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June 26, 2013

Legal Project Management Case Study: Loeb & Loeb

“Legal project management (LPM) has become absolutely critical to remain competitive in today’s marketplace,” according Christopher Kelly, Deputy Chair of the Corporate Practice at Loeb & Loeb, a firm with more than 300 lawyers in Los Angeles, New York, Chicago, Nashville, Washington, DC, Beijing and Hong Kong.   “It saves money, creates budget certainty, and makes clients more comfortable when they see exactly what their legal team is doing to become more efficient.” 

Kelly recently participated in a pilot test of LPM coaching with LegalBizDev’s Michelle Stein.  He focused primarily on developing spreadsheets for planning and budgeting new matters and started by developing a “Corporate Sell Matter” template which broke down a typical matter into component tasks such as term sheet, due diligence, purchase agreement and ancillary agreements.  Each of these was further divided into sub-tasks, which were listed in the rows of the spreadsheet.  To develop a cost estimate, a lawyer could work with a dedicated business manager and fill in columns listing the timekeepers assigned to each sub-task, the estimated number of hours, the standard rate for each timekeeper, and a proposed budget for this deal.  This process enables lawyers to experiment with different staffing scenarios to find the best solution to each client’s needs.

Just as importantly, the spreadsheet facilitates the process of defining the scope of the transaction by requiring the attorney to list the assumptions on which these estimates were based.

Working on this list of assumptions and carve-outs in the coaching, according to Kelly, “helped me think through the process of how to be both concise and precise with a client at the beginning of each matter.”  Coming up with the best list for a particular matter requires significant communication between client and firm, and enables both sides to talk through what work is required, and what is not.  On hourly deals, this leads to a new mutual understanding and rapport that increases the likelihood of new business in the future.  And on fixed fees, it leads to much more accurate bids, and increases the likelihood of completing high quality work within the original budget.

Of course the best plan in the world is only as good as its execution, and Loeb & Loeb also recently purchased the software program Engage  to help develop initial budgets and then track spending against them.  The Corporate Practice is in the process of building a database of actual experience in past and present deals to increase the accuracy of future estimates.  In fact, a few days before I interviewed Chris, he had just won some new business based on an estimate that grew out of this approach.

After Chris developed the Corporate Sell Matter template, he worked with his team to develop several others including templates for buy-side matters, fund formation and joint ventures. 

Several other lawyers participated in the pilot test coaching program, including Ken Florin, co-chair of the firm’s Advanced Media and Technology Practice.  When Florin worked with coach Charles Gilliam, they spent much of their time focusing on improving client communication to better define the scope at the beginning of a complex international matter that included working with outside counsel from a number of countries.

Florin had volunteered for the program in part because his clients are “increasingly asking for alternatives to hourly billing,” and successful alternative fees require both the firm and the client to do more upfront planning.  “We needed to spend more time with the client jointly thinking through the stages of the project, and how to handle aspects which could increase or decrease the cost.”

Many lawyers base their fee estimates on past matters that seem similar, too quickly assuming the price will be about the same.  But by digging into the details of a particular matter in advance, they can often identify both opportunities for savings, and risk factors that must be controlled to prevent budget overruns. 

The LPM process “led to significantly more communication with the client” at the outset, Florin said, and as a result “the original project morphed into something different.”  He threw away his first proposal, wrote a new one, and got the deal.

Florin said that the general approach he applied in this project will be quite useful going forward:  “The basic rules of how you detail the scope based on back and forth communication, and drive towards a fee arrangement that is very clear and transparent will translate well to future projects.”

“The legal business is changing,” he concluded, and the increasing use of non-hourly fees is leading to “more of a partnership with clients about how we price matters and how we do our work.”

David Schaefer, Deputy Chair of Loeb & Loeb, said “LPM is a strategic initiative of the firm in that being efficient, transparent and accountable builds a reputation for delivering value that is essential to building and expanding long-term relationships.”  Loeb & Loeb, he continued, “has plans to extend LPM throughout the firm by building on the success of this coaching and other initiatives.”



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