A slightly different version of this article, which I wrote with Jonathan Groner originally appeared in Of Counsel, the Legal Practice and Management Report. To download a pdf of the complete article, as it was published, click here.
Whether firms start from UTBMS or another system, they ultimately must decide on exactly how detailed the tracking needs to be.
At Baker Donelson, partner David Rueff is the firm’s legal project management officer. Rueff is one of a very small number of lawyers who has been certified as a Project Management Professional by the Project Management Institute. (Since PMI certification requires 35 hours of education, passing a demanding multiple choice exam, and 4,500 hours of experience leading and directing projects, we believe it is unlikely that a large number of lawyers will obtain this particular certification. LegalBizDev offers a different approach in the Certified Legal Project Manager® program which was designed specifically for lawyers.)
Rueff is responsible for the implementation BakerManage, a proprietary legal project management process which has been constructed in the Microsoft SharePoint environment to make it accessible to all attorneys across the firm. The system is currently being implemented in both litigation and transactional matters.
An important part of the BakerManage process involves budgeting, tracking time to budget, and identifying best practices. In developing BakerManage, Baker Donelson started with the UTBMS codes then developed many further breakdowns and refinements.
Level 1 within BakerManage comprises the UTBMS phase and task codes – such as L300 Discovery (a phase code) and L350 Discovery Motions (a task code). Then the system breaks the specific attorney assignment out much further into a unique firm phase and task code, such as HA11.830 Protective Order. That is considered Level 2. Finally, Level 3, which is also used as a to-do list in any project, breaks the time down further into drafting the protective order, analyzing the response to a protective order motion, preparing a reply, and so on. Time is not coded at Level 3, but attorneys are encouraged to start budgeting at this level in order to make the budget more accurate.
“Within the ABA codes, a lot of descriptions can fit within the broad concept of ‘Discovery Motions,’” Rueff says. “So we had to mine that data, post-engagement, to see precisely how the time was spent.”
“Attorneys are asked to track their time at Level 2. We know that Level 2 is easy for attorneys to understand and categorize, and not too detailed,” says Rueff. “We believe that a more accurate budget can be arrived at by using Level 3, however, and we try to prepare our budgets at Level 3. When we are estimating a fee for an alternative fee matter, we look back at historical data and try to develop a phased budget at Level 2 or better, at Level 3.”
This very granular system reflects one end of the continuum of how detailed the coding could get. At the other end of the continuum is DLA’s system. As Mike Barnes summarized this philosophy,“I don’t need it to be perfect. I just need a simple tool that captures a large percentage of the attorney time.” For pricing, DLA uses “a simple, straightforward budget tool, starting with certain assumptions based on past work and then changing certain variables.”
Using past costs to predict the future
Large law firms have data from thousands of legal matters and millions of attorney hours. When they first get serious about estimating future costs, it seems obvious that it would be useful to mine this data to determine what typical matters have cost in the past.
But, like many things, what sounds easy in theory can be very difficult in practice. As Foley’s Michael Tuteur summed up one example,“Clients want to know what a summary judgment costs. That sounds so reasonable. But when you try to go back into the data you have, you find that lots of data is very hard to interpret.”
If a firm has handled hundreds of mergers, how do you categorize the differences between them? More importantly, when the bills were sent, no one was thinking about documenting reproducible tasks. It can be extremely challenging to figure out exactly what was done and when.
For these reasons and others, Dotson says that at Bilzin Sumberg they decided,“An effort to go back wouldn’t be helpful. The time entered wasn’t described with task codes in mind, and we’d rather not expend the resources guessing. We’re starting to secure enough data on matters in progress so that we can provide better estimates in the future.”
A much bigger argument against investing a lot of time and money into data mining is the fact that the way legal work was performed in the past is different from the way it will be performed in the future. In today’s highly competitive marketplace, many firms are looking for new ways to increase efficiency and improve business processes.
As Lisa Damon, the partner who headed the development of Seyfarth Shaw’s widely publicized SeyfarthLean program once said,“If you get a group of lawyers and staff into a room to discuss how to make things more efficient, it’s very easy to find savings.”
When LegalBizDev offers legal project management coaching, we sometimes include an exercise in which lawyers select a significant past matter, and assume that the same client comes back to retain the firm for a nearly identical new matter, but only if they are willing to perform the work for a fixed price that is 10% or more less than last year’s cost. The question is,what could they do differently to deliver the same quality in fewer hours?
In our experience, this exercise is always an eye opener, and it is often not difficult. The answer to more predictable and lower costs usually starts with defining scope more clearly in the engagement letter, and goes on to include better definition of assignments, management of the team, monitoring the budget, and quickly communicating with the client when significant issues arise. In our exercise, simply doing those things can often lower cost estimates by 10%, 20% or more.
Clearly, some knowledge of the cost of past matters is absolutely necessary if you want to predict future costs. But it is easy for firms to waste a lot of time and money mining data about outdated inefficient ways of doing business, when they could get far better predictions by focusing on the task breakdowns and budgets that they should be planning for the future.
The benefits of tracking with task codes
When we interviewed experts for this article regarding the best way to use task codes, it quickly became clear that the details varied from firm to firm and even from practice group to practice group.
If in doubt, we recommend a “less is more” approach. If a coding system gets too complex for lawyers to provide consistent data, it will not provide reliable information for planning the future. As programmers like to say, “garbage in, garbage out.”
But when a group implements a coding system that they can use consistently, the payoff will be enormous in terms of the ability to improve predictions of what legal matters will cost. Tracking spending in real time by task codes will also make a huge difference to the ability to live within the original budget.
Consider the case of Nixon Peabody litigator Sam Goldblatt. “As lead relationship partner for several clients over a long period of time, I was an early adopter of UTBMS and have used these codes religiously. As a result, we have detailed cost information for cases in my areas of product liability, toxic and commercial torts, broken down by phase and task and a solid database upon which to construct budgets, forecasts, plans and price alternative fee arrangements. The best proof is experience, and clients know it.”
A solid database of task coded data also provides an enormous potential marketing benefit. Every legal client wants more predictable costs these days, and many are looking for lower costs. Task codes are an important part of the legal project management process that enables firms to meet both of these goals. They also provide the transparency that so many clients are looking for.
Rob Kahn, chief marketing officer at Fenwick & West, says that as a result of the consistent, detailed use of budget tracking, clients are pleased “that we are now able to better explain how our pricing system works.”
As Al Dotson at Bilzin Sumberg summed it up, “It is unfortunately common practice to provide a client with only an hourly rate, which provides little to no information about what the client cares about: the value of the services he or she is seeking. A comprehensive road map, on the other hand, provides the client with information--based not on guesstimates, but on solid data--regarding what is likely to occur, at what time, and at what cost".
To download a pdf of the complete article, as it was published, click here.