Legal Business Development

The billable hour: How sick is it?

The failure of the billable hour to die is back in the news. 

In a recent AmLaw Daily post entitled The Billable Hour Endures, former Kirkland & Ellis partner Steven Harper argued that, “Regularly over the past 20 years, optimists have declared [the billable hour’s] imminent demise…yet it survives because it has powerful defenders, including the U.S. Supreme Court's conservative five-man majority.” 

Harper listed several reasons that the billable hour remains strong, but it was the Supreme Court reference that got the blogosphere buzzing.  He described an April 2010 US Supreme Court ruling that addresses how, “attorneys fees [are awarded] under the federal statute permitting winning plaintiffs to recover from the losers.”  The court’s “lodestar method” is based upon multiplying hours worked by the hourly fee.  The implication is that, “lawyers maximizing their chances for court approval of their fees will adhere to hourly billing. Innovators experiment at their peril because, depending on the type of matter, they risk not getting paid.”

Whenever a post appears that argues in favor of the billable hour, lawyers and consultants rush from all sides to add their support.  This is the message that lawyers want to hear: “The way you’ve worked for your entire career is the best way to meet client needs.  You don’t have to change a thing.  Just keep billing hourly, and when the economy improves you’ll make as much as ever.  Maybe more.” 

In every profession, sellers love the billable hour, because it puts all the risk on the buyer side.  Believe me, if I could sell all of my company’s services on an hourly basis, I would switch over in a heartbeat.  But I’m stuck with fixed price work, because I sell to lawyers, and they hate buying services by the hour.  They know better. 

Which brings us back to the ACC Value Challenge and the widely heralded revolution in what legal clients want.  Will lawyers take the risk of non-hourly billing if clients continue to demand it?  Oh wait, the revolution in client demand is also being questioned.

Last Thursday, Paul Lippe sent Legal OnRamp members an update email came with the subject line, “How Many GCs Does it Take to Change a Paradigm?”  It highlighted a post by Patrick McKenna entitled The Demand Side of The Market is Not Demanding, arguing there is “a lot of smoke, but...where’s the fire?”

Patrick cited a number of experts about client preferences for billing by the hour, including an excellent article by Alex Novarese in Legal Week, which argued that clients “are not only generally failing to enforce change, they are, if anything, more conservative than the law firms, which is saying something.”  Patrick’s conclusion?  “In the end things will change...but on the client side, it may yet be a long, protracted process.”

The day after Patrick’s post appeared, a colleague emailed me a link.  He knew that Patrick and I had co-chaired a panel in Chicago a few weeks ago on “Overcoming Lawyers’ Resistance to Change,” and he was surprised that Patrick had a substantially different view of alternative fees than I do.  I wrote back to say that actually I agree with most of what Patrick wrote.  Clients are moving very slowly. 

My LegalBizDev Survey of Alternative Fees quoted a number of law firm leaders to this effect, such as the partner who said, “At least half the time, maybe more, when the client says alternative fee, what they are really saying is, ‘Give me a larger discount than you gave me before’” (p. 32).

In that survey, I also asked chairmen, senior partners, COOs and CFOs from 37 of the largest law firms in the US to estimate the percent of AmLaw 100 revenue from alternative fees then and five years in the future.  Every single participant said it was going up. 

When senior decision makers at 37 of the largest law firms in the world unanimously agree on a trend, something very important is going on. 

Only headline writers are predicting the death of the billable hour.   But there can be no doubt that, as Bruce MacEwen of Adam Smith Esq. elegantly put it in the foreword to my survey, “The billable hour’s market share has peaked.”

It is very difficult to predict exactly how quickly the market share of hourly billing will decline, or whether a tipping point is in sight.  In my survey, although all agreed on the direction of change, decision makers strongly disagreed about its speed.  Predictions of the five-year growth rate ranged from 20% to 900%. 

Lawyers are not known for embracing change, and going from an hourly business model to a non-hourly one is extremely difficult not just for law firms, but also for in-house lawyers.  That’s why the Association of Corporate Counsel is beginning to offer presentations for law departments on project management.  (One example: on September 30, I will be on an ACC panel at McDermott Will’s Boston office entitled The Value Challenge in Action: Doing Deals Efficiently and Effectively Using Legal Project Management.)

But while the difficulty of change makes for slow progress, do not be fooled into thinking that change will not occur.  All of the momentum is away from hourly billing. 

If you doubt this, consider what you would do if you were the general counsel for a large corporation, and you were being pressured to control costs.  Suppose you had to choose between two law firms that you thought would provide comparable service, one with hourly billing and the other with a firm fixed price.  Which would you choose? 

I know that the assumption of comparable service is a big one.  In another recent study of GCs, the most significant obstacle to increasing the use of alternative fees was “concerns about quality” (56.7%).  But bear with me for a moment and assume that lawyers are smart enough to solve that problem over time, and that they will gradually be able to consistently deliver comparable quality at a fixed price.  Which would you choose: hourly or fixed?

Now suppose that you chose the fixed price option a few times, and you did indeed get the same kind of service that you got under hourly arrangements.  Why would you ever go back?

Announcing a .pdf version of our alternative fees survey

A .pdf version of the LegalBizDev Survey of Alternative Fees is now available for $99.  To order today, email survey@legalbizdev.com or call Elisabeth Westner at 617-217-2578. 

The LegalBizDev Survey of Alternative Fees is based on in-depth interviews conducted between June and September 2009 with chairmen, senior partners and C-level executives at 37 of the largest law firms in the US about their past use and future plans for alternative fees.  This report summarizes their opinions about what works for alternative fees, and what does not.  While some of the percentages may have changed, the insights of law firm leaders on when and how to use these fee structures are as valuable as ever.

In the past, many clients asked us if they could buy a pdf file, but we sold only the printed report. To celebrate the first anniversary of the survey, we are now offering the results in a pdf form which can be distributed to everyone in your firm or department for one low price.   If you’d prefer to own a printed copy, the price is $129 plus shipping – $10 in the US, $30 outside the US.

“Every law firm that seriously intends to tackle alternative fee arrangements would clearly benefit from reviewing this work…” – Jordan Furlong, Edge International

 “Valuable insights from AmLaw 100 decision makers about how the market is changing and what will and will not work in the future…” – Harry Trueheart, Chairman, Nixon Peabody

“This groundbreaking work provides indispensable guidance…” – Richard G. Rosenblatt, Operations Partner for the Labor & Employment group, Morgan Lewis

“An impressive contribution to defining ‘the state of the art’ in the land of alternative billing.” – Bruce MacEwen, Adam Smith Esq.

To order the LegalBizDev Survey of Alternative Fees, email survey@legalbizdev.com or call Elisabeth Westner at 617-217-2578.  (The cost is $99 for the pdf or $129 plus shipping for a printed copy – $10 shipping in the US, $30 outside the US.)  We offer an unconditional money-back guarantee on all of our products.  If you decide to return the book within 30 days, we will send you a full refund, no questions asked.

Project management (Part 14): The power of checklists

In the business bestseller The Checklist Manifesto, Atul Gawande makes a powerful case for the value of this simple project management tool. 

As the book jacket notes, “The volume and complexity of knowledge today has exceeded our ability as individuals to properly deliver it to people – consistently, correctly, and safely.”  Checklists can solve this problem by addressing two problems that every busy expert faces: “The first is the fallibility of human memory and attention, especially when it comes to mundane routine matters that are easily overlooked under the strain of more pressing events….[The second] is that people can lull themselves into skipping steps, even when they remember them” (p. 36).

The book gives examples of the power of checklists ranging from flying the B-17 bomber (p. 34) to building skyscrapers (p. 54).  Since Gawande is an endocrine surgeon at the Brigham & Women’s Hospital in Boston and an associate professor at Harvard Medical School, many of his examples relate to hospitals.  The most compelling story in the book describes a medical procedure commonly performed in intensive care units: inserting a central line (a catheter placed in a large vein to deliver medications and more). 

Until recently, infections from central lines were a major source of illness and death in ICUs.  But in 2001, a Johns Hopkins intensive care physician named Peter Pronovost created a checklist of five simple steps to reduce infection, starting with doctors washing their hands with soap and cleaning the patient’s skin with the antiseptic chlorhexidine.  Almost everyone agreed that all five of these steps were important.  In fact, “some physicians were offended by the suggestion that they needed checklists” (p. 40).  But Pronovost believed that high infection rates were related to the fact that in the real world of medical trauma, one or more steps were often skipped in the heat of the moment, or simply because hospitals ran out of the needed supplies.

He spent several years refining and promoting his five item checklist.  When it finally became a standard operating procedure, the results were dramatic.  One study was performed in Michigan hospitals and published in the December 2006 issue of the New England Journal of Medicine.  In the first eighteen months of this Michigan initiative, Pronovost’s checklist saved 1,500 lives and $100 million, simply by forcing doctors to comply with five items that summarized “ridiculously primitive insights” (p. 39).

A number of legal experts have written about ways to apply lessons from The Checklist Manifesto to the practice of law, including here, here, and here. 

From my perspective, the most valuable use of legal checklists is to summarize basic knowledge in a simple form which is easy for busy lawyers to access and use.  Whether they list well-defined step-by-step procedures or fuzzy brainstorming ideas, checklists provide lawyers with “just in time” information at the exact moment they need that knowledge at their fingertips.

When we develop customized versions of our Legal Project Management Quick Reference Guide for clients, we include proprietary documents that are already being used in each firm.  Some of the most valuable tools we’ve found are checklists that lawyers have developed for everything from due diligence to closing a deal. 

Most of the time, developing a legal checklist is the easy part.  The hard part is getting lawyers to use it.

How to improve pitch meetings

A few months ago, I wrote about “The biggest mistake lawyers make when trying to develop new business": they fail to listen.

As I wrote in that post:

The familiar term “pitch meeting” shows just how pervasive this mistake is.  Most lawyers seem to think that when they meet with prospective clients, their task is to pitch, to hurl, to throw out information.  In fact, any successful sales person will tell you that instead of pitching, you should be catching, listening to what clients have to say.

I had a similar discussion last week with a senior litigator that I am coaching, when we discussed ways to increase new business with a client he’d helped before.  LegalBizDev principal Kirk Forrest is working with me with this client, and took the analogy one step further when he talked about what to do after you listen.

Here’s what Kirk wrote in a follow-up email: 

1.  To continue the baseball analogy, yes, it is more about "catching" than "pitching.” But he [the lawyer being coached] gains the advantage by using that information "caught," to throw a series of "strikes" thereafter.  It is the "strikes" thrown which will get him the business.  Having the information but doing nothing with it will not produce results.
 
2.  For example, at the recent Network of Trial Law Firms seminar I attended, a GC on the panel reiterated my view that lawyers seeking work should show how they will be helpful.  [The lawyer being coached] mentioned that there was a second case filed [with his client]; he wrote the company and merely said, "Let me know if I can help on this." Polite, yes, but it did not give the GC any stated reason to hire him.  A better approach to the GC could have been something like this:

I have given some preliminary thought to the new suit filed against the company. As we did with the last case, we would recommend removing the case to federal court in the Eastern District of Virginia. Depending upon the federal judge we get, would could advise the Court that the case is related to others already pending within the District and ask the Court to transfer the case to Judge Jones' docket. You will recall that we received some favorable discovery rulings from Judge Jones in the XXX matter which were very helpful in getting us to an early and cost effective settlement. Assuming that you want to go this route, after filing an Answer we would seek an early Rule 16 Status Conference to discuss with the Court limiting discovery for now and having the parties focus on the few key issues raised in the Complaint.  As we did previously, we would expect our pleadings to be closely watched by the press, and we can offensively use the pleadings to get our side of the story out. 

Presumably, we would use many, if not all, of the same witnesses as before.  We spent much time working with John Doe in preparing for his deposition and we could pick it up again from there.  Mary Public was a little more difficult but we finally got her focused on why her testimony was critical. We built up a good rapport and credibility with her, which will likely be very helpful.  Tim Smith and Jane Miller, who worked with me on the last case, are available to again provide an experienced team in defending this matter. I will call you tomorrow morning to discuss; however, if you would like to talk sooner, just let me know and I will clear some time on my calendar for us to talk.

3.  The key point is to provide the decision maker with helpful information. Investing some time to study and analyze the complaint is time well spent. At the conference, GCs agreed that even if the lawyer was not hired for this particular matter, all would remember a lawyer who took the time to add value to his communication and who was helpful to the GCs making the key decision of who to hire.
 
4.   So, yes, catch first.  But then do not waste pitches; throw only strikes.

Overcoming resistance to change (Part 3): Raising the urgency level

Last week I wrote about how short-term wins can help to promote change in law firms.

In the book Leading Change, John Kotter also talks about the value of “raising the urgency level,” and even provides a table listing nine ways to do this in the corporate world (p. 44).  While some would not work in the legal world, in my opinion, every law firm leader would be wise to focus on one key item from Kotter’s list: talk to unhappy clients and publicize the results.

I’ve written before about the Lake Wobegon effect, named after Garrison Keilor’s fictional community where “all the women are strong, all the men are good-looking, and all the children are above average.”  Several surveys have shown how this applies to lawyers.  In my favorite, Inside Counsel magazine asked lawyers to grade their overall performance with clients as A, B, C, D, or F.  43% of the lawyers thought they were earning an A.  But when they asked clients the same question, in fact only 17% earned As. In other words, most lawyers significantly overrated their performance.

If lawyers spent more time understanding how clients really feel, they would have a much better chance of protecting client relationships in troubled times and expanding them when things improve.  Not to mention the fact that listening to clients is a powerful technique for generating new business. 

A few years ago, I wrote a series of posts about how to conduct client satisfaction interviews.  In the current environment, law firm leaders should also be thinking about client dissatisfaction interviews: spending time with clients who have left, or who are in danger of leaving, the firm.

Relationship partners may prefer not to think about the clients who have left.  If they do talk to them, they may try too hard to win work back or be defensive about what went wrong.  Therefore, I believe such interviews would best be conducted by disinterested parties, ideally a very senior partner in the firm, thus showing clients how serious the firm is about understanding any issues.  And then they need to find a way to communicate what they found to others, without embarrassing or annoying the partner who lost the client.  This won’t be easy.

But the potential payoff is understanding how unhappy clients have perceived your service and dealing with any underlying issues before other clients leave.  Partners who continue to deny that the legal world is changing, or who think “our firm is different,” may have their eyes opened by hearing exactly what their own clients are saying about them.

In their discussion of urgency in the book Switch: How to Change Things When Change is Hard, Chip and Dan Heath quote a Harvard Business School Review paper which argues that “In the absence of a dire threat, employees will keep doing what they’ve always done (p. 119).”  This quote reminded me of Richard Susskind’s comment about law firm conservatism in the book The End of Lawyers: “It is not easy to convince a group of millionaires...that their business model is wrong.” 

But Susskind wrote those words before the economic downturn.  And most law firm leaders believe that even if the economy recovers completely, legal changes are here to stay.  In a recent survey of law firm chairmen and managing partners, only 4% said that the changes to the legal profession in 2009 were “an anomaly.”  69% said that the 2009 economy was “an accelerator of past legal trends,” and the remaining 27% saw 2009 events as “a game changer that has changed the legal profession.” 

If you agree that the legal world has changed forever, maybe this cloud can turn out to have a silver lining.  If you focus clearly on value and on meeting client needs before your competitors do, you could end up expanding your book of business.  As Euripides noted, “There is in the worst of fortune the best of chances for a happy change.”

Overcoming resistance to change (Part 2): Short-term wins

Last week I wrote about a simple strategy to promote change: find the feeling.  Sounds great in theory, but exactly how do you do that? 

Of course the answer will depend on your firm’s culture and on the change you are promoting.  Here’s one example: in many of the firms that we talk to these days, the executive committee and senior leadership are interested in applying project management principles to increase client satisfaction and improve marketing.  But they don’t know how to get started because there is little grassroots support for an idea that will require partners to change the way they practice law. 

One tactic we recommend to promote change in our project management workshops and coaching is to focus on short term wins.  Instead of trying to train everyone in the firm, we seek out lawyers who are motivated to change and then help them to find the personal “low hanging fruit” that will prove project management’s benefits to others in the firm.

For example, one AmLaw 100 firm hired us a few weeks ago to coach three influential partners in project management for several months, and then conduct a panel discussion of the results at their annual retreat.  The fact that the evidence will be discussed frankly by partners will make the presentation far more credible than anything an outside consultant could say.  Our goal is to lay the groundwork for short-term wins that are significant enough to trigger an emotional response. 

As John Kotter notes in his book Leading Change:

Real transformation takes time…Most people won’t go on the long march unless they see compelling evidence within six to eighteen months that the journey is producing expected results.  Without short-term wins, too many employees give up or actively join the resistance (p. 11).

Kotter goes on to list many benefits of short-term wins (p. 123), including the fact that they:

• “Provide evidence that sacrifices are worth it
• Reward change agents with a pat on the back
• Help fine-tune vision and strategies
• Undermine cynics and self-serving resisters
• Build momentum”

In our experience, most lawyers will change their behavior IF they are provided with convincing evidence that it is in their own self interest.  If partners that they respect and trust say that an aggressive fixed fee deal became profitable because of the way it was managed, or that a lawyer working on an hourly basis avoided a write off with a difficult client because she used project management tactics, the others will listen.

Next week, we’ll discuss another way to “find the feeling”: raising the urgency level.

Overcoming lawyers’ resistance to change (Part 1): Find the feeling

In preparing for an upcoming panel presentation in Chicago (for details, see the end of this post), I’ve been reading and thinking a lot about lawyers and change.  The most useful book I’ve found so far does not mention lawyers at all, but it does review an enormous amount of research. 

The book is called Switch: How to Change Things When Change is Hard, and it was written by two brothers: Chip Heath, a professor at the Graduate School of Business at Stanford University, and Dan Heath, a senior fellow at Duke University.  While they do not offer easy answers, they do suggest many tactics that law firms could apply.  Their central idea is that change requires finding the right balance between three different elements: the rational mind, the emotional mind, and the environment. 

The Heath Brothers outline nine tactics for change, several of which will be described in this series.  (You can download a one-page summary of all nine tactics by signing up at their web page.) This week, I will talk about “Find the feeling.  Knowing something isn’t enough to cause change.  Make people feel something (p.259).”

When people overemphasize the rational element, the Heath Brothers say, it can lead to wheel spinning, overthinking, and analysis paralysis.  Have you ever seen that in a law firm?

When I talked about this last week with a Director of the Program and Project Management Office for an AmLaw 100 firm, he said that back when he worked as a consultant, they used to worry about fast-moving clients whose approach could be summarized as READY…FIRE…AIM.  But with law firms, his experience can be characterized as READY…AIM…AIM…AIM…AIM…AIM…Wait a minute, why am I holding a gun?

One of the more interesting studies the Heath Brothers cite originally appeared in The Heart of Change by John Kotter, professor emeritus at Harvard Business School, and Dan Cohen, a principal at Deloitte Consulting.  Kotter and Cohen interviewed over 400 people who had been involved in change efforts at 130 companies to understand why some change initiatives had succeeded and others had failed. 

They concluded that the managers who failed used an approach which could be described as ANALYZE-THINK-CHANGE.  They focused on rational arguments, compiled spreadsheets, and developed PowerPoints to show workers all the intellectual reasons why they needed to change.  This type of systematic approach can be effective in a stable and controlled situation, they say, such as when you need to cut your printing costs or reduce your commute time. 

But in most corporate change efforts it does not work because “the parameters aren’t well understood, and the future is fuzzy (Switch, p. 106).”  The term “fuzzy future” certainly applies to law firms that are trying to decide how, or even if, they should respond to what Paul Lippe has called “the new normal.”

In change efforts for complex situations like this, Kotter and Cohen found, successful managers relied on the sequence SEE-FEEL-CHANGE.  Instead of trying to appeal to the rational mind, they focused on making an emotional connection.

The Heath Brothers’ book cites many examples of this approach, including the “Glove Shrine” created by a manager at a large manufacturing company who believed his employer could reduce costs by $1 billion over five years, simply by changing the purchasing process (p. 13).  But in this global behemoth, changing procurement meant that many people would first need to be convinced to change the way they did business.  Instead of focusing on the rational reasons for change, this manager looked for a single compelling example of overspending that could make his case in a way that appealed to the emotional mind.

The manager decided to focus on work gloves, which were used in the company’s factories around the world and purchased in hundreds of locations.  He assigned a summer intern to track down all the different orders for work gloves, and found that the company was purchasing 424 different types.  Worse yet, each purchaser struck his own deals, and as a result exactly the same type of glove sometimes cost $5 at one location, and $17 at another, depending on how well the local purchaser had negotiated.

He could have made this case by compiling a detailed rational report filled with charts and examples.  But instead he asked the intern to get samples of all 424 types of gloves, and put a price tag on each.  Then he created the Glove Shrine by piling them all on an expensive conference table in corporate headquarters.   

As the Heath Brothers summarized the result, “The reaction was visceral.  This is crazy [people thought]…We’ve got to make sure this stops happening…The company changed its purchasing process and saved a great deal of money (p. 13).”  All because a single manager and a summer intern figured out a way to get past analysis paralysis and navel-gazing, and break through to emotion and action.

If you think that making an emotional case for change could help win people over at your firm, the next obvious question is, how do I make that emotional connection?  Ah yes.  Nobody said it would be easy.  But in Part 2 of this series, I will talk about two key tactics: short-term wins and creating a sense of urgency.

Note: My August 16 Chicago panel presentation on this topic is sold out, but I will write in this blog about what I learn from the other panelists: Steve Poor, Chairman of Seyfarth Shaw, Joey Smith, Chairman of Williams Mullen, Tea Hoffmann, Chief Business Development Officer at Baker Donelson, and consultant Patrick McKenna.  The Ark Group is now organizing a second session on the same topic in New York on January 25, 2011.  If you’d like to be notified when the official announcement is released, email Elisabeth Westner.

Legal project management (Part 13): Getting the “Statement of Work” right

This week’s post was written by LegalBizDev Principal Mike Egnatchik, former Associate General Counsel at Xerox.

Law firms are increasingly realizing that they must both adopt and adapt the principles of project management in order to perform their work more efficiently and to assure that clients are delighted by the final outcome. In fact, a growing number of firms believe that once their staffs are trained to employ techniques for completing matters in an efficient, streamlined manner, they will have a significant advantage over law firms that move more slowly in today’s challenging competitive environment.

But legal cases and transactions can have unpredictable aspects, sometimes beyond the control of the best managers and planners.  Therefore, flexibility is key.  Project management is all about tradeoffs, and efficient project managers must be ready to adjust scope, time and budget as the case or matter evolves. This factor underscores the importance of the primary task at the start of any project: setting your objectives and carefully defining the project scope with the client.  Doing so will align mutual expectations and prepare the stage for developing an activity schedule and budget. 

A statement of work (SOW) must fix the boundaries of what is within the reasonably expected scope for the matter, and what is not.   This is particularly critical if the work is to be performed for a fixed price.

The first draft of the SOW should be shared with both the client and the anticipated team members for their review and input.  You need to understand the client’s goals and expectations and align them with the team’s approach, focusing on the business problem or dispute from which the matter arises and on acceptable outcomes and deadlines for the client.  The summary may include a mutually agreed-upon success statement, which will define the desired outcome of the matter.

As the team comes to an understanding of your client’s wants and needs, you have to keep in mind how much each want or need will cost, and whether there is any waste or excess in these expectations.  These budgetary considerations may eventually impact the steps and actions taken to complete the matter. Speaking of the budget, you must be sure to carefully define in writing the anticipated assumptions of your budget and any “carve-outs;” that is, work that will not be included within the fixed price for the agreed scope.
 
Some other helpful steps at this stage are common sense items such as assuring that every member of your team is familiar with the final project objective.  It can be posted prominently on a bulletin board or online. Also, it does not hurt to remind team members of the project objective in regular memos and meetings.

The better your initial SOW, the more likely you are to meet the client’s objectives.  And if things change, the approved SOW will provide a solid basis for negotiating with key client decision-makers before performing work that may require additional funding. 

Below is a sample SOW for a hypothetical internal foreign corrupt practices investigation.

Background – Client ABC Corp has contacted us to handle the following matter:

A man has just left an anonymous message on ABC’s ethics call-in hotline with allegations that the marketing director in ABC’s Malaysia branch has been offering free personal computers to decision makers in various Malaysian government offices if they sign up to buy ABC’s products.  The client asks that we conduct an internal investigation of the matter and prepare a privileged and confidential written report to the general counsel on the facts and law for a fixed price. 

Draft SOW (to be discussed and agreed with the client) – This project shall include the following activities:

1. Review company policy relating to the Foreign Corrupt Practices Act and gifts to government officials.
2. Interview the Malaysia marketing director and up to 10 other Malaysian employees involved in local marketing/finance, and up to five US employees in the marketing chain of command for the Malaysia branch. The client will provide us the names and CVs of the individuals to be interviewed. We will handle the interviews for US-based employees, and our office in Singapore will handle the interviews of the employees in Malaysia. Notes will be typed after each interview.
3. Discuss with the client the justification for using a private investigator (such as Kroll’s Singapore office) to follow up on leads and to look into the matter in Malaysia with relevant Malaysian customers. If the client agrees to go forward with a private investigator, all related costs and expenses will be reimbursed by the client.
4. Complete a draft report on the facts and applicable US and Malaysian laws and review it with client. Update the report as necessary. The portion on Malaysian law will be prepared by our Singapore office. The report shall include our recommendations to the client as to next steps in the US and Malaysia.

EXCLUSIONS.  This SOW does not cover any litigation/dispute resolution activity, including without limitation, lawsuits arising from related employee terminations, and/or future dealings with Malaysian or US authorities (Securities and Exchange Commission, Department of Justice, etc.) that may become informed of these allegations or otherwise involved in this matter.

This post is based on material from The Legal Project Management Quick Reference Guide. 

Why project management is becoming increasingly important to law firms

This week’s post comes from the preface to my new book.  The preface starts by explaining how to use the book’s tools and templates to improve profitability and client service, then transitions to the material below, explaining why project management is becoming a critical component of many firms’ marketing. 

My interest in legal project management grew out of an alternative fees survey I conducted with AmLaw 100 chairmen, senior partners, and executives.  Many of these senior decision makers emphasized the need to adopt project management techniques from other professions.  As the CFO of a firm with more than 1,000 lawyers succinctly put it, “If we teach our people to manage, we can make more money.”

Several survey participants said that project management could be especially helpful to lawyers who must suddenly learn how to deliver quality solutions within limited budgets.  For example, the chairman of a firm with more than 800 lawyers noted that:

In the world of construction, architects, engineers and contractors have been working on a fixed price basis for a long time. There is a body of learning about how to estimate, contract, define scope, manage changes, allocate risk, and how to manage fee disputes, delays, [and] changes in scope [that could] be adapted to the legal profession.

But exactly how should this rich and deep body of learning be adapted to meet the unique demands of the legal profession?  Professional project managers devote thousands of hours to being certified and/or to earning a master’s degree in project management, but senior partners must find a way to apply key principles far more rapidly.

We believe that the long tradition of the billable hour has created an enormous amount of inefficiency and “low hanging fruit” – areas where lawyers can instantly reduce cost simply by focusing on proven best practices.  We also believe that the most useful tactics will vary from person to person and from practice to practice.  Therefore, we have developed our Quick Reference Guide to help partners find the best practices that will have the greatest impact for each individual practice. 

Since the field of legal project management is brand new and changing rapidly, our Guide will be revised from time to time to include additional templates and new information.

This is a time of both challenge and opportunity for law firms.  As the 2010 law firm Client Advisory from Hildebrandt Baker Robbins and Citi Private Bank put it:

Law firm leaders and managers must understand that the world has changed. The focus on growth and expansion that drove law firm strategic and management decisions for the decade preceding 2008 has been replaced with a different imperative – the necessity of focusing on efficiency in the delivery of legal services.

The innovative tools in the Guide can help you to gain an advantage in today’s highly competitive marketplace by increasing efficiency and offering clients greater value.  All you have to do is use them.

To review the complete table of contents of the book, or to order a copy for $29.95, see our web page description of The Legal Project Management Quick Reference Guide: Tools and Templates to Increase Efficiency. 

Should you buy Pat Lamb’s new book on alternative fees?

In my opinion, any lawyer who wants to understand the nitty gritty details of how non-hourly fees really work, from pricing to project management, should buy Pat Lamb’s new book Alternative Fee Arrangements: Value Fees and the Changing Legal Market.

To put this into context, people who work with me often remark that I am cost-conscious.  (All right, they say I’m cheap.)  And while I often recommend books (for example, see my Amazon list of the top marketing and sales books for lawyers), I am quite confident that this is the first time I have recommended an 81-page book that costs 295£ (about $445 US).

The reason I am suggesting that you consider spending freely here is that if you bid on and work on alternative fees matters, the information in this volume can help you save many times its price.

Where else could you find an alternative fee pioneer’s answers to such frequently asked questions as, “If I use a fixed fee or portfolio fee, how do I make sure that work quality doesn’t suffer?” or “I’ve quoted a fixed fee and have been hired.  Now what do I do to ensure this is a profitable engagement?”

This book is the only place I know of where you can find lists of the factors several law firms use to set fixed prices.  It’s not the simple formula many lawyers are looking for, but the advice is very practical and immediate.  My favorite pricing factor was number 13 on Valorem’s list:

Client personality – is the contact person of the client high maintenance, low maintenance, or something in-between?  Clients who are indecisive, who endlessly debate minor points, or who endlessly shift strategies consume lawyers and add to the cost of doing business (p. 41).

The chapters on pricing, tools of change (from early case assessment to project management), FAQs for buyers and sellers, and “collateral benefits and damage” all provide nuggets of advice from the trenches that I had not heard before.  To be honest, in several places I was surprised by Pat’s commitment to transparency and his willingness to share his own hard earned lessons.

The book even includes a sample process map Valorem developed, outlining “all of the steps typically taken or that could be taken in a case to state or federal court.”  There’s been an enormous amount of talk about how Six Sigma, Lean, and other approaches can be used to simplify and streamline work processes, but very few detailed law firm examples have been published.  I liked Pat’s sample so much that I got his permission to reproduce it in my own new book, The Legal Project Management Quick Reference Guide: Tools and Templates to Increase Efficiency.

True, if you’re like me, you’ll find a few things to disagree about.  My list starts with Pat’s emphasis on the phrase “value fees” in the title.  I know ACC loves that term, and am sure that Ron Baker will disagree violently with what I am about to say, but I think the phrase “value fees” puts too much emphasis on the client side of the table.  What buyers want to pay is extremely important to price setting.  But the cost to sellers matters, too – it takes two to tango.  And the most extreme versions of value pricing can lead to odd situations, as suggested by Pat’s anecdote about a conversation with the head of one law firm who “once told me of charging two clients two different amounts for what was essentially the same work because the work had different value to each client” (p. 31).

Will this book answer every question you have about alternative fees?  Of course not.  Pat would be the first to tell you that he is still learning how to implement alternative fees.  And I’m guessing there are at least a few tips he could have offered that he held back. 

Maybe I like this book so much because there is nothing theoretical about it.  There’s been an awful lot written about alternative fees by people who have had very little personal experience with winning and losing their own money on alternative fee matters.  Pat is a man who has put food on his table by implementing alternative fees; some months there was more food than others.  If you buy this book you will benefit from what he has learned.  It may not be the best book that will ever be written about alternative fees, but it is clearly the best so far.

Full disclosure: Pat has written very nice things about my book too.

To see a comment on this post by Susan Hackett, Senior Vice President and General Counsel of the Association of Corporate Counsel, click here.