« July 2011 | Main | September 2011 »

5 posts from August 2011

August 31, 2011

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

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

MPCoverFirms that are looking for more affordable solutions sometimes start by focusing on the role of non-lawyer project managers. Many law firms already have project managers in-house in IT and other departments, and their roles are expanding to include planning legal work.  Others are hiring new project managers specifically for that purpose.  We predict that some of these experiments will succeed and others will fail, depending on the culture of each firm and how well each project manager can learn to function within complex power structures.  Some law firms will waste a lot of money on having project managers devise plans that influential partners will ignore. 

Many of the non-lawyer project managers who now work for law firms have been certified by the Project Management Institute.  A more recent trend involves going around law firm politics by certifying the lawyers themselves on legal project management.  Last December, my company introduced the first knowledge-based certification program in legal project management. Lawyers work with a coach for up to six months, studying leading textbooks and discussing how to best apply the principles to their own practice.  Hildebrandt offers a certificate of attendance to lawyers who participate in a two-day workshop.  Other certification programs of both types are sure to follow, designed to create a core group of lawyers who become experts in managing projects.

A few firms are training all of their lawyers in project management principles.  This approach got a big boost in April 2010 when Dechert announced that it had just completed training all its partners.

Professionals in the training business often talk about the importance of distinguishing between two types of goals: education and behavior change.  Of course, almost every training program aims at both.  But clients get the greatest return on their training investment when they think carefully about the tradeoffs between the two and about which is more important to their firm.

Educating is relatively easy, but changing behavior is very hard.  It is also the central problem in legal project management.  The Association of Corporate Counsel and the ABA recently conducted a meeting “at which leaders of corporate and law firm litigation departments rolled up their sleeves and tackled the complex issues surrounding present day concepts of value in litigation.”  In an ACC Docket article summarizing the event, the authors noted that progress will not be based on improved understanding or increased knowledge.  Instead, “The challenge is change/behavior management.”    It’s not a question of knowing what to do, it’s a question of getting lawyers to do it.

One approach to changing behavior for a low cost includes “just-in-time training,” an approach that enables lawyers to save time by finding exactly the information they need, just when they need it, and then following up with them to insure it is applied to their work with immediate and practical effect.  Camden R. Webb, a partner at Williams Mullen who participated in one such program conducted by my company, described the action-oriented philosophy this way:

Don’t hold a series of committee meetings for a year and then do a top-down analysis.  Just do something.  This will spread project management, because when lawyers succeed, others in the firm will imitate their success.

Which of these many approaches is best?  There is no one right answer. The best solution for a given firm or practice group will depend on its culture and needs.  Large firms may find that they need several different types of solutions for different practice groups or offices.  Some may be paralyzed by the risk of doing the wrong thing.  But there is so much room for improvement that many different approaches will have positive effects.  And the greater risk is to do nothing, while competitors take away your clients. 

This uncertainty makes it easy for some partners to be skeptical about the value of legal project management.  They believe, and indeed hope, that project management is just another fad that will fade away over time.  But when Altman Weil surveyed managing partners and chairpersons in its 2010 Law Firms in Transition Survey, 77% said that the emphasis on increasing efficiency through legal project management is a permanent change in the way lawyers must do business.  (Note:  After this article want to press, the 2011 Law Firm in Transitions Survey came out and reported that 94% now believe there is a permanent change to “Focus on improved practice efficiency.”)

As the CFO of a 1,000-lawyer firm in our LegalBizDev Alternative Fees Survey explained:

A large number of lawyers do not know how to manage.  [In the past], the more hours that got charged, the more money [they] made, and so they’ve never really had to manage…If we teach our people to manage, we can make more money.



August 24, 2011

An introduction to legal project management (Part 2 of 3)

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

MPCoverProblems like the ones described last week could be reduced or eliminated by focusing on the eight key issues in legal project management described in my book, The Legal Project Management Quick Reference Guide:

  1. Set objectives and define scope – In order to complete a legal matter efficiently, you must know exactly what is included, and what is not. 
  2. Identify and schedule activities – After scope is clearly defined, the next step  is to break down a complex matter into smaller tasks and to schedule them.
  3. Assign tasks and manage the team – To maximize efficiency, the right people must be assigned to the right tasks, and performance must be monitored.
  4. Plan and manage the budget – Estimating and controlling costs are a challenge in every profession, and this is the most critical area for many lawyers.
  5. Assess risks to the budget and schedule – What can you do at the beginning of a matter to increase the chances that work will be completed on time, within budget?  
  6. Manage quality – Traditionally, lawyers have been very successful in delivering high quality legal work.  However, when schedules change and budgets get reduced, delivering quality requires more attention.  And lawyers must be careful to avoid delivering higher quality than the client wants or has budgeted for.
  7. Manage client communication and expectations – Along with budgets, communication is the area that matters most to clients, and it is an area where many lawyers have room to improve. 
  8. Negotiate change orders – No matter how well lawyers manage legal matters, sometimes things change.  The issue here is deciding exactly when and how to negotiate with clients.

It all starts with clearly defining the scope of the work at the outset – what is included in the budget and what is not.  Planning and managing the budget is important as the project proceeds, as is negotiating a change of scope when issues first become apparent, rather than waiting until the end of a matter and just sending a bill.

However, legal project management requires fundamental changes in the ways lawyers do business.  Change is difficult for anyone, and it is especially challenging for lawyers who have developed strong habits over several decades.  As Richard Susskind noted in his widely quoted book The End of Lawyers?, “It is not easy to convince a group of millionaires...that their business model is wrong.” [1]  But the environment is changing and lawyers must adapt.

Firms are now experimenting with a variety of techniques to introduce project management.  The key word in that sentence is “experimenting.”  Lawyers would prefer to act based on solid precedents, models that have been proven their worth over decades.  But legal project management is a brand new field, and those who wait decades to apply it do so at their own risk.

When lawyers begin considering what to do, they often start the discussion with the approaches that have been most widely publicized, such as Seyfarth Shaw’s use of Six Sigma and Lean.  According to Seyfarth’s web page: “With more than 100 projects executed [we have] applied SeyfarthLean in every practice throughout the firm to deliver quality and efficiency that also delivered client cost savings ranging from 15–50%.”  

While the results have been impressive, Lean is not the best place for most firms to start because it is such an expensive way to go.  According to an April 2010 American Lawyer article, “Seyfarth has spent over $3 million to date administering and training workers...and budgets $200,000 – $500,000 annually for such costs.” [2]  Similarly, Eversheds has been widely recognized for the success it has achieved through massive project management training programs and software systems.  But they have spent even more: over £10 million, according to Eversheds’ web page.

This series will conclude next week.

[1] Susskind, Richard, The End of Lawyers?, (Oxford University Press, 2009), 280.

[2] Levine, D.M., “Leap of Faith.” American Lawyer, 1 April 2010

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.

August 10, 2011

Book review: Winning legal business from medium-sized companies

Silvia Hodges’ Winning Legal Business from Medium-Sized Companies  is based on her Ph.D thesis at Nottingham Law School.  Most legal marketing books are based on anecdotes and experience.  This one is based on the type of systematic research evidence that lawyers love.  (I do too.)   

Hodges’ central finding was that medium-sized companies care most about predicting and controlling legal costs.  While law firms often like to sell the value of customized solutions, these clients aren’t buying it.  They are quite content with standardized and packaged solutions, and are willing to sacrifice some sophistication as long as it saves them time and money. 

The key reason medium-sized companies are different from their larger competitors is that their decision makers are different.  In Fortune 500 firms, the buyer of legal services worries about justifying and defending her decisions to her manager or her board.  This leads to a conservative mentality that favors hiring law firms based on reputation, so that the decision maker will not be blamed if anything goes wrong.  As they say in the computer business, “No one ever got fired for hiring IBM.”  

In contrast, in medium-sized companies the legal decision maker is likely to be the CEO or an entrepreneur who reports only to himself.  They don’t care about buying the safe brand.  They care about solving a problem for the lowest possible cost.

When clients in Hodges’ study talked about their ideal lawyer, they used words like flexible, fast, efficient, effective, results-oriented, honest, and sincere; “in brief, having the same qualities they pride themselves on” (p. 72).

Hodges’ interviews led to some specific advice for lawyers who are marketing to medium-sized clients, including:

  • Be pragmatic, flexible and down-to-earth, so you will be perceived as speaking the client’s language.
  • Try to get satisfied clients to recommend you to new prospects.  Word-of-mouth is especially powerful in this group.
  • Avoid legalese.  Newsletters should be written in a “pragmatic, journalistic style” (p. 71), and summaries of legal analysis should be in plain English.
  • Repay loyalty by offering discounts.  “Law firms charging for every detail are strongly disliked” (p. 71).
  • Be prepared to offer alternative arrangements such as fixed fees and caps in order to meet client demands for predictability and cost consciousness.
  • When clients need a recommendation of a lawyer in another jurisdiction or country, be very careful to recommend only lawyers you are sure of.  Decisions may be made quickly based on your word-of-mouth recommendation, and if there is a problem later, you will be held accountable.

I trust these findings more than what I read in most marketing books, because they were based on systematic research. It brought me back to my academic days on dissertation committees. 

Hodges focused on “medium-sized” companies (those companies with fewer than 250 employees and annual revenues below $70 million) because they represent the “economic ‘bread and butter’, for many law firms”  (p. v).  

Her conclusions were based on interviews with 34 buyers and providers of legal services in the European Union.  She used “snowball sampling”, in which each participant named others to talk to.  The questions focused on how medium-sized companies buy legal services, and whether marketing approaches should differ from those used with larger clients.

I must admit, some of the conclusions made me wonder about the limits of an academic research approach in a profession that is changing rapidly.  It can take years to conduct research with academic rigor, and report the results.  But what happens to your conclusions if the world changes while you are writing your thesis?

But when I change hats and evaluate this from my current perspective as a legal marketer, I have absolutely no doubt that the trends that Hodges studied in European firms a few years ago apply to many US firms today. 

In my judgment, Hodges’ advice against traditional marketing approaches – including the view that many events, sponsorships and advertising campaigns waste money – applies not just with medium-sized clients but also to many large clients.

True, there is still a market for “bet the company” matters, where clients are not very concerned with price.  But that market is shrinking, and the market for efficiency is going up.  When the Wall Street Journal starts publishing articles about how companies like Toyota, Sun Microsystems, GlaxoSmithKline, and eBay are using reverse auctions  to drive down legal prices, you know that efficiency matters.

So if I managed a law firm, I wouldn’t care whether my target clients were medium, large, or small.  I’d build my marketing around providing more value.


August 03, 2011

Legal project management tip of the month: Be sure you fully understand client needs

Near the beginning of each engagement, make sure you understand what your client wants and needs. What would the client consider to be a successful outcome? What are their priorities, both overall and for this particular matter?  Exactly what problem are they trying to solve?

The first Wednesday of every month is devoted to a very short and simple tip like this to help lawyers increase efficiency and provide greater value to their clients.