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6 posts from June 2010

June 30, 2010

How Should Law Firms “Gear Up” to Manage Projects Better? – A 50,000-foot View (Part 1 of 2)

This two-part series was written by LegalBizDev Principal Steve Barrett, former CMO at Drinker Biddle.  It is based on an article that will appear in Of Counsel: The Legal Practice and Management Report.

Steve_barrett Approaching the second anniversary of the September financial markets collapse, let’s look at the major changes that have impacted law firms, aside from drastic force reductions and a slowdown on previously annual rate increases.

Whether alternative fee arrangements (AFAs) will continue to spread is no longer an issue; how quickly they will spread might be.  Little energy is being devoted to defending the “old normal.”  In a period of dramatic transformation, a lot is up for grabs.  No defensible survey or study suggests that hourly fees are or will be 100% dead, yet none suggest, either, that AFAs will NOT continue to grow measurably.  The consensus cross-section of all recent polls agree that these “changes are permanent.”  In fact, the latest indicator, the 2010 Altman Weil Flash Survey, reported that:

Over 75% of firms surveyed indicate that they believe that more price competition, more non-hourly billing, and the use of project management to improve efficiency of service delivery will be permanent changes in the legal landscape.

All corporate clients are intensely focusing on cost reductions, be they paper clips, energy, raw materials, restructuring, manufacturing, or benefit plan revisions.  The only costs that have apparently NOT dropped over the past decade are healthcare, energy and outside legal (many have already shaved inside legal to the bone).  Corporate responses to healthcare cost growth has been simple: switch vendors or reduce available benefits.  Likewise, companies are stampeding to get green or reduce energy usage.  Outside legal costs are likely to follow such paths, and soon, if the industry’s response is ineffective. 

A disturbing comment in the same Altman Weil survey was that:

Less than a third of firms track profitability outcomes, feature fee options in marketing communications, provide project management training, or set annual targets for AFAs.

Likewise, many firms are under-prepared to competitively price their offerings, since few have effectively mined their legacy accounting data to discern what many standard types of legal tasks or matters cost.

Project management techniques can reduce costs and increase efficiency and profitability in any type of legal billing arrangement, though the results may be easiest to see with AFAs.  When a law firm agrees to handle a certain matter for a flat or constrained price, it must find a way to meet legal needs within a limited budget.  The less the firm spends, the more money it will make.  But, as one major law firm’s CFO explained in responding to our LegalBizDev Survey of Alternative Fees in 2009:

A large number of lawyers do not know how to manage. [In the past], the more hours that got charged, the more money [they] made, and so they’ve never really had to manage [costs].

The market for legal project management (LPM) training has recently exploded, and a number of vendors have proffered or announced LPM software systems.

Talk to any major law firm COO or IT head and they’ll agree that busy private firm partners, for whatever reason, have a VERY limited bandwidth for learning new software or technology – as seen in past conversions of accounting systems, WordPerfect to Word, Groupwise to Outlook, new voicemail systems, landlines to VoIP, time/billing, CRM, Knowledge Management, etc. roll-outs.  Most senior law firm administrators will agree that partner appetites for the training and behavioral changes necessary with new technology fall somewhere between limited and non-existent.  This should be remembered by firm leaders rushing to implement software PM solutions or comprehensive, Six Sigma-type process improvement initiatives.  User resistance is easily underestimated.

Nevertheless, there ARE early adopters of process improvement (Seyfarth Shaw, Eversheds, Foley & Lardner, to name a few), as well as those undertaking legal project management training and/or acquiring LPM software or staff specialists (such as Dechert, Orrick, Osler, McCarthy Tétreault).  Most agree that while hourly rates will never disappear, alternative fee arrangements are here to stay, and that LPM is a necessary firm skill to ensure that AFAs do not spell disaster going forward.  Yet, even if hourly rates remain dominant, many firms now realize that better understanding of what their services cost AND better matter management can make lasting efficiency changes that will improve client satisfaction and reduce costs, while protecting law firms’ margins and competitiveness.  The transition to new efficiency will make some law firms winners and some losers.  The sooner firms start, the more likely they are to be on the winning side.

With the introduction of UTBMS matter task tracking and LEDES electronic invoicing standards more than a decade ago, major American clients sought to push law firms toward a standardized method of task cost reporting, in order to arrive at a better understanding of the component costs of legal services (more or less a “parts list” of replicated tasks within large projects).  Unfortunately, more clients than law firms have developed a full understanding of these costs for future pricing purposes.  Indeed, one could argue that the forensic accounting analysis to develop the hi-median-low cost of, for example, an average deposition (UTBMS/LEDES task # L330) would be wasted, since it could be analyzing the cost of an obsolete, inefficient process.  But understanding such cost history can help firms avoid “shot-in-the-dark” AFA pricing.

Next week we’ll discuss the options now available for law firms to get started on project management efforts.

June 23, 2010

Legal project management (Part 12): What Canadian firms are doing

Last week we offered a project management webinar workshop at Clark Wilson, one of the leading law firms in British Columbia.  The next day, a colleague asked me how Canadian legal project management differs from the US.  My answer: it doesn’t.

True, when we customized their edition of the Legal Project Management Quick Reference Guide, we had to use a Canadian English spell checker.  But changing the spelling of practice (to practise), and defense (to defence) was about the biggest cultural challenge we faced.  Of course Canadian law differs from US law in many ways, but when it comes to legal project management, the basic principles are the same.

For examples of what other Canadian firms are doing, see Michael Rappaport’s article in the current issue of the Canadian Corporate Counsel Association magazine.  It’s entitled “Better service by design: Project management and the quest to add value,” and discusses how:

• McCarthy-Tétrault's enhanced project management program is supported by customized tools including work plan templates to help lawyers “develop time lines, define the scope of work,  staff a matter appropriately, plan for contingencies and generate cost estimates.”  The tools were developed in house over 18 months, and the firm is rolling them out this year to all of its 650 lawyers. Detailed training sessions for all lawyers will be completed by the fall.

 • Osler, Hoskin & Harcourt has “launched a matter management initiative and has rolled out a project management guide book, which will serve as the firm’s bible for legal project management.”

• Borden Ladner Gervais “continues to build on project management initiatives started 25 years ago in its trademark and practice group.”

These days, I spend much of my life talking to people about what law firms are doing with project management, but before I read this article I was familiar with only one of these three initiatives.  Like my post on McDermott’s Deal Dashboard, this suggests that there has been an enormous amount of legal project management activity going on under the radar for years. 

And all signs point to an acceleration of legal project management activity in Canada, not to mention everywhere else. A few hours before I offered the workshop at Clark Wilson, I got an email out of the blue from the training coordinator of a Canadian government agency that employs over 200 lawyers.  They too are considering a project management initiative, and she wanted to discuss the best way to structure training to assure immediate and practical results.

I told her about the approach we used in our highly interactive two-hour webinar workshop with Clark Wilson, starting with a brief review of eight key areas for improving efficiency:

1. Set objectives and define scope
2. Identify and schedule activities
3. Assign tasks and manage the team
4. Plan and manage the budget
5. Assess risks to schedule and budget
6. Manage quality
7. Manage client communication and expectations
8. Negotiate changes of scope

Each lawyer picked one or more of these areas to focus on, based on their personal needs and interests.  Then our proprietary process focused on the customized Legal Project Management Quick Reference Guide we had created for Clark Wilson, and helped each lawyer identify the tasks that could have the most immediate and significant impact for their practice.

Note that we did not tell lawyers what to do.  If you’ve ever tried that, you know how rarely it works.  Instead, we structured the situation so they had easy access to summaries of tactics that had worked for other lawyers and professionals, and they told us what would work best for them.

The action items they agreed to included writing monthly one-page status reports on a few key matters based on the suggested format in our Guide (see point 7 above), using the Matter Planning Template in our Guide to plan the details of a complex set of assignments (see point 2), and using our Project Risk Analysis Template from the Guide to identify potential problems in advance before they had a chance to affect the budget (see point 5).

Of course, there is nothing radical about any of these action items.  What’s radical is the simple fact that law firms are actually putting them into practice without huge investments in training, software and/or process reengineering. Now.

The day after the workshop, I called Darren Donnelly, the project manager for our workshop and one of the participants, to ask how he thought it went.  I most enjoyed the part of the conversation where he talked about why he thought it had gone “very very well.”  But I learned the most when he talked about how our process had guaranteed practical next steps and increased the chances of successful implementation.  As Darren summed it up, “It’s always better if people come up with their own ideas.”

For the next 30 days, LegalBizDev principal Steve Barrett, will be following up with each participant to provide support, and to help them fine tune activities to maximize results.  I’ll let you know how it goes.


To download a .pdf summary of this series, see the white paper in the project management section of our web page.  It will be updated from time to time as the series continues.  Additional information appears in the Legal Project Management Quick Reference Guide.

June 16, 2010

Another mistake: Overestimating the value of personal relationships

A few weeks ago, I wrote that the biggest mistake lawyers make in developing new business is failing to listen.  This week I’ll talk about another mistake that is not quite as common, but just as deadly: overestimating the value of personal relationships.

As David Fine, city attorney for the City of Denver put it at a recent panel discussion for general counsel hosted by the Rocky Mountain Chapter of the Legal Marketing Association:

I don’t need to have a close personal relationship with my outside counsel.  I really don’t want to play golf with them or see them outside the office. But I do want to have a good professional relationship with them.  [They should] help us do our jobs better.

And, as several other panelists at that session stressed, these days the best way to help GCs do their jobs is to provide more value. 

In my experience, many lawyers don’t understand that the value of personal relationships has declined.   This mistake is seen most often among senior lawyers who have been working with the same clients for years, especially those who have been relatively unaffected by the economic downturn.  They’ve built entire careers by taking clients to sporting events and developing personal friendships, and believe that the best way to succeed in the future is to just keep doing the same thing.

Their behavior reminds me of the book Seduced by Success, in which Robert Herbold explains how companies like General Motors have fallen into nine success-induced traps, starting with “Neglect: Sticking with yesterday’s business model.” As Herbold says, “You believe that what enabled you to become successful will enable you to be successful forever.” Anyone who believes that will be wrong. The only question is when.

As Bill Gates put it, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” 
When I started writing this blog five years ago, my first post described how Tyco had reduced the number of law firms they used for product liability cases from 167 down to one.  Interestingly, the one firm they ultimately decided to use - Shook, Hardy & Bacon – had not done business with Tyco before.  Shook, Hardy & Bacon did not win based on personal relationships, they won on value.

In its most recent annual survey of Chief Legal Officers (CLOs), Altman Weil reported that:

CLOs rated the importance of "relationships" with outside law firms at exactly the same low level, whether for critical work, important work or commodity work.  The personal element apparently doesn’t carry much weight in the hiring decision.

The decreasing importance of personal relationships may be surprising to some lawyers, but it has been true in other businesses for some time.  As the ACC Value Challenge Briefing Package notes,

For the past two decades, there has been an unrelenting drive by companies and their suppliers to reduce costs while increasing quality and value in their products and services.  The only outlier seemed to be the law firms.

In the book What the Customer Wants You to Know, consultant Ram Charan explained how the internet and the global economy have changed the way customers think, and that in turn has changed the nature of selling.  “[Businesses] are under enormous pressure to deliver value to their clients and their shareholders.  They are compelled to use the newfound power of transparency and overcapacity to drive down prices.”  In the past, “Salespeople built long-term relationships, cementing those ties with golf games, skybox seats and theater outings” (p. 3).  But “now the context is completely different” and those types of personal relationships no longer give salespeople an edge.

If they are not spending as much time playing golf, what are sales people doing instead?  In Escaping the Price-Driven Sale, Tom Snyder and Kevin Kearns explain that to succeed in today’s economy, “sellers have to create value by providing insight” (p. 17).  The authors argue that powerful forces of commoditization are driving prices down in every industry around the world.  The best way to “escape these price-driven sales” is to develop “business acumen” and focus on how the solutions you offer increase clients’ revenue, margin, and/or profit (p. 75). 

In his influential article Welcome to the Future: Embracing the New Normal, Paul Lippe described a very similar idea in his themes for law firm success:

In the new normal, the theme will be client intimacy, where firms do a better job of enabling success and preventing failure by being more tightly integrated with and knowledgeable about clients.

As jazz great Miles Davis said in his autobiography, “The world has always been about change.” The legal world is changing, and there will be winners and losers. The winners will be the firms that adapt fastest to the new normal, recognize that personal relationships have lost their power, and provide clients with more value TODAY.

If I managed a law firm, I would start by slashing the entertainment budget.  Then I’d invest that money, and more, in working with top clients to provide greater value.

This post is a preview of material from the second edition of The LegalBizDev Desk Reference, which will be published next fall.  To see a comment on this post by Fred Krebs, President of the Association of Corporate Counsel, click here.

June 09, 2010

Legal project management (Part 11): End of matter evaluations


Communication is absolutely essential in project management, and systematically debriefing clients at the end of every matter is more important than ever before.  Indeed, the ACC Value Challenge Briefing Package suggests that clients should take the initiative on this and “Conduct ‘after action’ reviews at the end of each matter to help continuously improve performance” (p. 4).

Over the last several years, I’ve written a number of posts about how to assess client satisfaction (including here and here). My book, Legal Business Development: A Step by Step Guide, also has an entire section entitled “How to conduct a client satisfaction interview” (page 129).

But when it comes to end of matter evaluations, I strongly believe that less is more.  Unless there is a major open issue requiring an immediate joint review, or unless a client requests a lengthy discussion, I would assume clients have little time to spare, and you should limit the debrief to three open ended questions:

1. What did you like about the way we handled this matter?
2. What could we do better?
3. (optional) Working together, how can we, in the future, improve the value you receive on matters like this?

The first question is a classic “easy to answer” opening, designed to get people talking freely.  The second question is the one you really care about, since you are likely to learn far more from criticism than from praise.  No matter how much clients like your work, they can always like it more.  And in today’s highly competitive environment, it is in your interest to turn every client into a raving fan.

The third question is optional, and it focuses on the question which is most likely to lead to new business: how to increase perceived value.  This is a slight rephrasing of a key question suggested in the ACC Value Challenge Briefing Package (p.3).  Note the phrase “working together,” which stresses the the need to align interests and collaborate more closely.

Ideally, you should ask these questions in person, maybe even over lunch.  The phone is my second choice, while email is a distant third.  Email is better than nothing, but just barely.  You want to get people to open up and speak freely, and that is unlikely to happen via email. 

If you’d like to extend the interview, consider this fourth question:

4. On a scale from 1 to 10, how satisfied are you with our firm?

As I’ve explained in a previous post, asking for a numerical rating forces clarity and frankness.  We ask our own clients for this “1 to 10” rating at the end of every program we deliver. 

To be honest, not every client will give us a number.  Some simply don’t like to be pinned down in this way, and whatever the client wants is fine with us.  But when clients do rate you on a 1 to 10 scale, there’s a good chance the number will be lower than you expected.  For an explanation, see my post on the Lake Wobegon effect, named after Garrison Keillor’s fictional community in which everyone thinks they are above average.

The best place to see this effect in the legal community is in a series of surveys published in Inside Counsel magazine, comparing ratings of satisfaction from clients and the law firms who serve them.  In one recent survey, 43% of lawyers thought they were earning an A for their work, but only 17% of their clients agreed.  So if you think you deserve an A, you’re probably wrong.

And if your client gives you an 8 or less on our 10-point scale, you need to do something about it.  As noted in my post about Fred Reichheld’s research on the loyalty effect, you might think that 8 out of 10 is a pretty good rating.  But it is not good enough to protect you from aggressive competitors.

If you want still more questions for your end of matter debrief, see my list of 24 more questions to ask current clients, or Google "client satisfaction interview" and you’ll come up with dozens of forms like this.

When I discussed with LegalBizDev Principal Mike Egnatchik which survey forms to use, he suggested that Association of Corporate Counsel members search the ACC members-only database for more, including "Customer Satisfaction Surveys: Best Practices on How to Create and Implement Them" and the ACC Infopak "Outside Counsel Management" (page 57).  

At some level, it really doesn’t matter whether you prefer my three question approach or a long questionnaire.  The important thing is that you get feedback from your clients at the end of each matter.  If you don’t, your competitors will.

June 02, 2010

Legal Project Management (Part 10): Where to begin

Which should come first: a formal legal project management system or legal project management training?

This particular chicken and egg question has come up quite a few times in the last few weeks.  For example, I recently talked to a law firm IT project manager who was stunned at how rapidly his fortunes had changed.  He has worked for a firm with over 500 lawyers for several years, and has spent much of that time trying to get lawyers to accept the idea of applying project management principles to legal matters. 

Until a few months ago, nobody listened.  Then the news came out that Dechert had trained every one of its partners in this area and all of a sudden people were asking him to recommend project management systems, tools and training.

Which is where the chicken and egg question comes in.  Does a firm need to have project management software and systems in place before they train lawyers how to work more efficiently?  Or should they begin project management training as quickly as possible, to encourage lawyers to change behavior that can have an immediate impact on client communication and the bottom line? 

If you’ve seen my white paper on Trends in Legal Project Management, you know that I believe that firms should start just in time, just enough training as soon as possible by offering it to motivated influential partners.  The results of these initial sessions will help law firms gain traction in this difficult transition.  The workshops will also pay for themselves by improving the profitability for alternative fee arrangements and by increasing client satisfaction and new business for both hourly and non-hourly work. 

Designing new systems and selecting and installing new software takes time.  While you are creating the perfect customized system, competitors will be racing ahead and stealing your clients. 

This rapid action philosophy reflects an entrepreneurial approach that, in response to global competition, has become increasingly common in companies of all sizes.

For example, many software developers now use “Agile methods,” in which they develop programs as quickly as possible, try them out on users, make changes based on feedback, and try them out again. Rather than spending time on the perfect requirements document, they simply develop release after release until they have a product that truly meets user needs.  As Wikipedia summed it up,

Agile methods generally promote a disciplined project management process that encourages frequent inspection and adaptation, a leadership philosophy that encourages teamwork, self-organization and accountability, a set of engineering best practices intended to allow for rapid delivery of high-quality software, and a business approach that aligns development with customer needs and company goals.

The approach is described in the Agile manifesto, which was written by a group of influential software developers in 2001:

We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:

• Individuals and interactions over processes and tools
• Working software over comprehensive documentation
• Customer collaboration over contract negotiation
• Responding to change over following a plan

That is, while there is value in the items on the right, we value the items on the left more.

My company has spent many years applying this philosophy to training development.  Before we started working with lawyers and renamed the company LegalBizDev, we spent 20 years developing large training programs for financial services firms and federal agencies. 

When we started out, our government clients required us to follow a formal training development process which demanded that multiple drafts of training materials be reviewed repeatedly by a group of subject matter experts, before they were tried out with a live audience of typical students.

That process produced effective training programs, but they took a very long time to develop.  In some cases, we developed training modules that were absolutely perfect from the subject matter expert’s point of view, only to find that students did not benefit from them.  Those modules were dropped from the course, and all that development time and money was wasted.

After a few years, we began using a leaner process to get in front of students more quickly, by quickly developing “pilot test” materials and getting user feedback.  This approach was faster, cheaper, and ultimately more effective.  That’s one of the elements of the just in time, just enough training approach that we now recommend for legal project management.

Don’t start by rolling out a program for every lawyer in the firm.  Identify small groups of willing and motivated partners, and quickly offer them something that meets their immediate needs.  The training will not be 100% perfect, but it will work well enough to pay for itself several times over.  And success will create a new group of evangelists within the firm who will spread the word: legal project management can help serve clients better. 

While some law firms are taking this “just in time, just enough” approach, others are responding to today’s challenge in a different way: they are forming committees.  On the plus side, committees can build the type of consensus which is needed to make progress in many law firms.  On the minus side, committees almost always slow things down, and this is a moment when law firms need to speed up. 

When I swapped some emails about this problem with Toby Brown of Fulbright & Jaworski (and of Three Geeks and a Law Blog), he noted that,

It's classic for a firm to ‘build then do’ with software and other systems.  A committee attempts to anticipate every need a proposed system might meet before it is developed and rolled-out.  The thinking has been that more input is better, and the process will insure that new systems meet the needs of all the lawyers in the firm.  In my opinion, this has never worked.  Design by committee is a recipe for failure.  Instead of a focused, functional system, you end up with a bloated one that doesn't address the original need….Until you start doing legal project management, you are not going to know your software and system needs.  Buying and implementing software and establishing policies and processes before you know what you need doesn't make sense.  Cart – get thee behind the horse!

I recently had a chance to talk to Eric Elfman, co-founder of a company named Onit which has created a web-based program for legal project management using the Agile approach.  I’ll write about the software in a future post.  (If you can’t wait, you can try the software for free by signing up to be a beta test user.)  During the demo, we talked about my belief that most lawyers need to work on other things – like client communication – before they spend time with software.

Near the end of our conversation, Eric asked, “Do you think lawyers can implement project management without systems and tools?”

“In the long run, absolutely not,” I said.  “But in the short run, they must.”

Why?  Because clients want law firms to increase efficiency and communication NOW.

June 01, 2010

Former GC joins LegalBizDev project management team

Forrest0900 A few weeks ago, I wrote about how Mike Egnatchik, former Associate General Counsel (International) at Xerox Corporation, has joined the LegalBizDev team.

Today, I am pleased to announce that Kirk G. Forrest has also joined us to help meet the rapidly growing need for our proprietary “just in time, just enough” project management training programs.

Kirk has over 30 years of experience in law departments and in law firms, including senior management positions at three multi-billion dollar companies: as General Counsel at Sam’s Club and Minerals Technologies, and as Associate General Counsel at The Williams Companies.  He has also been a litigation partner at Carroll, Burdick & McDonough, and served on the legal staff at MAPCO, International Paper, and Xerox. Kirk received his JD from Harvard Law School and his undergraduate degree from Cornell University.  He has extensive experience in litigation, risk management, corporate governance and business counseling, and he led the litigation function at International Paper, MAPCO and Williams.  Kirk has served as Vice President of the International Association of Defense Counsel, and on the Board of Directors of several bar associations, including the Minority Corporate Counsel Association.  He was a founding member of the American Corporate Counsel Association, and has been writing and speaking about alternative fees for more than fifteen years.

For more information about LegalBizDev project management workshops and presentations, contact us at info@legalbizdev.com or 617-217-2578 or see our web page.