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August 17, 2011

An introduction to legal project management (Part 1 of 3)

This series of posts is a slightly extended version of an article that appeared in the July 2011 issue of Managing Partner magazine. To download a PDF of the published version of my article, click here.

In one sense, any lawyer who has ever planned a budget or managed an associate has acted as a project manager. But a new movement is underway to improve legal project management by applying formal methods that have been used for decades in engineering, construction, information technology and other businesses.

Mpcover The modern discipline of project management is such a rich and deep body of knowledge that universities offer advanced degrees in the field. Its origins can be traced back to the Nautilus nuclear submarine program after World War II and beyond, all the way back to civil engineers in ancient Rome constructing a 53,000-mile network of roads, many of which are still in use today.

In 1969, five professionals formed an organization called the Project Management Institute (PMI) to facilitate communication in this discipline. PMI now has more than half a million members in 185 countries, organized into dozens of chapters and “communities of practice.” It is interesting to note that the PMI sub-group which focuses on legal project management started less than a year ago. As a recent article in Canadian Lawyer put it, “Project management is so new to the legal profession that everyone is still trying to figure out what it can do and how to make it work.” [1]

Despite this uncertainty, many law firms are beginning to implement a variety of types of legal project management programs. When The American Lawyer published the results of its annual “Law Firm Leaders Survey” last December, 55% of AmLaw 200 firms reported that they offer project management training to partners, and 34% said they offer it to associates.

Why is LPM spreading so quickly? According a National Law Review article by Squire Sanders’ partners Stacy Ballin and Mitch Thompson:

The world has changed, and clients need more than ever from their law firms. They want their lawyers to partner with them to achieve their business goals and deliver value, not to merely send them a monthly bill showing how many hours have been spent. Like every other kind of business worldwide, law firms are becoming more cost-effective and efficient in providing their services.[2]

The growth of non-hourly alternative fee arrangements (AFAs) has also played a role. When a law firm agrees to handle a certain matter for a flat rate, 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 a senior partner at a 500-lawyer firm put it in an interview for The LegalBizDev Survey of Alternative Fees:

For alternative billing to be successful for both the client and law firm, the partners have to re-think their approach and try to decide the most efficient way to approach matters. For example, instead of sending an associate off to research 50 issues that could come up in a litigation case, you might focus strictly on the small number of issues that are likely to be most important.[3]

Project management skills can also help lawyers protect the profitability of hourly work in a number of ways, including reduced write-offs. There are many reasons write-offs occur, but poor communication is frequently the key. Consider this scenario from a senior partner at an 800-lawyer firm (and a participant in the LegalBizDev survey):

[The client asks] “What’s it going to cost?” and [the lawyer] says, “Oh, I can’t tell you, we don’t have enough facts. But normally a deal of this size would run $120K-$150K.” The client hears, “You’ve promised me $120K.” And then that’s it. That’s your fixed fee. And you don’t know that, of course, because you thought what you did was say, “This is what it costs on average.” And at the end the client would say, “Gee, this cost $200K, how is that possible?” And you think, “Well, you know, your CEO got fired in the middle of the deal. The deal dragged on for three years. It turned out you got sued. Yeah, it cost $200K.” [4]

This series continues next week.

[1] Kevin Marron, “Buzzword 2010: project management,” Canadian Lawyer, April 2010.

[2] Stacy D. Ballin and Mitchell S. Thompson, “Why We Decided to Become Certified Legal Project Managers,” National Law Review, 4 Feb. 2011.

[3]Jim Hassett, The LegalBizDev Survey of Alternative Fees, (Boston: 2009) 114.

[4] ibid, 30.


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