist University, Todd began his ca-
reer as an associate in the business litigation section at Haynes and Boone,
LLP. Thereafter, Todd was employed as an associate in the litigation depart-
ment of Weil, Gotshal & Manges, LLP, which was recently recognized as one
of the nation™s top litigation departments by The American Lawyer. Todd is
admitted to practice in the State of Texas.

JOHN J. REDDISH is founder and president of Advent Management Inter-
national, Limited. John and his associates work with, and speak to, leaders
who want to master growth, transition, and succession.
Prior to starting his own consulting practice in 1978, John served as vice
president of the Presidents Association (PA) of the American Management
Association. From 1971 to 1976, he was president and director of client ser-
vices at RA Group, an advertising and public relations agency. John has also
been associated with the New York State Nurses Association, IBM Corpora-
tion, Edison Electric Institute, and the Civil Service Employees Association.
John is a member of the National Speakers Association, the American Ar-
bitration Association panel of arbitrators, and the Pennsylvania Business
xxi
About the Authors

Brokers Association. He has written and spoken widely and is the author of
the audiocassette program, “New Techniques for Motivation and Discipline”
(Dible, 1983). He holds a bachelor ™s degree in communications from Fordham
University and a master ™s degree in administration from West Chester Uni-
versity. He has also taught management classes for several universities and
training organizations, including Penn State University, Boston University,
Texas Tech University, AMA International, INC Seminars, and others. John is
a Certified Management Consultant.

LESLIE REISNER is a professional lecturer and clinical psychologist in
private practice in Los Angeles and Newport Beach, California. Leslie re-
ceived her BS degree in human development from Cornell University, her
MS degree in experimental psychology from Villanova University, and both
her MA degree and doctorate degree in clinical psychology from Hofstra
University. She received her clinical training at the Institute for Rational-
Emotive Behavior Therapy (REBT) in New York City, under the direct su-
pervision of Dr. Albert Ellis, the founder of REBT.
Leslie is one of the West Coast™s leading experts in REBT, a form of brief
cognitive-behavioral psychotherapy that focuses on the present behaviors
that can sabotage a fuller experience of life. Instead of focusing on what
can™t be changed (the past), Leslie teaches effective, present-day strategies
to problem solving, relating to others, and personal self-enhancement. She
has lectured and leads numerous workshops nationwide on stress manage-
ment, increasing motivation, overcoming compulsive eating and addictive
disorders, assertiveness training, improving relationships, and many other
topics at law firms, hospitals, universities, professional conventions, and var-
ious professional groups.

FRANCISCO “FRANK” RIBEIRO is a principal in Booz Allen Hamilton™s
Organizational & Change Leadership practice focusing on the communica-
tions and technology industries. He specializes in business strategy and the
transformation of technology-driven companies from product to customer-
centric organizations. His expertise lies in the areas of strategic transforma-
tions, growth strategies, and high-performance organizational design to help
global communications and technology companies sustain growth and prof-
itability. Frank has coauthored articles focusing on new operating models
and services/solutions-focused strategies for telecommunications and tech-
nology-driven companies.
Prior to joining Booz Allen Hamilton, Frank was an experienced execu-
tive in the telecommunications industry. He held leadership roles in the areas
of engineering, product development and management, and strategic plan-
ning. He holds an MBA from the Stern School of Business at New York Uni-
versity and a BS degree in engineering from the New Jersey Institute of
Technology.
xxii About the Authors

JOE SANTANA is a director with Siemens Business Services. He is also
coauthor of Manage I.T., a book that taps into his technology and professional
services management experience to provide IT managers with those compe-
tencies needed to succeed in the highly competitive twenty-first century. In
addition to his years of experience designing and executing learning and de-
velopment solutions, Joe has extensive personal experience as a manager and
executive working for and servicing Fortune 1000 clients. For 15 years of his
career, Joe served as an enterprise executive in the fast-paced, zero-tolerance
for error, global financial services arena where he launched and managed
highly profitable projects. In all of his roles, his key area of success has been
in the transformation of nonprofitable service organizations or poorly organ-
ized in-house departments into business-aligned, revenue-driving operations
that run like a well-managed professional services business. Joe is a highly
sought-after media commentator and speaker whose views are well known to
readers of various publications including Fortune, Computerworld, and the
Outsourcing Journal, as well as other media channels including radio and tel-
evision. For more about Joe, visit him on the web at www.joesantana.com.

ROBERT H. SCHWARTZ is the managing principal and chief executive of-
ficer of the firm of Raymond & Prokop, P.C., with offices in Southfield,
Grand Rapids, and Sault Ste. Marie, Michigan. He has extensive experience
in business planning, mergers, and acquisitions. He also has considerable ex-
perience assisting physicians, hospitals, and nursing homes in the health care
regulatory areas, including reimbursement, fraud and abuse, and hospital-
physician relations, among others. He is also involved with matters concern-
ing international practice with a particular emphasis on Mexico, Latin
America, and Canada.
He received his Bachelor of Arts and Juris Doctor from Wayne State Uni-
versity. He is a member of the Health Law Section of the American Bar As-
sociation and Michigan Bar Association, the American Health Lawyers
Association, and the Business Law Section of the American Bar Association.
Schwartz has also authored a number of articles for various publications, is a
frequent lecturer on topics relating to health care, and has been interviewed
on many occasions by Detroit area media agencies. Mr. Schwartz lives in
Southeast Michigan with his wife and two daughters.

BRYAN J. WICK is a founding partner of Wick Phillips, LLP, a Dallas,
Texas, based law firm focused on providing its clients with innovative solu-
tions to a wide variety of commercial disputes. Bryan has a national practice
and has prosecuted and defended numerous complex commercial disputes in
federal and state courts throughout the United States and the United States
Virgin Islands. Additionally, Bryan has significant experience representing
debtors and creditors in bankruptcy proceedings.
xxiii
About the Authors

Bryan graduated from the University of Pennsylvania with a BA in inter-
national relations and a minor in economics and then received a Juris Doc-
torate from Washington University School of Law in St. Louis, Missouri.
Bryan has worked for two U.S. Magistrate Judges and one U.S. District
Court Judge and is currently licensed to practice law in Texas, New York, and
the U.S. Virgin Islands. Bryan was also selected as one of the “Best Lawyers
Under 40” by DMagazine.
SECTION I


Managing and Governing the
Professional Services Firm
1
Managing the Professional
Services Firm
JOHN BASCHAB, JON PIOT, AND ROBERT H. SCHWARTZ


Some problems are so complex that you have to be highly intelligent and well informed just to
be undecided about them.
”Laurence J. Peter




It was a cool and rainy day in Texas, drizzly weather odd for mid-June,
when the cell phone began to ring. It was a friend of ours from Chicago
who was running a consulting company. After a bit of small talk, she said,
“Speaking of drizzle, we have been facing a constant drizzle of problems in
our practice group.”
She related a few of the problems that had been keeping her awake for
weeks:

The market hasn™t changed, the demand for services seems to be strong, but
our company sales are down and our pipeline is weak. I cannot figure out how
to keep our pipeline building as we deliver more and more work. It always
seems like we have a few large deals that we close, we execute those deals, and
then our pipeline dries up. As our projects come to a close, we scramble to re-
fill our pipeline. We just finished two of the largest projects in our company
history, which was great while they lasted, but now I have 20 consultants sit-
ting on the bench with no work to give them. I cannot keep them there indefi-
nitely. Last year we had a similar situation, and I had to lay off 12 staff; believe
me, that was not pleasant and really hurt our morale. Two months later, we
closed a major bid, and our HR department hustled for weeks to hire back some
of the people. We had to push the start date on those projects back by three
weeks. On top of that, my controller is telling me we are behind on cash f low,

3
4 Managing and Governing the Professional Services Firm

so I need to call the VP at my largest client and ask them to pay their outstand-
ing invoices, so we don™t run into any trouble covering payroll. I just hope all of
this doesn™t affect my buyout negotiations with Stan, my original partner. You
know he and I have not been working well together, so I have decided to buy
him out. His management skills are horrible, and he was really hurting the cul-
ture around here. Besides, he hasn™t sold any new business in probably two
years. I can™t wait to get some closure; however, the bank may balk on the loan
if business performance isn™t stable. Any way, I know you guys run a larger firm,
and I™m sure you™ve had to face some of these issues. Can you help me?

We responded quickly and to the affirmative. It would be a long couple of
weeks as we helped her sort through the many issues we have witnessed both
through direct experience and through helping other professional services
firms. Those experiences prompted our conversations with other professional
services firm executives, who had all experienced similar management issues
in their firms.


Professional Services History
People have been offering their expertise in exchange for compensation for
centuries, probably dating back to trade route guides, mercenaries, and early
forms of bookkeepers. In fact, traces of accounting as a professional service
date back 5,000 to 7,000 years with the invention of clay tablets that were
used to track property records.
Interestingly, there is little evidence of large professional services firms
predating the nineteenth century. There seem to be a few turning points
in history that led to larger firms. First, in the 1600s, England saw the
emergence of the professional accounting firms. In England, feudal law
was replaced by the law of royal courts. The royal courts developed com-
mon law in the early seventeenth century. This drove a surge in litigation
and a growth in law firms. Then, 200 years later, in the 1800s and early
1900s, most of the large U.S. accounting, legal, and consulting firms were
started.
Why this period and why not before then? There were major technolog-
ical inventions during this period. The early 1800s saw the invention of the
steam engine, which allowed easier transportation between major cities.
The telephone allowed communication within and between major cities.
Then, in the early 1900s, the invention of the automobile again provided
another mechanism of transportation. These inventions allowed the emer-
gence of multioffice firms that could now communicate and meet more
frequently. Additionally, the inventions enabled big businesses in other in-
dustries. This period saw the emergence of the large industrial manufac-
turing companies, which would require more professional services. As
5
Managing the Firm

companies built multicity offices, professional services firms had to follow
suit. Higher demand, higher need for specialization, larger customers, and
ability to communicate and travel across greater distances are all factors in
the transformation of the one- to two-person proprietorship to the growth
of the large professional services company. These factors are also relevant
as we determine how to build a business from a handful of professionals to
several hundred. In short, no reasonable person today contemplates life
without professional services (hiring a lawyer, selecting an accountant, hir-
ing an architect, retaining an advertising agency). Additionally, professional
services firms can now scale to multithousand-employee firms while just a
few hundred years ago, these firms were limited to fewer than a handful of
professionals.


Another Book on Professional Services?
With the increase in professional services over the recent past, it might be
expected that guidance for executives in those firms would be readily avail-
able. We scanned the virtual bookshelves of our favorite online bookseller
and located about 50 books on professional services. The topics covered in
these books range from how to get started, how to sell, how to incorporate,
how to minimize risk, to how to market your services. Surely, another book
on running professional services companies was not needed.
However, closer examination yielded a surprising result about most of
these books. The vast majority are focused on the yet-to-be-created profes-
sional services company. The books are focused on professional staff who are
part of a larger firm but wishing to branch out and start their own company
as an independent provider. These books are geared to giving them the
know-how and the courage to branch out. Topics range from where to pur-
chase office supplies to creating letterhead. This set of books is also targeted
at the one-person shop”how to network, how to send out marketing mate-
rial, how to create a contract”hardly topics of interest to anyone who has
been in business for any amount of time. Book after book targets this sole
proprietor market. Lacking, however, is a book focused on the mid-size pro-
fessional services group, employing 5 to 250 professional staff, with strong
growth aspirations.
Another subset are the popular and widely known books about profes-
sional services, yet these tend to address the problems of multinational
firms with enormous numbers of professional staff. The concepts included
are both appropriate and valuable but geared toward steering a massive
ocean liner and modifying its direction by a few degrees”again, hardly the
tactical and pragmatic text reference for the small to mid-size firm trying
to grow.
6 Managing and Governing the Professional Services Firm

How Do We Define Professional Services?
While there are a large number of books on the subject, there doesn™t appear
to be a standard definition of professional services. A formal definition of
professional services found in most dictionaries is similar to the following:
Professional service is a service requiring specialized knowledge and skill
usually of a mental or intellectual nature and usually requiring a license, cer-
tification, or registration. The definition posted on the web site of one state
legislative agency is:

PROFESSIONAL SERVICE means work rendered by an independent contractor
who has a professed knowledge of some department of learning or science used
by its practical application to the affairs of others or in the practice of an art
founded on it, which independent contractor shall include but not be limited to
lawyers, doctors, dentists, psychologists, certified registered nurse anesthetists,

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