September 24, 2014

Book excerpt: What should law firms do to improve profitability and LPM? (Part 1 of 4)

This series was adapted from my new book Client Value and Law Firm Profitability, which will be published in a few weeks.

This research was designed to help lawyers make the best possible decisions about how to adapt to a rapidly changing marketplace by providing insights into the actions and opinions of their peers.  In the months preceding this book’s publication, a number of conferences have been held by law schools to discuss the challenges facing the legal profession.  Countless articles and several books addressing these changes have also been written by law school and business school professors.  And consultants have written far more – probably millions of words on how client demands are changing and what law firms should do about it.

The only thing that’s been missing from the conversation is public statements by the people who run large law firms.  These senior decision makers rarely publish anything on their tactics and strategies, or even attend conferences.  They are the ones who deal with these issues every day, and whose very livelihood depends on coming up with the right answers.  What do they think?

To answer this question, I interviewed chairs, managing partners, executive committee members, CEOs, CFOs and other senior executives at 50 AmLaw 200 firms between June 2013 and January 2014.

Based on those confidential interviews, there can be no question thatclients are demanding more value than ever before.  There is, however, much less agreement about the best way to remain competitive in an increasingly challenging environment. 

There are many signs that as times get tighter, firms are paying more attention to profitability and to its role in compensation:

I think you’re going to see the pressure in law firms increase about how the pie is split. When things were going well, it was easier to take care of the worker bee partners, who are great lawyers. It’s going to be tougher now, because everybody’s strategy is through lateral hiring, and you don’t want the great brief writer. What you want is the person who has five to eight million dollars following him or her, or the group that’s going to bring 20 to 30 million dollars. – Senior executive

As the pressure goes up, the emphasis on total revenue is being replaced by an emphasis on profitable revenue:

Historically, virtually all law firms overweighted revenue. Often two partners who produce five million dollars each are treated equally for compensation, even if one of those partners used six and a half million dollars of resources to produce that revenue, and the other used three and a half million. – Senior executive

We merged a few years ago with a firm that principally focused on total dollars in the door and allowed billing attorneys to set their own rate exceptions without much oversight. We focused on those decision points that reduced realization, and the lack of profitability in a million dollars received that takes two million dollars of effort to generate. Consistently reinforcing these basic concepts through our BI tools and in the compensation system has resulted in significant margin improvement. – Senior executive

There are still far too many lawyers who respond to cost pressure by offering discounts, without understanding the implications:

Most of our partners have been doing things in a particular way for a long time. And the carpet is moving under them, because the market is changing. A lot of times, their reaction to competitive pressure is to just cut rates but not examine the way they deliver the service—not change the way they practice to be able to offer more value for the same price, or reduce the cost to deliver the same value at a lower price. Demand is down. Price pressure is up. So some lawyers will just say, “I don’t want to talk about value based billing arrangement. I’ll just give clients a big discount. They’ll be happy, I’ll be happy….” It’s really remarkable how few attorneys appreciate the economics of discounting. They just don’t get the math. They never had to before. – Senior partner

It is easy to make clients happy by just cutting the cost.Not enough lawyers have really embraced building a better mousetrap that makes clients happy while at the same time maintaining profitability. – Senior executive

Lawyers are proposing a 10% discounted deal or a 20% discounted deal, or a blended rate deal, but then they’re going to literally do everything the same way they’ve always done it. They don’t think about it in terms of profitability yet. So we’ve got a lot of catching up to do. However, at one recent conference I attended, it sounded like there are still a lot of firms that aren’t much ahead of us. – Senior executive

Many firms are working to fill this gap and develop new tools and approaches:

I’ve been with the firm a little over a year, and part of the reason that the firm brought me in was that we needed to look at our operational infrastructure and basically get caught up with the rest of the AmLaw 100. We didn’t have the ability to really measure profitability. We could just barely measure it at the firm level and at the office level, but not at the practice level, not at the client level, or matter level. About three months ago we finally started using a business intelligence platform that allows us to measure those things, and we’re still trying to make that part of the culture. – Senior executive

Life used to be so much easier. The world has changed, and I think in the new environment, to preserve and enhance existing client relationships and to get our nose in the door for new client relationships, we’ve had to be more flexible on pricing, particularly in the alternative fee context. I think we’re in a brave new world here, where we have to learn a lot of new sciences and employ a lot of new techniques. – Senior partner

Some firms are providing lawyers with very detailed reports, like these:

We developed a real-time report on our intranet that is role-based. For example, if you are a client attorney, then your report will show all the clients on which you have any client credit on any matter, and it will show you the components of profitability. The report shows you collected revenue, the costs associated with that revenue, the profit, and the profit margin. Then it shows you the number of hours that are in it, the revenue per hour, the cost per hour. Then it breaks down timing differences on billing and collecting time. And then it shows you the traditional measures of profitability such as realization rates at the various levels. You can click on a client and it drills down to the matter level, so you see it for every matter. And then you can click on every matter and it drops down to all the timekeepers, and you see it across the board for all timekeepers on each matter, all those same metrics. We built the database to go back 10 years. You can do it for time periods of year to date, rolling 12 months, from inception, or for any other time period. – Senior partner

Other firms are concerned that too much data can be counterproductive:

One of the traps you can fall into is giving people a lot of data but not giving them information. Simply revealing realization or matter profitability, just putting it out there, would not really advance the management goals of getting people to focus more on profitability. What you would engender is more questions about “How come she got paid more than I did?” That kind of stuff. – Chair

Merely sending canned reports to partners will not result in many partners changing the way they manage their practices to improve profitability. We need to better develop a process whereby partners with profitability challenges receive the help they need to improve profitability in a manner tailored to the issues presented by that partner’s specific practice. Otherwise they look at the report and say, “This is crap. It’s wrong.” – Senior executive

A pdf of this entire series can be downloaded from Altman Weil Direct, where it originally appeared.

 

September 17, 2014

Case Study: Update on LPM’s benefits at Bilzin Sumberg (Part 2 of 2)

Jose Ferrer is a commercial litigation partner at Bilzin Sumberg who has an extensive practice in international disputes and arbitration. As noted in Part 1 of this post, a majority of Bilzin Sumberg’s partners completed our three-month individual coaching program, but Jose is part of the “other half” who attended an initial retreat presentation, and then developed LPM tactics on his own, and in collaboration with partners who were coached. 

As a litigator, Ferrer says, “you always work with your strategy in mind, and LPM helps you better define your strategy. It tells you what the next 90 days will involve and it enables you to think through your case.”

“Sometimes we compete with firms that have lower hourly rates, and then we have to provide something else to our clients. Part of that “something else” is certainty and the ability to budget. Of course, most clients’ litigation departments see outside counsel as a cost item. Our ability to produce and adhere to a budget improves a company’s ability to predict its own bottom line, which is of great value to the client.”

“We track every hour billed by an attorney or any other timekeeper by task code. It takes longer to put your time into the system, but it represents a significant value-add to any client,” Ferrer says.  This task-code system was developed at Bilzin Sumberg starting from standard ABA task codes and it is extremely well suited to the types of litigation they specialize in.

“The task codes force you to think about your strategy,” Ferrer says. “If you see that in the past 30 days, you have used only the discovery task codes, it forces you to think, ‘Did this discovery add or detract from your progress in the case?’”

“I have an icon on my computer that represents our budgeting software, ENGAGE. If I click on it, it will help me compare the planned budget with actual expenses, for example. It is relatively simple software and is easy to use. The benefit of the software is that it draws on past experiences in similar cases and tests how realistic the budget is when compared with them. We’ve been populating that system with our cases for two years, and we now have a reasonable amount of data in front of us.”

“ENGAGE offered training in the software, and it’s very hands-on.  For example, for one footwear chain client, we are using it to budget for current cases – breach of contract cases, landlord-tenant cases, other commercial cases – based on prior experience in similar cases. We have prior history that we can draw upon. Not only do we have an idea of what the current case will cost; we also can have an educated conversation with the client in advance about how the case will go and what strategy to use.

Al Dotson is a government relations partner and leader of the land development practice group at Bilzin Sumberg. His work primarily involves public-private partnerships in economic development in South Florida. It involves securing land use, zoning and other key government approvals and permits for large real estate developments. 

Al was one of the three lawyers in the initial pilot test of LPM coaching, and says he is now using LPM principles “in just about every matter that I have here. These principles are flexible and important enough to apply to nearly everything that I do.”

One key area is communication with the client and among team members. “Early communication with the client is absolutely essential for us to mutually understand what the expectations are,” he says. “In addition, I routinely set up non-billable team meetings  to ascertain the status of the work at any given stage, to avoid duplication of effort, to identify issues sooner rather than later and to communicate quickly with the client if there are any issues. This is done early and frequently throughout the project.”

“You really can’t say you are engaging in LPM,” Al says, “unless the budget and the assumptions are continually being reviewed and updated on a going forward basis. It’s an ongoing process, not just the mere act of creating a budget for a project. For example, changes occur regularly within a project. The initial assumptions will change, and we will need to change the staffing on a matter. Similarly, changes in a project will even begin to change how we define the concept of success for the project. Because of our use of LPM, all of these matters are now top of mind.”

Al shared that he has access to the LPM reports and budget tracking for the matters on which he is working.  To ensure consistency of data and to provide additional "eyes on the target," Bilzin Sumberg has a centralized process supported by finance staff who input budget information into the budgeting software.  One of the finance team's responsibilities is to “provide us with ticklers when certain milestones are reached.”

“Bilzin Sumberg provides attorneys with access to real-time information and this is critical to LPM.  It enables better communication with the client and allows me to be  even  more timely and efficient on my matters.”

 This post was written by Jim Hassett and Jonathan Groner.

 

September 10, 2014

Case Study: Update on LPM’s benefits at Bilzin Sumberg (Part 1 of 2)

Last December I wrote in this blog that “no law firm on the planet has achieved more LPM behavior change, more quickly or more efficiently” than Miami firm Bilzin Sumberg.  Since then, the firm’s LPM success has been featured by others in books and at conferences.

As explained in my book Legal Project Management, Pricing, and Alternative Fee Arrangements, their breakthroughs were built on a foundation of providing LegalBizDev’s individual coaching program to the majority of their partners (26 out of 51).  That coaching was completed in May 2013.  By then, the LPM had reached critical mass and had developed enough momentum that no more coaching was needed.  The partners themselves and Bilzin’s internal staff took ownership of moving the effort forward.

No one at Bilzin Sumberg would say that their LPM work is done.  As the chair of one AmLaw 200 firm put it in my new book Client Value and Law Firm Profitability:  “It’s an evolving process.  I don’t think there’s ever going to be a point at which you can say: ‘Now I’ve arrived.’”  But Bilzin Sumberg’s continuing experience provides valuable lessons in the best and most cost-effective ways to get started, and what happens next, so we will continue to update their results from time to time in posts like this.

Jon Chassen, a partner in the real estate group at Bilzin Sumberg, was one of the three lawyers in the firm’s original pilot test of LPM coaching at the beginning of 2012 with LegalBizDev principal Steve Barrett, and his success encouraged other partners to give it a try. Jon’s practice focuses on complex real estate deals  and on real estate deals with unusual twists. He often works closely with litigators to solve his clients’ problems, although he is not a litigator himself.

Jon says that a lot of things that he learned in the LegalBizDev coaching were similar to techniques that he had been trying to implement throughout his career.  The coaching crystallized and formalized these methods and techniques.

In Jon’s practice, LPM works best for larger transactions, where at the very outset, you need to design an engagement letter that spells out what you will and will not do for the client. “This way, the engagement letter guides the entire project. It establishes the scope of the project so that everyone in the transaction, outside lawyer and client, knows what role they will play. Then, as the transaction changes in unexpected ways, the engagement letter can be modified to reflect changing expectations.”

“Sometimes it’s relatively easy to anticipate that the scope of work will change and that the project will become larger or smaller than originally anticipated,” Jon says. “Sometimes, the changes are completely unanticipated. Either way, LPM techniques permit the lawyer and client to make changes pretty much on the run. I can now see at a glance who needs to be added to the team, who is dropping off the team, and so on. I see immediately when we’re at a fork in the road, and what the possible choices are at that decision point.”

“LPM also permits me to delegate more effectively. Since all the assignments to attorneys are made well in advance and carefully specified, I don’t need to be the funnel point on everything. If I have a lawyer working on a particular set of documents, I can trust that he or she will complete that assignment.”

“I am a bit technologically challenged in terms of creating charts and work flows. But with the use of LPM techniques and with people in the firm who can help me, I can now create these charts in a very useful manner. The chart will tell me what happens next. Who needs to get involved? LPM helps me come up with answers to those questions.”

Carter McDowell’s practice as a Bilzin Sumberg partner involves land use, zoning, environmental, and other regulatory approvals for major building projects, including regional malls, resort hotels, industrial complexes, professional buildings and marinas. Carter completed LegalBizDev’s three month coaching program in its second wave, after the pilot test.

“At the end of the day,” Carter says, “LPM is mostly about organization.”

“It enables you to step back and look at the process and compartmentalize it. It also enables you to look at it in the largest possible sense, from the very beginning.”

For one major project on South Beach that Carter has worked on, he made a very specific LPM outline of all the aspects of the project and of the budget associated with each aspect.

“We separated the project into several parts,” Carter says, “and we made several updates to each part as we went along. The government, after all, doesn’t take a linear path in granting approvals, so this LPM document has helped us plan each step. Our client used the LPM document on an ongoing basis.”

“In the South Beach project, there have already been seven hearings at which some sort of approval was granted, and two more approvals remain to be granted,” says Carter. “Each hearing is before a separate board. So the LPM document was helpful in documenting and managing the whole process.”

“We actually prepared the LPM document as soon as our client acquired the property. It was that long ago.  The client had asked us to put together a list of the most likely tasks that needed to be accomplished. So we used the LPM document to prepare that and we have updated and expanded it on an ongoing basis.”

“The firm now has sophisticated budget software (ENGAGE). On this project, the financial department staff at the firm established the outline of the document before the current software was available. So in this case, I don’t manipulate the software myself. I do receive reports from the financial people. They have been very helpful and responsive.”

“The document has led us on more than one occasion to go back to the client and to say, Here’ s a hearing that we hadn’t anticipated, so we updated the budget to include that process.”

“The LPM process is working well to enable us to provide our clients with better service at a lower cost.  Some of the procedures that we documented repeat themselves in other projects, so I can reuse this outline for other clients and efficiently tailor it to fit their needs.”

 This post was written by Jim Hassett and Jonathan Groner.

 

September 09, 2014

Ark webinars to discuss my new book: Client Value and Law Firm Profitability

In association with the publication of my new book on Client Value and Law Firm Profitability, the Ark Group has scheduled a series of three webinars in which I will discuss key findings from our research with leading experts in the field.  All of the events will be recorded, so if you have a conflict on any of the dates below, you can listen to the webinars later any time, any place.

 

Wed Oct 8, 1-2 PM Eastern

Defining value and its impact on profitability

Law firms cannot meet client demands for greater value until they understand exactly what clients are looking for. This session will begin by reviewing data on how often clients simply want to lower costs, and how often they are looking for better understanding of business objectives, greater efficiency, improved communication, and other factors. It will then proceed to discuss how to define and manage profitability while meeting these client needs.

Jim Hassett, President, LegalBizDev

Michael Roster, Steering Committee Co-Chair, Association of Corporate Counsel’s Value Challenge

David Schaefer, Deputy Chairman; Chair, Corporate, Loeb & Loeb

 

Wed Nov 12, 1-2 PM Eastern

Legal project management: The state of the art

When law firms were asked what they were doing to meet the profitability challenge, many started by listing legal project management (LPM). But the term means different things to different firms, and some have had much greater success than others in changing lawyers’ behavior. This webinar will review data on what has worked best in LPM, and what hasn’t worked at all.

Jim Hassett, President, LegalBizDev

Albert Dotson, Government Relations & Land Development Practice Group Leader. Bilzin Sumberg

Richard Rosenblatt, Operations Partner, Labor & Employment Practice Group, Morgan Lewis

 

Wed Dec 10, 1-2 PM Eastern

Strategy and tactics for the new normal

In addition to LPM, firms have been experimenting with many related tactics including knowledge management, software, new staff positions in pricing and value, contract attorneys, outsourcing, alternative fee arrangements, and much more. The final webinar in the series will explore which strategies and tactics have been most effective, and what firms must do in the future to adapt to a changing marketplace.

Jim Hassett, President, LegalBizDev

Tom Clay, Principal, Altman Weil

John Paris, Partner, Chair of the Firm Innovation Team, Williams Mullen

 

To register, or for more information, see the announcement on the Ark Group web page, or contact Ark’s Peter Franken at pfranken@ark-group.com or (312) 212-1301.

 

September 03, 2014

Tip of the month: Increase the pace of change

According to the chairs, managing partners and leaders of AmLaw 200 firms interviewed for my new book Client Value and Law Firm Profitability,the faster firms act, the more likely they are to survive and prosper in today’s increasingly demanding marketplace.  In Altman Weil’s most recent Chief Legal Officers Survey, the top three things that clients want are improved budget forecasting, greater cost reduction, and more efficient legal project management (LPM). Since LPM will help meet the first two requests, you could say the top three things clients want are LPM, LPM, and more LPM. To date, the response at too many firms has been delay, delay, and more delay.

 

The first Wednesday of every month is devoted to a short and simple tip to help lawyers increase efficiency, provide greater value to their clients and/or develop new business. This month’s tip is explained in detail in Chapter 7 of my new book.

 

August 27, 2014

LPM Case Study: Loeb & Loeb (Part 4 of 4)

Livia Kiser is a Chicago-based partner at Loeb & Loeb who represents defendants in consumer class actions, primarily those that relate to claims by consumers of a defect or a false claim about a product. She also reviews product advertising in advance to counsel clients on their advertising and what is likely to be a “red flag” for plaintiffs’ counsel.

Her LPM coaching, with Michelle Stein, focused on the litigation side of her practice. 

“This training has made me more cognizant of how to create and implement a realistic budget on every matter, even one that can seem historically hard to quantify or to control, such as a class action brought by a plaintiff,” Livia says. “Even for cases which are hard to predict, I have learned how to provide more accurate budgets, not only because it is important for internal business reasons, but these days clients understandably expect it.”

“I am very interested in strategies for how we can stick to a budget.  Will this particular task really take ten hours? Should we budget it for that amount of time? These are the kinds of questions LPM causes you to consider,” Livia says.

Livia says that as a partner and lead counsel, she is also required to get involved in planning the time of other attorneys such as associates. She says many associates don’t think about these issues until they become partners.  When the issues become relevant to them, they’re not prepared. LPM, Livia says, is not only about numbers and budgets; it’s about human beings.

Livia uses Excel to prepare budget documents – just garden-variety Excel that she’s already familiar with. She receives weekly updates on her projects from Stephanie Flitcroft and also speaks with Stephanie at least once a week, if not more often.

Stephanie reports that “We provide many ad hoc reports so that lawyers can compare budgets to actuals along the way.  If there is a variance, they can determine if it was caused by a change of scope or whether some timekeeper simply didn’t understand the requested task.  This allows them to deal with issues before they get too far off course.”

Livia says Stephanie and her team are involved both in ongoing client matters and in pitching new matters. They are also extremely helpful in working on alternative fee arrangements (AFAs). “We cost out all the scenarios that make sense before we propose an AFA,” Livia says, “and Stephanie helps provide the assumptions and ideas that we need.”

The more lawyers take this approach, the easier it gets.  As Andrea Danziger explained, “We endeavor to share the actual tools and templates that have come out of the coaching program, as well as others that we’ve developed for proposal bids. This has been a grass roots effort. We’ve tripled the number of people in the program since you first wrote about it, and we want to keep going, because the more lawyers incorporate LPM into their matters, the more the ideas spread.”

What does the future hold?  According to Deputy Chairman David Schaefer, “I think legal project management is going to become one of the core business skills of running a law firm. Even in situations where we still bill hourly, every client wants to know:  How much is this going to cost? How long is it going to take? What’s involved? It may take a few years, but it will become part and parcel of how we do business. Lawyers will be comfortable having those discussions. They will expect it. And I think that you’ll see an increasing growth within our firm, and other firms, of non-legal professionals who will take a bigger and bigger portion of these tasks under their wing.”

Schaefer has also seen that the benefits of LPM go not just to clients, but also directly to the firm’s bottom line: “LPM has already protected our profitability in very significant ways. These days, lawyers are more prepared to provide accurate bids. We have better data and more reliable information. In the past, when we looked at a class of cases or of deals, and there was a fairly significant range between the high and the low, we really didn’t know why we had such a wide spread. Now we understand what the key considerations are. We can look for those at the outset of a matter, and try to address that with the client, rather than letting it catch everybody by surprise. And so I think that LPM has made our processes much, much better.”

 

This series was written by Jim Hassett and Jonathan Groner.

 

August 20, 2014

LPM Case Study: Loeb & Loeb (Part 3 of 4)

Ross Emmerman is a Chicago-based corporate and M&A lawyer at Loeb & Loeb who was coached by Fred Kinch.  Ross says that although many attorneys at the firm start out by considering LPM to be just one more thing that management wants them to engage in, Loeb & Loeb’s National Business Manager Stephanie Flitcroft has “taken the laboring oar” and helped the firm add a great deal to its capacities through the use of LPM. He is in constant touch with Stephanie and says he uses LPM tools at least twice a week.

Ross knows that the firm uses ENGAGE “behind the scenes,” but he works with easier to use Excel spreadsheets prepared by Stephanie.  (A sample format for a typical spreadsheet for a sell-side M&A transaction appeared in a previous post.)

From a practice standpoint, the most important aspect of LPM for Ross is that his sophisticated clients “understand that changes in scope are inherent in transactions” but matters still need to be on budget and on time. In comparing an attorney’s role with LPM to a general contractor’s role to a construction project, Ross mentioned that no builder would tell a prospective homeowner in advance that a new home would cost anywhere between $300,000 and $600,000; that is much too large a range and does not contain any analysis. A home builder would not be expected to have enough data to hit the number on the spot before all the variables were known, but bids would be expected to fall within a much smaller range, such as $420,000 to $450,000. In today’s marketplace for legal services, the same is true for predicting legal costs.

The essence, according to Ross, is not whether a firm uses Excel or ENGAGE or other software. What matters is the data that a firm retains and how the firm tracks and uses that data to come up with a reasonable advance analysis of the cost of each phase of a project. As a partner, he says, “I am accountable to the client,” and his ability to provide accurate estimates in advance is very helpful to creating and maintaining client relationships.

During the coaching, he not only developed more detailed budgets himself, but also sent out budget hours by task to the team members at the start of matters to get their input and buy-in. In the future, he expects that the team members will become accustomed to this process and may even be call upon to set the initial budgeted cost and time estimates.

Back in the old days, he says, lawyers simply did this by the seat of their pants, and no one knew where you were going with the deal or its costs. That is no longer acceptable. One of the reasons that better budgeting was not possible years ago was that firms did not retain their data for this purpose or kept their data in a “big lump,” with no effective way of breaking it down. Now Loeb & Loeb and other leading firms retain their data in a form that can be broken up into pieces as needed. They can then use the data “quickly and intelligently.”

Ross joined Loeb & Loeb in March 2013, and in his previous firm he had received LPM training. But LegalBizDev’s coaching was able to take him “from theory to practice.”

According to Andrea Danziger, Loeb & Loeb’s director of business development and practice management, a number of people who went through the program had similar experiences:   “Once they started working with a coach, they realized right away, I’ve been doing LPM all along. But now it’s more methodical and sophisticated, supported by new resources, including business managers, budgeting software, and the various reports that we run.  That makes lawyers much more confident to explain to clients how they will use LPM to manage a matter within budget, and communicate effectively about mutual expectations.”

This series was written by Jim Hassett and Jonathan Groner.

 

August 13, 2014

LPM Case Study: Loeb & Loeb (Part 2 of 4)

Last year, I wrote Part 1 of this series about our pilot test of legal project management coaching at Loeb & Loeb LLP a law firm with more than 300 lawyers in Los Angeles, New York, Chicago, Nashville, Washington, DC, Beijing and Hong Kong. At the time, I did not know that there would be a Part 2.

Since then, Loeb & Loeb has selected a total of 19 lawyers to complete our two to three month coaching program, with more on the way. They have also expanded the role of their internal business managers in LPM, refined their use of ENGAGE software, and even added a section to their firm web site describing Loeb & Loeb’s commitment to LPM

One reason they are expanding the program is that clients are demanding LPM in increasingly sophisticated ways.  According to Andrea Danziger, the firm’s Director of Business Development and Practice Management: 

A year or two ago, most clients simply asked whether you used LPM, and it was enough to just say "we’re committed to efficient project management" and explain our tools and resources. These days, clients ask harder questions: "Show me how you’re going to apply LPM, walk me through it." The attorney who’s making a presentation has to really prove that they understand LPM and know how to use it.

Why do clients care about LPM?  According to the firm’s Deputy Chairman, David Schaefer, one reason is that:

It’s clearly of benefit to clients when we provide a high level of certainty that we can work within a budget.  For example, we have a significant financial institutions practice, where we represent banks and others who make loans and extend credit, and the borrower pays the fees. The ability to come up with a budget and a fee arrangement that is agreed to at the outset has enabled our clients to be more competitive in their marketplace, because borrowers look at the total cost of funding, including legal costs.

Miriam Cohen is a finance partner in Loeb & Loeb’s New York office, whose practice primarily involves representing lenders on secured loans. She recently completed a three month program with LegalBizDev coach Michelle Stein.

The most important advantage of LPM, in Miriam’s view, is that it helped her to come up with a system to obtain and present information for clients quickly and readily, so that clients understand the entire array of time and budgeting data for a project -- based on a single document.

“I can now create this quickly for any client,” she says. “[Clients] just want the bottom-line numbers, and there are so many assumptions that go with the numbers. I just plug in the numbers and I have something that a client can understand. If you don’t get them the data fast enough and in this manner, they will give the work to someone else.”

Miriam says this applies to existing clients, who, when they need a new project done, will usually obtain three bids – one from Loeb & Loeb and two from competing law firms. Since the borrower typically pays the bill for lender’s counsel in these transactions, both the borrower and the lender have an incentive to keep the bill low and to know in advance how much it will be.

The document that Miriam prepares is a budget worksheet that contains all the assumptions regarding the upcoming transaction – staffing, time, complexity, and so on.

“For example, the assumptions I typically make in preparing the document,” Miriam says, “include that borrower’s counsel will be competent and can deliver an appropriate product and that there will be no more than four turn-arounds of the lending documents before they are final.”

In the past, Miriam says, most lawyers made these budgets and assumptions “on the back of a napkin” but not surprisingly that process didn’t consistently result in accurate estimates.

These days, much of the calculation at Loeb & Loeb is done in the background by Stephanie Flitcroft, a national business manager working out of the firm’s Los Angeles office. When Miriam needs information and budgets based on past experience, Stephanie and her team use ENGAGE to find the best information and send Miriam the info she needs. Stephanie prepares the output in Excel, and Miriam uses it in a Word table that lays out the budgeting and task information in a logical fashion. When they win the work, Stephanie also provides weekly spending reports.

The LPM coaching, Miriam says, “helped me to create this document where everything is in one place. Now, no client should be surprised by the bill when they receive it.”

In addition, Miriam says, everyone in her group uses standard task and billing codes now.

“This is a great way to force discipline from my team. I created my own time and billing codes, based on the type of work that the team does, and this accurately reflects their time.”

That’s a great example of the value of improved communication, Stephanie says: 

LPM coaching has enabled billing lawyers to have much better communication with both the client and with the timekeepers. The client knows what’s going on in the matter. They feel part of the process, not left out. They have an idea of where fees are going to end up, because we’ve provided them with estimates and monitored spending.  And on the other side, with the increased communications between the relationship partner and the timekeepers, tasks and expectations are being relayed more clearly. So you don’t have timekeepers going off and looking under every rock to get an answer.

For Miriam, LPM has already led to new business as a result of the more systematic approach to engagement letters, and the increase in client confidence in budget estimates.

 

This series was written by Jim Hassett and Jonathan Groner.

 

August 06, 2014

Tip of the month: Keep a written record of business development hours and progress, every week

What gets measured gets done.  Keeping a weekly list of how many hours you put into business development, and how many advances you achieved will help keep your business development effors moving forward.  Tracking behavior works for people who are increasing exercise or changing their diet, and it will work for you when you develop new business.

 

The first Wednesday of every month is devoted to a short and simple tip to help lawyers increase efficiency, provide greater value to their clients and/or develop new business. For more information on improving results, see page 54 of my Legal Business Development Quick Reference Guide, which is now available in both paperback and Kindle editions.

July 30, 2014

Five questions to ask lawyers before they begin LPM coaching

You won’t get a second chance to make a first impression, so if your first legal project management (LPM) program is not well designed and executed, it may be quite some time before there is a second one.

We have consistently found that the most effective way to change LPM behavior and build momentum within a firm is for motivated attorneys to directly experience immediate benefits and then become internal champions who spread the word. And the most efficient way for lawyers to experience those benefits is to work one-on-one with a legal project management coach.

Who should be coached first?  We recommend starting with the motivated: lawyers who are open to new ideas and who have the most to gain. They could be the key partners who are responsible for new alternative fee arrangements. Or they might be relationship partners who are worried about protecting business with key clients who are looking for greater efficiency. Or maybe an entire practice group is considering new checklists, templates and processes to improve its competitive position.

The exact individuals and groups will vary from firm to firm. But in every case, the best lawyers to start with are those who are open-minded about change and efficiency, in a position to benefit when it works, and influential enough to quickly spread the word of their success.

That’s the model we used when we began working with Hanson Bridgett a Northern California law firm with more than 150 attorneys that has launched many new initiatives to increase client satisfaction by providing greater value, including several focusing on project management.  As Managing Partner Andrew G. Giacomini put it:  “The legal marketplace is changing, and as a result Hanson Bridgett is making a significant commitment to what we are calling 'Pricing to Client Value':  fairly pricing the creative scope of work and efficiently delivering what's most important to the client.”

Last August, we began an LPM pilot program test with eleven of their lawyers, who were split between our two most popular programs.  Five lawyers completed three months of individual coaching, and six others were enrolled in a just-in-time training program that began with a group workshop and also included one month of coaching. 

Based on the testimony of the first group, firm management was interested in expanding the program, so the firm was faced with the task of identifying the candidates who would provide the greatest return on investment.

Program leaders Garner Weng – a partner who participated in the pilot program -- and Chris Fryer – their IT Director and internal project management guru -- developed a very brief questionnaire to pick the best candidates.  When we saw the questionnaire, our first question was:  Why didn’t we think of that?  Our second question was:  Could we share it with others through this blog?

They said yes, so here are the five questions Hanson Bridgett asked, emphasizing the need for each lawyer to provide specific and concrete examples:

  1. Have you used any flat-fee or other alternative-fee arrangements in the past?
  2. Are you willing to commit at least 2-4 hours per week to your participation in this program?
  3. Describe two challenges you commonly face in managing your work.
  4. What benefits or skills do you hope to gain by participation in our project management coaching program? 
  5. With greater or improved use of project management, describe the impact or long-term benefit you hope to achieve for the firm or on behalf of firm clients.

Hanson Bridgett used the results to select ten more lawyers to begin a LegalBizDev coaching program in April.  It is a hybrid which combines the just-in-time workshop with two to three months of coaching.  We will describe the results of these programs in future case study posts.