Legal Business Development and Project Management

Building partnerships for alternative fees

When I conducted the LegalBizDev Survey of Alternative Fees, senior decision makers from AmLaw 100 firms reported that alternative fees work best in an atmosphere of trust.  However, as noted in an earlier post, they also reported that trust is hard to come by.  This week’s post summarizes survey interviews that focused on the need for partnerships between firms and their clients.  The quotations are from chairmen, senior partners and C-level executives at 37 of the largest law firms in the US.

The need to agree on cost reductions sometimes makes it difficult to find common ground:

"One client recently told me that any arrangement that would entail us ever recovering more than 100 cents on our standard time would never fly. Ultimately, that is not the type of environment that’s conducive for their managing their legal budget most efficiently."

"One of the problems with this whole [alternative fee] notion is [that] it [might] just be a price mechanism. If the results aren’t what general counsel anticipate from the standpoint of getting the legal services they want, they are going to rethink it. If a firm is really hurting, and is in need of volume, the firm could just offer the lowest cost possible. The client could tell us your legal budget is x, and we’ll do it for y. Now, what happens if [the firm] can’t [deliver quality for that price]?  One of the questions that general counsel are going to have to evaluate is, is it going to be truly just, 'Give me a low number?' Is it going to be, 'I really want something from a partnership viewpoint with you, to know that you’re giving me the talent and the opportunity to be of service, but you’re also giving me an economic advantage, because I’m going to work with you?' Those are the discussions you have to have."

Several participants emphasized the need for good faith negotiations:

"When we have done this successfully it’s been a collaborative effort with the clients. We’ve sat down and figured out what works for them and what works for us and we’ve worked out a process to manage it on both ends."

"It’s got to be a joint effort with the client to come up with these new arrangements. Everyone has got to give a little bit. It can’t be one-sided."

"In my experience, alternative fees can work really well if you have sophisticated clients who act in good faith.  If you don’t have that, all of the king’s horses and all the king’s men might not be enough."

These types of good faith negotiations are most likely to succeed as part of a solid, long-term relationship:

"These kinds of fee approaches have consistently worked well where there is a strong relationship with the client. It always takes trust, and that is why we are so committed to being a relationship firm.  We have had many instances in which we already knew the [client], and that is the best setting for doing alternative fee arrangements."

"You want the same continuity, because the value that we can give on the fifth case of its kind is [higher, since] you’re using very little of my time. You’re using a lot of lower billing associate time. And that’s better for both. At that point, we should be flipping to a flat rate, which also has risk in it, but by the fifth time, I know what this insurance case is going to cost."

"[We need] to see alternative billing not in the context of a fly-by-night, of a one-off, or of a taking advantage, but as a real means of partnering with a law firm. 'Gee, you have the better expertise in this one. Why don’t you take the risk on this one?' And I know that if we take a bath on it, that client is going to be around – not to pay us back, we’re big boys – but at least to acknowledge that we’ve taken a bath."

"To really make these things work, you need an underlying partnership.  If somebody drives a truck through a loophole, it’s a short-term victory.  We look at these arrangements like marriages."

Partnerships can be expected to develop more completely within the context of the convergence movement, which attempts to reduce the number of outside law firms that clients deal with by providing more work to a smaller group of firms:

"I would advise many clients to deal with fewer law firms [and] make a similar investment in a long term relationship that you’re hoping to get your law firms to make in you. There is unbelievable efficiency that can be gained through open communication and by making that mutual investment, [and] there is a lot of value that can be created through volume.  Not to say that somebody should necessarily sole source all their work, but it enables the law firm to have predicted revenue [and] to train people that have client-specific knowledge. It can work dramatically more efficiently than otherwise. Too often, a lot of that efficiency value is left on the table, because clients and/or law firms took too adversarial a position with the other."

Legal Project Management (Part 17): Warning signs

This post was written by LegalBizDev Principal Steve Barrett.

In an hourly billing environment, few incentives exist to be alert for warning signs of threats to matter schedules or costs.  More than a generation of lawyers has practiced without the pressures of creating and tracking budgets.  With the recent client pressures on value, outright costs and timeliness, this is changing.

Even lawyers who are good matter planners and budget estimators rarely watch for early warning signs.  But business analysts see such signs as critical, and sometimes use the phrase “canary in a coal mine,” as explained at one popular website:

Early coal mines did not feature ventilation systems, so miners would routinely bring a caged canary into new coal seams. Canaries are especially sensitive to methane and carbon monoxide, which made them ideal for detecting any dangerous gas build-ups. As long as the canary in a coal mine kept singing, the miners knew their air supply was safe. A dead canary in a coal mine signaled an immediate evacuation… Many business and political analysts use the term “canary in a coal mine” to describe a harbinger of the future. A melting glacier in Alaska, for example, may be described as a canary in a coal mine for global warming. One small event in an isolated area may not seem especially noteworthy, but it may offer the first tangible warning of a larger problem developing.

Just as miners needed to look for signs of silent, odorless, and lethal gases, lawyers in the “new normal” must be especially alert to precursors of trouble that can upset the best plans and budgets, including:

o Missed internal deadlines
o Over-researched tasks or issues
o Hours spent well in excess of pre-set quotas, without warnings
o Miscommunication
o Delays in people being released from prior or competing assignments
o Increased numbers – whether number of deponents, witnesses, experts, parties to receive copies, regulatory questions/clarifications, etc.
o Typos
o Missing time entries
o Last-minute personnel substitutions
o Unexplained absences
o Long silences
o Work delivered that doesn’t reflect the project or matter goals

Many of these symptoms can be addressed or rectified in real time.  Improved communications are vital.  Too many problems are detected after it’s too late to cure or correct them.  Solutions include:

o Improved time/dollar data updates, at least for the lawyer managing each matter, and maybe for the whole team – for example, “pre-bills” that are daily or weekly, not just monthly
o Daily time entry integrity.  Without it, projects can stumble and write-offs can result
o Group communications discipline
o To Do list tracking/status tools
o Schedule monitoring
o Better internal communications
o More efficient brief meetings
o Better client communications, starting with small communications, rendered steadily

Ultimately, these vital skills must become automatic.  One way to start is with project management training.

Law360 article about the LegalBizDev certification program

This article was originally published on Law360 and is reproduced with permission.

Program Aims to Turn Attorneys into Project Managers

By Leigh Kamping-Carder

Law360, New York (November 08, 2010) – A new program billed as the first to certify lawyers as project managers highlights the need for attorneys to become experts at managing their firm's legal services or risk losing profits in an era of alternative fees, experts say.

The program, developed by LegalBizDev founder Jim Hassett, is designed to help lawyers communicate more effectively with clients, improve processes, reduce write-offs and protect profitability. The first group of participants, who must each have at least 10 years of law experience, will start classes Dec. 1.

Participants get between one and six months to complete the 40-hour program, which is broken down into two modules: one to review project management principles critical to the legal world and another to apply the principles to a matter from each lawyer's practice.

With the billable hour no longer king, project management skills are increasingly becoming a must-have for attorneys, experts said.

“Any skills that lawyers develop in the areas of project management can do nothing but help their practice and what they provide to their clients,” said Patrick Lamb, founding partner of Valorem Law Group, a nine-partner firm that operates entirely on alternative fee arrangements. Eventually all lawyers will have to learn these skills, he added.

The need for project management expertise springs from two interrelated developments: the economic crisis and the rise of alternative fee arrangements, both of which have prompted clients to demand greater productivity and cost predictability from outside counsel.

As firms experiment with fixed fees, blended rates and performance-based rewards, effective project management will ensure they maximize profit margins, experts said.

“Once they say, 'OK, I'm going to do this for $500,000,' the next day it is in their self-interest to make sure they meet the clients' needs and keep them satisfied for less than $500,000,” Hassett said.

In the business world, project management is nothing new, and LegalBizDev has an army of competitors, including fellow consulting firms and the field's marquee name, Project Management Institute Inc.

Seyfarth Shaw LLP opened a project management office five years ago and now has five project managers who are PMI-certified, according to Carla Goldstein, the firm's chief strategic innovations officer.

For Seyfarth attorneys, taking the LegalBizDev program wouldn't make much sense, since the firm does its own internal training, she said. But for firms without a formal approach, a project management program pared down for lawyers “can only be a good thing,” Goldstein said.

Hassett said his key selling point is to tailor the tested principles of project management to lawyers. Although setting budgets and timelines, assigning tasks, breaking down projects into small chunks, and other aspects of project management cross professional lines, law firm matters pose some unique challenges.

A host of elements – the maneuvering of opposing counsel, court calendars, client schedules and regulatory developments – are out of an attorney's control. And putting together the “products” of a law firm relies heavily on judgment.

Compare manufacturing a consumer product to writing a brief – “the idea of defining 'done,' what is complete, what is the end, is much different, and as a result the steps are much different,” Lamb said.

According to Hassett, when it comes to legal project management, law firms and their clients are looking for standards for evaluating competence in legal project management. That concept was reinforced at an event in September, when two senior partners from an international firm approached him and asked him to design a certification program for them.

The motivation was twofold: on the one hand, firms have a genuine desire to gain a deeper level of competence in project management, Hassett said. On the other hand, firms also want to prove to clients that they have the competence, he said.

“A lot of RFPs are coming out that say, 'Please tell us what you're doing about project management,'” Hassett said, “and it's very hard to come up with a good answer for that for a lot of firms.”

Certification can serve both those purposes, according to Hassett.

Even so, a client's confidence in an attorney's abilities will come from talking with him or her, Lamb said, describing the certification aspect of the program as “kind of bells and whistles,” a way to say you've done the program but not necessarily that you're any good at project management.

“It's not like you're going to go put some additional initials at the end of your name,” Lamb said.

Although certification couldn't hurt an attorney, Goldstein said, law firms should be careful about obtaining it solely for marketing purposes, without attempting to incorporate the skills into a larger approach for delivering legal services.

“For us, we don't just see this as marketing, we see this as actually doing it,” she said. “Certification isn't the end-all-and-be-all because if you're not really incorporating it into your practice, it doesn't really give you a lot.”

Hassett acknowledged that the value of the certification rests on the confidence people have in his company. But he is convinced that LegalBizDev is serving a need and that when participants master the lessons and apply them, they will see a difference at their firms. Promotional literature cautions that not everyone will pass the program.

For now, the program's success will depend on how lawyers who take the classes react, and whether they see an improvement at their firms. A verdict is still at least six months away.

Questions and answers about Certified Legal Project Managers™ (Part 1)

The day after we published our press release announcing the first certification program for legal project managers, I got an email from Paul Easton, author of the influential blog Legal Project Management, with a long list of interesting and insightful questions about our program.  Indeed, the list was so long and so insightful that it is going to take me several posts to answer all the questions Paul sent.

Some must wait until December, when the program is officially launched.  But this week I want to immediately answer a few of the most critical questions.

Paul’s question: What does this certification represent? How will program participants, their employers, and their clients benefit from this certificate?

The Certified Legal Project Manager™ program is designed to help lawyers apply proven best practices from other law firms and other professions to: 

• Reduce or eliminate surprises
• Reduce write-offs
• Protect profitability
• Improve process control
• Improve communication with clients
• Deliver greater value to clients
• Focus on clients’ true needs
• Increase new business

The program aims to set standards for legal project management and to give clients confidence in their lawyers’ fundamental knowledge of this new field, and in their ability to apply the concepts to the practice of law.

To earn certification, each lawyer must pass tests on core concepts and terminology, and also demonstrate the ability to apply the ideas to real-world legal matters.  The certification process also includes practice using a reference library supplied with the program to look up just the information they need, exactly when they need it.

This month, the LegalBizDev Certification Advisory Board is reviewing the details of our approach to assure that it meets these goals.  The Board currently includes six lawyers and four project managers from ten firms with a total of over 6,000 lawyers. 

Board member Howard Kaufman of Fasken Martineau explained why lawyers could find a program like this useful:

As a lawyer my primary reason for wanting this type of program is to learn how to use project management in the practice of law. What I will learn about project management is only of interest to me if I can do something with it in my practice. To be able to "broadcast" a third party’s evaluation of my project management skill in the practice of law is great for marketing/business development purposes, but that is a secondary reason for taking the program.

In the program summary that I sent to Board members, I wrote that “Legal project management certification is not necessary, or even desirable, for every lawyer.”  We offer several programs that require less time, including training workshops to increase knowledge, and coaching programs to practice on the job skills. (Note: If you look for details of our training and coaching programs on the web you won’t find them, because we don’t want to reveal the details of our proprietary approach to competitors.  However, if you work for a law firm or in-house law department we would be happy to send them to you if you email info@legalbizdev.com.)  

In our opinion, our training and coaching programs are more than enough to meet the needs of most lawyers.  Certification is designed for those who want to go a step further, and guarantee a solid foundation in both knowledge and skills.

However, the term certification also comes with a lot of baggage which does not apply to our program.  And that leads to a more technical question on the list.

Paul’s question: If lawyers want to be project managers, why not obtain a PMP or CAPM? Doesn’t JD+PMP=LPM?

While every project manager in the world knows what a PMP is, it is a rare lawyer who knows that PMP stands for Project Management Professional.  This is the best known of five certifications offered  by the Project Management Institute (PMI), which is described on its web page as “The world’s leading not-for-profit membership association for the project management profession, with more than half a million members and credential holders in 185 countries”

PMP is widely considered the gold standard certification for project managers.  According to Wikipedia, 393,413 people held this certificate as of last July.  By contrast, the CAPM – Certified Associate in Project Management – is an entry level program, with, according to one recent count fewer than 10,000 certificate holders. Both deal with the same basic approach and content (summarized in PMI’s Project Management Book of Knowledge, which is one of the books we include in our program’s reference library), so I will focus this discussion on the PMP.

Requirements for the PMP include 4,500 hours of project management experience, 35 contact hours of project management education, and passing a 200-item test which can take many additional hours to study for.  How many lawyers do you know who have time for that, especially if much of the content is clearly not relevant to their practice?

The sixth edition of the PMP Exam Prep guide by Rita Mulcahy includes a list of key concepts you should have mastered in your 4,500 hours of experience before you start studying for the exam, including Monte Carlo analysis, schedule compression, managing float, and how to manually create a network diagram (p. 3).  Perhaps even more off-putting from a lawyers’ point of view is Mulcahy’s observation that “The exam tests from the perspective of…a large project that involves 200 people from many countries, takes at least a year, has never been done before in the organization, and has a budget of US $100 million dollars or more” (p. 17).  Hardly the profile of a typical legal matter.

Somewhere in the world, there are lawyers who can benefit from a PMP.  But we believe that there is a much larger number who, like Mr. Kaufman, are looking for something that can help them manage legal projects quickly and efficiently, without spending time on concepts that are clearly not relevant. 

Paul’s question: Will the program provide participants with MCLE credits? 

We are currently exploring the possibility providing MCLE credits.  But given the fact that so much about legal project management is new, and that the process for getting MCLE credits approved in many jurisdictions is time consuming, it may take time to provide a definitive answer.

Paul’s question: Where can those interested go for more information and application materials? 

We will post information and applications on our web page after the program is officially underway in December.  If you’d like to consider joining the first group that begins the certification process on December 1, email info@legalbizdev.com for more information. 

 

The first program to certify legal project managers

About 36 hours ago, we announced the first formal certification program for legal project managers in a press release on Business Wire.  Our announcement has already generated some buzz.  It was picked up by Forbes.com and discussed by Paul Easton in the Legal Project Management blog.  I was also interviewed yesterday by Leigh Kamping-Carder from Law 360.  Her article may appear as early as tomorrow.

Of course, the world already has a number of widely respected project management certification programs, notably the five credentials offered by the Project Management Institute.  What’s new is that our certification program is the first to be specifically designed to meet the unique needs of busy lawyers.  While the general concepts of project management are similar in every profession, legal action items must be adapted to fit the nature of legal services and relationships, including opposing counsel whose “scorched earth” tactics may purposely create roadblocks to efficiency, regulatory developments, and court calendars and client schedules that are outside lawyers’ control. 

Certification has become standard in many fields, because it offers benefits to both buyers and sellers.  Buyers can be assured that the firms they are working with have familiarity and experience with best practices.  Sellers can develop that experience more quickly and efficiently, and at the same time demonstrate it in an easy and credible manner. 

The problem of certifying legal project management competence has been in the back of my mind for a while now, in part because my company has been creating training and certification programs for more than 25 years, long before we started working with lawyers.  If you have ever flown on an airplane, you’ve dealt indirectly with one of the systems we trained and certified.  About a decade ago, when the FAA introduced a new computer interface that enabled air traffic controllers to track and monitor the position of every US flight in real time (the Traffic Situation Display), they hired our company (then named Brattle Systems) to train and certify each air traffic controller before they were permitted to use this critical tool.  More recently, we developed a certification program for internal business development coaches at a 1,500-lawyer firm.

The problem of legal project management certification came to the front of my mind a few months ago when I gave a speech at the retreat of an 800-lawyer firm.  When I spoke with several senior partners afterward, I was surprised by their level of interest in becoming certified.  So I decided to devote some time and resources to designing a program to meet their needs. 

The program we designed requires a minimum commitment of 40 hours and is built around two self-paced modules that can be completed in one to six months.  The first is a customized review of the project management principles that are most critical in the legal environment.  The second applies these principles to a case study from each lawyer’s practice.

This month, the program is being fine-tuned by the LegalBizDev Certification Advisory Board, a group of lawyers and project managers from large firms. On December 1, we will begin training a small number of lawyers in our first certification group. 

This program is not for everyone.  Some consultants argue that every lawyer and staff member needs project management training.  I disagree.  Think about the phrase: project management.  Training in how to manage must start at the top.  At least for now, law firms need to get some traction, have some success with project management, and build momentum among senior partners.  For most lawyers, we believe that the best way to achieve that is not by being certified, but rather through our just in time, just enough training and coaching.

Nevertheless, in every firm there are a small number of lawyers who do need a solid foundation in project management principles to help them lead large teams and/or influence other partners.  Those are our people, the ideal candidates for our certification program. 

We will be explaining all the details of the program on our web page after its formal launch on December 1.  If you can’t wait that long, or you may be interested in joining that first group, contact Elisabeth Westner at ewestner@legalbizdev.com or 800-49-TRAIN.