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4 posts from July 2010

July 28, 2010

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.

Mike-egnatchikLaw 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

July 21, 2010

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. 

QRG coverMy 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

July 14, 2010

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.

July 07, 2010

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

This two-part series was written by LegalBizDev Principal Steve Barrett, former CMO at Drinker Biddle.

Steve_barrett You’ve decided that your firm needs to assess the need for or embark upon instituting project management as an efficiency improvement and margin protection discipline (see part one from last week). 

So here are your options:

1. Do nothing. Assume hourly rates are permanent and that clients will gladly relent in their pressure for efficiency, cost savings and predictability once the economy resumes its growth. Most think that won’t happen.

2. Train your lawyers in alternative fee arrangements (AFAs) and legal project management (LPM) to help them deal with AFA pricing, improve matter management, achieve efficiencies, and build more interactive relationships with major clients.

3. Hire a cadre of project managers and/or purchase and install sizable LPM software solutions. This may include (listed generally in order of increasing cost and support requirement):

a. “Cloud” web-based PM solutions, such as Basecamp, ProjectSpace, QuickBase (from Intuit), @task, ClientSpot, Teamwork Project Manager and the like, which are comparatively inexpensive (typically $25-$50 per month per user), support internal and client collaboration but are not specifically optimized to legal processes. Many law firm IT staffs use this type of project management/collaboration software themselves for internal firm systems roll-outs. One new cloud-based system, Onit, was developed for the legal industry by knowledgeable lawyer-programmers and is currently in beta testing at several major law firms. A number of other cloud-based collaboration systems are out there, such as Scrumy, ProjectSpaces (not to be confused with ProjectSpace, above), Collabtive, Gantter, and LiquidPlanner. Many are free to use, and one, Gantter, promotes its integration with and similar looks to Microsoft Project. These online cloud solutions can vary from the very basic – best for simple casual group projects only – up to more secure extranets for firm/client collaboration – which have good calendaring and task tracking capabilities – on to the more recent Onit legal-specific system.

b. Packaged desktop PC project management software, such as the omnipresent Microsoft Project or dozens of its competitors, most of which are rather complex and not tailored specifically for the legal environment. Microsoft Project is now but one entry in a suite of Service Delivery Management (SDM) solutions offered by the company as an applications ecosystem for professional services firms. Desktop PC solutions also may not generally support ready collaboration across networks or with clients, and law firm time entry and accounting information must be imported from separate firm systems. There are even freeware desktop alternatives to Microsoft Project, such as Open Workbench.

c. “Heavyweight,” integrated legal software solutions are arriving, such as Thomson Reuters Engage, developed in partnership with Hildebrandt Baker Robbins, a Thomson Reuters sibling company. The system is in beta test stages at several name law firms. LexisNexis’ Redwood AnalyticsTM also has software tools and processes available, as does Data Fusion Technologies' IntelliStat (for Elite accounting system users). We haven’t details, yet, on their pricing or capabilities, but since they are established legal vendors it is likely that their products and services are both comprehensive and expensive. Both offer training and consulting and, one can assume, do integrate with the major law firm accounting systems for data extraction. Also, the major legal accounting software vendors, such as Aderant, incorporate analytic tools and are planning more systems in matter management/AFA solutions in the months ahead.

d. Comprehensive Continuous Improvement/Process Improvement reengineering, such as Six Sigma, Lean and Deming-type continuous improvement/process improvement undertakings, aim at eliminating errors and extraneous steps in all legal processes, much like Toyota, Motorola and DuPont continuously improve their manufacturing processes to eliminate waste and errors, and to speed up production without sacrificing quality. Several law firms have undertaken such initiatives, such as Seyfarth Shaw and Eversheds, for example, at considerable expense and commitment.

4. While all of the above classes of software or process solutions may be expensive, they appear to ignore two important options that require little or no technology investment:

a. Go for the “low-hanging fruit,” by developing simple just in time, just enough process changes and by shifting attention of lawyers to the discipline of matter management efficiency improvement.  This often includes economical workshops or training to self-examine law firm operations and processes so that firms may formally or informally develop process and behavioral client service changes in order to better manage projects in the “new normal” of AFAs.  (Full disclosure: our firm offers such educational, interactive or consulting services.)

b. Fully exploit existing law firm accounting systems.  It’s been eye-opening to see the many features and benefits of the three major law firm accounting systems (Aderant (formerly CMSOpen) ExpertTM or Practice Manager, Thomson Reuters’ Elite 3E or ProLaw, and LexisNexis’ Juris or PCLaw).  These systems are just as prevalent in law firms as Microsoft Outlook, Office applications, and Exchange and SharePoint.  In fact, if your firm has one of these accounting/financial management systems, you likely can already do almost everything you need to do to better manage legal matters and projects.  If your system is an older version, you can either upgrade or update (which could be a significant cost, in some cases) or purchase modest add-ons to provide the scoping, budgeting, calendaring, tracking and reporting you’ll need.  Thus, you won’t have to “double-clutch” to integrate a new PM solution with your firm’s existing accounting package, where most of the salient time and billing data reside, anyway. 

With few exceptions, these systems provide cost estimating aids, budget loading on a matter basis, task assignments and responsible parties, periodic or ad hoc reporting on time/dollars worked/billed/remaining (and collected), as well as the ability to calendar and track matter sub-tasks and generate budgetary or deadline alerts.  Yes, they may not have the sophisticated critical path and dependency analysis capabilities that a fully configured PM package may have, but they can output data and reports in formats usable in Excel tables or PowerPoint outlines.  In most cases, though, once the overall scope, detailed tasks, timeline and responsibilities are delineated, an experienced partner can quite easily see which tasks depend upon the completion of prior tasks (sequential) and which do not (parallel).  Let’s also not forget Outlook’s underused but powerful calendaring, meeting scheduling, and individual or shared task/”to-do” list tracking capabilities, available even in the oldest versions of Outlook.

For those wishing comprehensive solutions akin to the integrated heavyweight systems above, the major legal accounting systems vendors either are already there or are well on their way.  Ask yourselves: do we want to be project management specialists exporting law firm accounting data into separate PM packages for analysis (with all the significant infrastructure reconfiguration required)?  Or do we want to do a better job of using what we already have, systems that are fully integrated and usually closer to “real time”?  The latter could cost far less, and has the added benefit that we know lawyers and administrators will use it, since they already do.  That will minimize the disruption or resistance met in rolling out whole new applications to busy timekeepers.

My thanks to the law firm accounting software systems representatives who explained the capabilities of their existing and future product offerings and reviewed our text for accuracy: Don Howren at Aderant; Amy Kosey at LexisNexisJuris; and Sabrina Wainio at ThomsonReutersElite.