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6 posts from September 2010

September 29, 2010

Legal project management (Part 15): The power of sharing

This post was written by Steve Barrett and Jim Hassett.

Any lawyer who has ever had a mentor knows how valuable it is to have access to information about what has worked in the past, and what hasn’t.

But lawyers are busy, and sharing is not their long suit.  Knowledge is often passed on haphazardly, or not at all. 

Many firms are approaching this problem by instituting formal knowledge management programs.  Wikipedia’s definition of the term suggests just how broad this movement has been: “Knowledge Management comprises a range of strategies and practices used in an organization to identify, create, represent, distribute, and enable adoption of insights and experiences.” 

In June 2010, the Knowledge Management peer group of the International Legal Technology Association (ILTA) published the results of their second survey of trends in legal knowledge management.  141 professionals responded to the survey which “was provided to the members of ILTA’s Knowledge Management Peer Group, various local KM groups, and was also sent out through social networking channels by several KM bloggers and tweeters.”

They were asked to name up to three primary areas of focus for their firm’s knowledge management initiatives in 2010.  The top ten answers included two that are particularly relevant to this blog: 20% said “Supporting fixed fees and other AFAs” and 23% said “Supporting matter management (e.g., checklists, project planning, status tracking and reporting).”  Several of our clients have programs of this sort, such as Squire Sanders’ Project Management Global Toolkit which is designed to increase efficiency by providing their lawyers with “one stop shopping” for engagement letters, forms, and more.

Whether firms have formal knowledge management programs in place or not, we’ve found that when it comes to project management, sharing successful tactics is very productive.  While many lawyers have never used the term “project management” nor read a book about it, they have in fact been acting as project managers since the first time they calculated a budget or assigned work to an associate. 

Many have developed forms, spreadsheets and a variety of “home brewed” tools and techniques to assist them in getting their own, their team or their practice group’s work done better.  Some take these tools/techniques for granted, or assume that everyone else in the firm does the same. They may not realize that what’s automatic to them may be totally foreign to others.

For example, we know of one partner whose secretary routinely gets from accounting a week-end “pre-bill” for all his active matters, and he reviews them on the train-ride home each Friday evening.  This way, he’s better prepared to address surprises on Monday morning – or even to text queries to team members over the weekend – and to keep his matters on track.

Sharing even the simplest “Rube Goldberg”-like tools and techniques may be just what another partner needs to gain a better grasp of his/her pending workload.  This most basic level of legal project management costs far less than investing in project management software, hiring certified project managers, or training lawyers on a formal process improvement system.  It simply requires firms to collect information about best practices, and share them.  If a best practice works for one lawyer, it may work well for others.  And most or all of these ideas have already been integrated with the software lawyers already have and know how to use, whether it is the firm’s existing time/billing software or the e-mail, calendaring and task tracking capabilities of long-time firm-wide programs such as Outlook and Lotus Notes.

When we begin working with firms on project management, one of the first things we usually do is to simply collect existing tools and templates, including certain types of engagement letters, budget spreadsheets, time/billing reports, and checklists. We then share these informal project management tools with seminar attendees and include the tools in a customized version of our Legal Project Management Quick Reference Guide, for two reasons.  First, lawyers become more receptive to learning about project management best practices when they understand that this is not a new fad, but rather a refinement of tactics partners have been using for years.  Second, when lawyers have easy access to these documents, they can often adapt them quickly to their own practice. 

Thus we begin a steady stream of small improvements and client communications, which in many cases can create far more value than a costly “big bang” initiative.

September 22, 2010

Value questions to ask your top clients (Part 2 of 2)

This post concludes our list of questions to ask top clients.  As noted last week, the idea is to pick just a few that fit your situation, schedule a meeting to discuss them, and listen to them while they talk 80% of the time.  Whatever the client says, do not argue or get defensive.  Just listen.

More questions about client satisfaction

  • In the past, what are some of the things that you’ve liked most about working with law firms, both our firm and others?
  • What have you liked least about working with law firms?
  • When you select outside counsel, what factors are most important to you?
  • When you rate lawyers’ performance, what factors are most important to you?
  • How do you decide when to do work in-house, and when to use outside counsel?
  • What future trends in your business or industry will affect the need for legal services?
  • What are your biggest legal concerns?
  • How would you describe your overall impression of our firm?
  • What mistakes can be made when lawyers don’t understand your business and/or industry?

Big picture business questions  

  • What are the biggest challenges that you face in your job?
  • What keeps you up at night?
  • Where do you see your industry going in the next few years?
  • What does your ideal customer look like?
  • What works best in finding new customers?
  • Who are your biggest customers?
  • What is it like to work for your company?
  • Who are the key people you work with?

Active listening questions

These simple prompts can help assure that you listen 80% of the time.

  • Tell me more about ____.
  • Would you elaborate on ____?
  • Give me an example of ____.
  • What else should I know about ____?
  • How does ____ fit the picture?
  • Talk to me about your experience with _____.
  • How do you handle _____?
  • What makes this urgent?
  • Why is this important right now?
  • What bothers you most?
  • How tough a position does this put you in?
  • How does this affect you?
  • Why is this important to you?
  • How does that sound?
  • Do I have it right?
  • If you were to go ahead with ____, when would you ____?
  • What else should I ask about?

For a more open ended discussion of current trends

If you would like to create more specific questions to fit your client’s precise interests, begin by reviewing Paul Lippe’s influential article “Welcome to the Future: Embracing the New Normal.” Then use your background knowledge of the client to create specific questions about one or more of the trends Lippe discusses: alternate staffing, predictable pricing, defined quality, client intimacy, technology, and process innovation.

September 15, 2010

Value questions to ask your top clients (Part 1 of 2)

When an AmLaw 100 senior partner recently asked us for advice on strengthening the relationship with a top client, we recommended asking questions about his client’s perception of value.  We sent this list.  His task was to pick a few key questions that fit this situation, schedule a meeting, and let his client talk 80% of the time while he listened carefully. 

Direct questions about value

  • How could we increase the value of the services we provide?
  • How satisfied are you with our services, on a scale from 1 to 10?
  • What could we do to increase our rating?
  • Have you heard of any interesting tactics other law firms are using to provide more value?

Questions about the ACC Value Challenge

  • Is your company involved in the ACC Value Challenge?
  • Do you think it is relevant to our relationship?

Background: The ACC Value Challenge is an initiative of the Association of Corporate Counsel, “The world’s largest community of in-house counsel, with more than 25,000 members in over 70 countries.”  Its goal is to promote “value-driven, high quality legal services that deliver solutions for a reasonable cost.”  The questions below were reproduced from ACC’s web page discussion of “How to talk with outside counsel (or clients).”

  • How can we reestablish trust and improve our relationship, on both sides?
  • How can we assure an adequate flow of work so that outside lawyers understand the client better and can be more efficient in what they do?
  • How can we get junior lawyers better trained, priced at more reasonable levels, practicing law more on the front line, and less likely to leave?
  • How can we better budget and manage costs and staffing?
  • How can we better institutionalize the relationship?
  • How can we evaluate progress and performance?
  • How can we create a culture of continuous improvement, on both sides?

Questions about client satisfaction

  • What do you like about working with our firm?
  • What could we do better?
  • What could we do to make your life easier?
  • Can you think of any ways we could help clients like you, or new services we could offer?
  • Could we better use technology to be of service to you?
  • What type of status reporting do you like? Weekly? Monthly? Email or phone?
  • Would you recommend our firm to others? Why or why not?
  • If you managed a firm like ours, what would you do differently?
  • How would you rate the quality of our legal product?
  • How well do we listen to your concerns?
  • How well do we understand your goals?
  • How well do we understand your industry?
  • Do we do a good job keeping you informed?
  • Do we explain legal issues in terms that are easy for decision makers to understand?
  • Do you perceive us as genuinely committed to your business success?
  • Do you perceive our lawyers as prompt, responsive, and accessible on short notice?
  • Are our billing statements accurate and complete?
  • Do our invoices include an appropriate level of detail?
  • Do you think our fees are fair and reasonable?

Note: Many of these questions address your service and could easily be reworded to ask how clients perceive other law firms they have worked with in the past.  That can be an excellent way to get insights into where competitors are vulnerable.

More questions will appear in Part 2, next week. 

September 08, 2010

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.

September 01, 2010

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). 

Checklistmanifestohires 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.