This article was published in the January/February 2018 edition of Project Manager Today. The article was authored by Carl Pritchard with contributions by David Kearney (me), Steven Levy, and Becky Winston. Project Management applied to the practice of law…Legal Project Management.
Listen to Karl Schieneman, Founder and President of Review Less, a predictive coding consultancy and document review company talk with Dave Kearney from Cohen and Grigsby and Nick Reizen from Xact Data Discovery about how law firms view outsourcing eDiscovery tasks like collection, processing, hosting and reviewing data to technology oriented vendors. It is definitely a growth trend and there are lots of views on this topic depending on which lawyer you talk to. Some firms want to own the EDRM model. Others want to outsource. And others consider eDiscovery a distraction to the practice of law so they ignore it.
Recorded 04/16/2014
This podcast was first published at ESIBytes and is available here with permission. For more information about ESIBytes, visit their website at http://www.esibytes.com and visit ESIBytes’ Podcasts at http://esibytes.com/category/blog/category-4/
Podcast Audio: https://app.box.com/s/wo1rmrheo4065vnsv53u
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/Client Value with Project Management and Efficiency Practices
The past few years have brought unprecedented change to the legal services industry and even the smallest of legal service providers are not immune to these changes. The challenges that lawyers and firms are now grappling with are those never experienced in the industry. The need for lawyers, law firms, and other providers of legal services to provide client-based value during any and all engagements has become a client expectation, with clients in many cases understanding their legal, resource, and cost needs like never before. Providers of legal services need to embrace, or at least be prepared for, alternative ways of providing services and pricing for those services differently than how the majority of work has been handled in the past. What has sustained providers of legal services in the past will not be the same to what sustains them in the future.
There are many factors beyond bottom-line pricing that clients now expect to understand. Clients do have an expectation of cost management/cost containment, but also how a matter is staffed, the tasks involved in a matter, and alternative recommendations for providing the required services. Providers of legal services need to be able provide alternatives to service delivery, which may include creative pricing models and even outsourcing some of the tasks. In order to meet client expectations, a granular understanding of matters and associated costs are a must. Scoping a matter correctly at the onset of an engagement is one of the key components to accurately agreeing upon what work is needed and what that work will “look like” when completed. Once a scope of work is agreed to, clients expect to know what risks may arise during a matter, what risks are most likely, and what impact those risks have to the scope of work. Risk management is an area that needs to be a part of any engagement, so any risks that materialize are a part of the overall risk management plan and corrective action is no surprise. Communication is another critical component of an engagement. A communication plan and vehicle needs to be determined, so both the provider of legal services and the client knows how a matter is advancing when compared to the original scope of work. Clients want to know the status of their matter(s) without necessarily having to inquire. Counsel needs to provide threshold communications of resourced used, estimates to completion, and variances from original estimates on a regular basis. Clients don’t want to be surprised by unexpected occurrences, bills, and task durations.
There is an opportunity for providers of legal services to truly reach beyond traditional hourly rates for, at least, some services driving efficiency and value and also providing a stronger relationship between counsel and clients.
Value needs to be identified by and for each client, such as efficiency, predicable processes, pricing, the services being delivered, and other items that the client sees as value. To address what the client deems as being of value, legal service providers must utilize tools that help drive improvements in the business processes. Tools are not exclusively software applications, but part of an overall strategy that includes matter management practices within the context of providing legal services. Traditional project management techniques can be mapped directly to the practice of law to provide a more methodical process to matters including thoroughly scoping a matter, time needed on a matter, the costs of a matter/improved budget estimating, its work breakdown into tasks, human resource allocation, communication management, and risk management. Project management practices applied to the practice of law, also known as Legal Project Management, is a way of enhancing the value to a legal engagement.
Project management practices are in no way a static set of sequential steps that can’t be elaborated upon, but a flexible way to help ensure that the provider of legal services can manage the matter as it evolves. Legal project management can be implemented in a very disciplined and thorough manner and also in a customized way. It can be implemented to take advantage of developing complete scopes of work, applying tools to manage risk, monitoring and controlling of a matter’s progress, and to develop and manage a communications plan. Once the key components of project management are implemented, greater rigor can be applied to managing and tracking of tasks during a matter utilizing tools, such as a Work Breakdown Structure; estimating methodologies, and financial forecasting analysis.
Project management, continuous improvement, quality management, process improvement, and efficiency methods are not new concepts, but these practices applied to legal services will be a large part of how legal services are priced, managed, and delivered. There is no one-size-fits-all solution for providing client value, but building transparency, cost predictability, efficiency, risk management, and communications into an engagement will undoubtedly resonate with clients of legal services
David J. Kearney 