Although every party member is allowed to have different alignments, it is often ignored by those who hires the party for a job. It sometimes irks me that in some published adventures, it is always assumed that, despite the different shades of grey of each character, they are always ready to act as protectors of justice and will never turn away from the pleas of the innocent.
That is a very weak plot hook that will eventually lose its luster in a long running campaign and it totally sidesteps the colorful characters that players have dedicated a small amount of time to building. Afterall, if they are treated as virtuous heroes all the same even when they are all chaotic evil, then why bother picking an alignment?
I think one way to remedy this disparity between individual alignment and having plot hooks is to not only allow players to choose their own alignment but also have a party alignment. A party alignment can be the moral common ground in which all party members are willing to cooperate despite any differences in principles, morals or alignment. It can also represent the fame or notoriety of the party for their deeds and how people perceive them to be. Party alignment has rarely anything to do with personal agendas and motivations but it is how the party operates as a team and what cause (or lack thereof) that they are willing to take.
Determining party alignment can be decided by the group or judged by the DM based on their actions towards a variety of scenarios. Even if a party has a lawful good paladin but they still demand high rates to complete certain tasks, the party alignment would be far from lawful good. Conversely, even if majority of the party members are evil but they are willing to do jobs for good organizations, their party alignment might tend towards being neutral. Similarly, if a neutral party prefers causing havoc than righting wrongs, they might be seen to be more evil.
Although party alignment could be more clear cut with 4E's new alignments, I think it can get very interesting in the older model. If the party consist of a great mixture of alignments from both axis (lawful v chaos, good v evil), it will be interesting to see the party alignment when they are combined together.
One major benefit of having and determining party alignment is that it solves the aforementioned problem of PCs being constantly treated as righteous heroes. With a party alignment, it becomes easier for DMs to tailor-made specific plot hooks that would appeal to their party alignment, such as the opportunity to defeat evil for a good party, gold for neutral parties and power or revenge for evil ones. Party alignment takes the alignments of each member into consideration and how they are treated is reflected by their party alignment.
Another benefit is that a party alignment can be a source of adventure ideas. By knowing what plot hooks that the party will bite, it opens up opportunities for the party that would normally be not allowed if they were seen as heroes. A good party might not be interested in helping smugglers guard their goods from official guards but this might be considered by a neutral or evil party. At the same time, a neutral party might be interested in taking up an exploration assignment through dangerous areas for the sake of adventure than a good or evil party that sees no benefit in doing so since they don't accomplish anything for either causes.
The last benefit I can think of having a party alignment is that it helps to identify the relationship between characters and create relationships towards the party. Organizations would only approach parties with certain alignments that will fit into their goals or association. This could also distinguish between what type of employment that the party would usually find due to their party alignment. A neutral party might never be employed by a good religious order while an evil party might find themselves constantly attacked by them and vice versa. Organizations could also perceive themselves to be the enemy or friend of the party based on their alignment.
What do you think? Is there any other benefits of having party alignment and how would you determine your party alignment?