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June 08, 2016

Task codes and budgeting: What works and what doesn’t (Part 4 of 7)

The 12 experts were interviewed were far from a random sample. We purposely chose people who were leaders in this area. But even among this group, most recommended that firms should use phase or task codes selectively rather than on every matter:

Probably about 30 percent of our firm’s cases are phase coded at this time. The firm requires phase coding for all new matters involving two of its largest clients, because these clients require budgets by phase for all their matters.

Only about 10 percent of our matters are coded, but they represent 35 percent or so of the dollar value, mostly in litigation. And as many as three-quarters of the cases that are task coded are done so at the direction of the client, while the other one-quarter are done at our direction.

This is not done on a firmwide basis, but rather only when the need arises. So if a particular client has a large portfolio of cases or matters and wants its time tracked, the firm will track that time. The firm is, however, considering making the use of phase coding mandatory for certain types of cases.

In fairness, some of the experts we interviewed do think task codes should be used for every matter:

My firm task codes everything. My team is responsible for setting up the task code system, deciding what codes should be used, eliminated, and added. The finance people have roles in loading the task codes in the system, the information systems people use them for reporting, and the lawyer-facing people are looking at task codes and how they interact with the work the lawyers are doing. At first, there were lawyers who were reluctant to do this, as they didn’t have clients who required task codes. But now we make the process as easy as possible with lots of training, the use of pull-down menus, and so on. Eventually, even these reluctant lawyers need a robust data set, and it’s interesting to me that they see value when they see a number based on this data.

Another interviewee was not as far along in the process but was optimistic about the future:

I am helping to lead the firm’s efforts to induce all partners to use our template and task code system. In 10 years, the picture will be quite different, as nearly all partners will use it.

But most of the people we interviewed are still facing an uphill battle getting lawyers to use task codes:

Attorneys are slow to change, except when a client insists on it.

The biggest problem is still lawyers’ resistance to change and many clients’ continued acceptance of chronological billing rather than task billing.

There should be a great deal more use of task codes at the firm but many lawyers object to it.

I am impressed that the idea has strong support from the firm’s management. But it’s still hard to get attorneys to do what they need to do.

I try to encourage the use of task codes but feel that I must pick my battles.

Given these realities, we believe that the best practice at this time is to use codes selectively, in the areas that matter the most:

We don’t use task codes on every matter but we do emphasize their use on any fixed fee or tight budget matters.

Our firm’s leaders definitely understand the importance of Task codes and budgeting, but they don’t want to take punitive measures against partners who don’t use them. The process must start at the grassroots and build upon success. We have only one shot to get this right.

Another recommendation from the experts we interviewed was that firms should limit retrospective analysis of past matters. While some firms begin by creating a database of the costs of past matters, most of the people we talked to felt it was not worth the effort:

Our firm does not go back into old closed files and try to assign task codes in retrospect. That just isn’t possible on any realistic basis. Not enough value will be added.

There is no effort to look at historical matters, only current matters, and not all of those.

The firm decided not to go back in time and look at past cases and code them. It was not deemed worth the effort, but the firm is making a concerted effort to code all present and future cases.

Aside from the amount of time that it would take to code past matters, there is a second reason not to invest in this: The whole idea of the LPM movement is to find ways to reduce costs by working more efficiently. Why devote resources to studying what things cost the old way when the same time and energy could be invested in finding new and better ways of doing things?

This series was adapted from the Fourth Edition of the Legal Project Management Quick Reference Guide which will be published this fall.

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