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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


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