Today’s Legal Market Landscape
As lawyers and law firms continue to recognize the need to more effectively engage, manage, and retain clients, it is becoming obvious that the adoption of tools and models to gain new work and keep existing clients is a necessity. Models that address the overall flat growth for legal services, the “new normal” economy since The Great Recession, the growing sophistication of clients, and new and non-traditional legal service providers in the legal market must be utilized to justify the traditional billable hour and also to be able to offer various alternative fee and service arrangements.
Regardless of the terms or concepts used, whether it is called legal project management or variants of client value initiatives, practice innovation, etc., it is becoming essential that when responding to an RFP or bidding for new work, lawyers must have at least a small arsenal of tools at their disposal to effectively price a matter, efficiently manage a matter to completion, while also producing value to the client. Part of the arsenal of tools must include training in the new economies of legal services; the ability to track billable time at the task and activity level; providing, communicating, and analyzing metrics of the business and engagement; the ability to budget a matter based on a combination of internal metrics, the value of the service being provided, historical data, and intuition; and being able to provide alternative fee arrangements not based solely on hourly rates.
A lawyer or firm may not know what exact steps to take and each step may vary across firms, practice groups, or individual attorneys, but the following are some essentials to have an understanding of to remain competitive to upstream and downstream providers, and utilize resources that can provide guidance in helping to move your practice towards meeting client expectations in today’s legal services environment.
Training
An acknowledgement of how the terrain has changed over the past few years needs to be addressed at the organizational level, regardless of the size or client-base. The elephant-in-the-room should not go unacknowledged. An overall discussion of how the business of law has changed and how this may impact a practice group or firm is the first step in ensuring that there is at least anrecognition that change is on the horizon. Looking a year or two down the road to peering five-to-10 years out and how the trends of today will impact the ability to gain new clients and retain them may make things clear that a strategic plan should be designed now; One that takes into account what is here & now and what other changes may be looming. Examine project management practices, innovations in the delivery of legal services, and what clients expect beyond the initial services they need and how best to service these needs is a good place to begin. Educate clients and practice groups and let them educate you in return.
Standardized Time and Activities
Consider keeping time utilizing the standardized categorization of legal work and expenses. The Uniform Task-Based Management System (UTBMS) was developed by the American Bar Association, the Association of Corporate Counsel, along with corporations and law firms. This standard will assists with electronic billing; the process of better understanding where time is spent on a matter, across matters, and within a practice; can be used to better prepare RFP responses; and enhance communications within your team and with your client…not to mention you will be prepared when a client requests that that these standards be instituted in their billings. Implementing a standard time-keeping and task structure will certainly require change to how entries are logged and billed, but will enhance the data captured that wouldn’t be able to be accurately measured otherwise. Some clients are already expecting this from their outside counsel and it is only a matter of time before other clients begin to expect this standard way of time and task accounting.
Workflow Improvement
Identifying workflows, identifying inefficient workflows, and automating efficient workflows where possible are ways of streamlining the work involved on a matter. By analyzing what works and what doesn’t will help remove inefficient practices that can then be made more efficient to help drive down costs and meet client expectations. Before any automation can be put into place, it is probably a good idea to make sure that workflows are efficient; otherwise an inefficient workflow will be automated. Study workflows of matters and find efficiencies and implement practices that can take advantage of similar processes across matters to manage them more effectively, perhaps even as a portfolio.
Metrics
Examining the all-around costs of people, places, and things and how those costs impact the degree of flexibility that can be applied to pricing work is essential to knowing if a certain piece of work will be done at a profit or loss and by how much. How much of a billing rate covers overhead, such as office space, benefits, staff, technology, supplies, etc.? These costs have to be covered and accounted for. When a matter is closed is an analysis done to compare the budgeted costs versus the actual costs? Is there a communication model around a matter and/or client? How is the status of matters communication to the internal legal team and to the client? Metrics analysis is vital to budgeting, managing, and improving the delivery of services…within scope and on-budget.
The Outcome
Once the systems are in place that keep the lawyers and legal team up-to-speed of legal market changes and client expectations, that standardize billing entries, that define efficient workflows, that account for costs and expenses related to a matter, the ability to utilize internal information, take advantage of the knowledge that is now available, the analysis of industry benchmarks against your practice, the examination of alternative service delivery mechanisms, and the application of project management tools and practices to the management of matters will allow for hourly rates to be based on the work needing accomplished and alternative fees arrangements that fit to the tasks required for the matter.
Hourly fee and alternative fee arrangements can be proposed more effectively when designed based on the analytics of an efficient process, based on historical data in-line with new work requirements, is consistent within a practice group and matter type, and in a way that is in-line with the goals of the organization or individual seeking a solution to their matter.
Change is never easy and the changes required to work in an environment that has changed significantly over a short period of time will require a long-term commitment, strategy, and team to ensure that client requirements are met head-on with transparent and predictable results.
David J. Kearney www.linkedin.com/in/davidjkearney/
David J. Kearney 