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July 13, 2016

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

So what does it all mean?  After reviewing all the opinions listed in the first six parts of this series, what are our conclusions and recommendations?

When we discuss these issues with clients, some take the position that there is simply too much controversy about task codes to make intelligent choices at this time. They would prefer to wait on the sidelines until experts agree and precedents have been set.

But these issues are too important to wait. When we did a survey of AmLaw 200 leaders for the book Client Value and Law Firm Profitability, an amazing 85% of chairs, managing partners, and senior decision makers agreed that firms will have an advantage if they address LPM before their competitors do. Given the fierce competition for a shrinking marketplace, the lawyers that try to wait on the sidelines may regret it.

There is absolutely no question that lawyers can increase client satisfaction and profitability by improving the way they plan and execute their work. The reason that project management is growing in the legal professions is that clients are demanding it. In its 2015 Chief Legal Officer Survey, Altman Weil asked general counsel to select the “service improvements and innovations… that you would most like to see from your outside counsel.” The top three were greater cost reduction (selected by 50% of respondents), improved budget forecasting (46%), and more efficient project management (40%). Since LPM leads to cost reductions and more accurate budgets, you could say that the top three requests of in-house counsel these days are LPM, LPM, and more LPM.

And task codes are a very important element in the LPM toolbox. In the fifth edition of the widely quoted text Fast Forward MBA in Project Management, Erik Verzuh wrote:

A task list… [more formally known as a] work breakdown structure… turns one large, unique, perhaps mystifying piece of work… into many small manageable tasks… It is the foundation of project planning and one of the most important techniques used in project management. If done well, it can become the secret to successful project management. The work breakdown structure is perhaps the most useful technique in this [510-page] book.

For lawyers who work in areas in which UTBMS codes have been developed – including litigation, bankruptcy, IP, and M&A – the single most important benefit of task codes may be the fact that they provide a ready-made work breakdown structure. Lawyers can immediately start using them to plan a new matter without re-inventing the wheel.

Still, many questions remain in the details of when and how to use phase and task codes, especially in the many practice areas where there is no standard set of UTBMS codes. Perhaps the most critical question is whether every lawyer in a practice group or a firm should be required to use the same codes in the same way or whether individual lawyers should be permitted or even encouraged to use their own systems their own way.

The benefits of a single universal system are obvious to anyone who wants to analyze and compare costs. However, as noted in several of the expert quotes above, many lawyers resist using a pre-existing set which is not to their liking, and others fail to use them properly. The result can be a huge amount of effort to create a system that produces “garbage in, garbage out.”

Based on our experience coaching hundreds of lawyers on these issues, we believe that “bottom up” solutions work better than “top down” mandates in almost all law firms. This implies that meeting the ideal of a single universal system, in which everyone in the firm uses the same codes in the same way, will be very difficult to achieve.

In contrast, if an influential partner or group of partners is asked to create a list of codes that meets their needs, it is a much simpler task. Lawyers in our coaching programs have developed codesets for many specialties that are not part of UTBMS, including real estate loans, private equity fund formation, venture rounds, private investment in public equity transactions, wage and hour audits, Equal Employment Opportunity audits and compliance, Office of Federal Contract Compliance matters, labor and employment litigation, National Labor Relations arbitrations, and more.

Even the format of these code systems can vary widely. Steve Barrett, one of the co-authors of this series has personally coached many lawyers to create such systems and notes that:

The code fields of major legal accounting systems can generally accept either letters or numbers (usually up to 10 characters), and the task title fields can accept 60-80 characters, so why not just use plain English? As long as there is enough planning and education at a matter’s outset to assure that everyone who works on the matter uses the same codes in the same way, it works very well.

Is it worth the effort to create and enforce a firmwide system? It depends.

In my Legal Business Development Quick Reference Guide, I’ve written about a similar “it depends” situation in business development:

When lawyers ask us for the single most important piece of advice in legal business development, the answer is simple: Ignore good ideas. You must prioritize relentlessly… Lawyers are much too busy to spend time on ideas that are only good. To maximize the chances of success, each individual must focus on the very best idea for their practice, their personality, and their schedule.

In the case of LPM, budgets and pricing are clearly very important, and a firmwide set of task codes which is properly implemented will certainly help. But it will also require a significant amount of time and effort that could be used to focus on other LPM tactics. And, as Toby Brown noted near the end of his article on “The State of Legal Pricing”:

As clients are trying to lower legal costs, and firms are trying to keep clients happy, the real trick will be more cost-conscious management of legal work.

The fourth edition of our Legal Project Management Quick Reference Guide, which will be published this fall, includes over 300 pages of tools and templates designed to help lawyers with “cost-conscious management of legal work” but have little to do with task codes, such as:

  • Improving engagement letters
  • Statements of work
  • Negotiating changes of scope
  • Business process improvement
  • Internal team management
  • Delegation
  • Personal time management
  • Risk analysis
  • Quality management
  • Improved client communication
  • Lessons learned reviews
  • And much more

In our study of the AmLaw 200, we found that managing partners and law firm leaders said that the two most important LPM issues they faced were defining the scope of matters better at the outset and communicating better with clients. Neither issue would be helped by investing time and energy into firmwide task codes.

Different lawyers will inevitably reach different conclusions because they are in different situations. We believe that in order to improve their competitive position, each firm, each practice group, and even each lawyer must decide for themselves where to best invest their LPM time and energy.

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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