« June 2017 | Main | August 2017 »

2 posts from July 2017

July 26, 2017

Seyfarth’s recent layoffs:  Much ado about nothing

Many people have been asking us lately whether Seyfarth’s layoffs of about 40 lawyers (out of over 900) a few months ago represent the beginning of the end for legal project management (LPM).  Our answer is very simple:  absolutely not. In fact, the entire LPM movement is still at the beginning of the beginning.

When the layoffs were announced, Law 360 published an article entitled:  “Seyfarth Shaw Layoffs Could Be New Normal For BigLaw.”  It quoted several leading experts about the challenges of a marketplace in which “demand for law firms remains sluggish.”  As Tom Clay, a principal at our strategic partner Altman Weil, put it: 

“This has nothing to do with Seyfarth and everything to do with what’s going on with the profession.  The reality is there isn’t enough work to keep everyone busy… Many law firms are going to have to … [resort to layoffs], and some have been quicker to act than others.”

Yet, given Seyfarth’s fame as the first large law firm to embrace LPM, the questions about implications have continued to linger.  The American Lawyer published a followup piece several months after the layoffs were announced, which asked again: “What [do the layoffs] say about Seyfarth’s lean strategy a dozen years in?  And what [do they] say about the broader LPM movement?”

Like the earlier analyses, this article argued that the layoffs resulted from changes in the profession rather than from LPM:

“Seyfarth’s financial results over the past five years have mostly outperformed the AmLaw 100’s…That occurred even as Seyfarth’s five year headcount outpaced the industry, 15.6 percent to 10.7 percent.  But that head count caught up to the firm last year.”  

In other words, Seyfarth has been doing quite well compared to other firms, but simply grew too fast.

The article also noted that: "Demand for the firm's SeyfarthLean Consulting arm, which helps clients make their legal departments more efficient, has never been stronger.”

Despite the fact that the experts agree LPM did not cause the layoffs, we predict that this is a situation where many lawyers will remain blissfully unaware of the facts, and will continue to use the layoffs as a reason to argue against LPM.   Many lawyers are unenthusiastic about the kind of attention to finance and management that LPM requires.  They would love to hear that they could forget about LPM, because it was just another fad that had run its course. 

Firms are embracing LPM not because their partners want it, but because their clients want it.  In its most recent Chief Legal Officers Survey, Altman Weil asked clients “What would you most like to see from outside counsel?”  The top three answers were greater cost reduction (53%), improved budget forecasting (43%), and non-hourly based pricing structures (36%).  All three are related to LPM, so, as we’ve often repeated, you could say that the top three things legal clients want these days are LPM, LPM, and more LPM. 

To sum it up, the fact that Seyfarth laid off about 40 lawyers means only two things:  they grew too fast, and they were wise enough to correct the mistake. 

The LPM sky is not falling. In fact, we predict that a few years from now almost no one will remember the Seyfarth hiccup.  The firms that will be healthiest will be the ones that have given clients what they are asking for: LPM, LPM, and more LPM.

July 12, 2017

Legal project management and business development (Part 2 of 2)

By Jim Hassett and Jonathan Groner

Stuart J.T. Dodds is director of global pricing and LPM at Baker McKenzie, one of the largest law firms in the world, with over 4,500 lawyers and 77 offices in 47 countries.  Dodds is widely recognized as a leader in linking LPM to business development, and he is the author of two related books published by the American Bar Association:  Smarter Pricing, Smarter Profit, and Pricing on the Front Line.

In a recent interview, Dodds noted that

In RFPs lately, we have seen very specific questions such as, ‘Do you have project managers who have certification? How and where have they supported client matters? Can you give us case studies for how you would deliver LPM concepts in a specific commercial situation?’ This gives the client a good basis to compare one firm with another. It’s more than the words on the page. It’s what the firm actually does. I think this is a very healthy development.

In fact, Dodds says, members of the senior project manager team that he heads (including over 40 project managers) typically become directly involved in the pitching process and interact with prospective clients as part of the business development team. 

This is how we tell the client that we will engage with them, if we are selected. We will take these nonlegal professionals into the client discussions in order to achieve the best result for the client.

When the firm begins work on a large client matter, a project manager is assigned to work alongside the attorneys. For smaller matters, the firm relies on a training program that it developed and executed in-house, in which all of its attorneys have been trained in project management to a high enough level that they can handle the basics of budgeting and planning, with occasional assistance from a project manager. As Dodds says, in those instances the use of LPM is “attorney-driven but expert-supported.”

Interestingly, as director of global pricing and LPM, Dodds reports to the firm’s Chief Marketing Officer. His 40 project managers are an integral part of the global firm’s nearly 400-person-strong marketing staff.

We see ourselves as part of the value proposition for our clients. We are not a cost to the firm. Rather, we contribute to the profitability of the firm.

This type of integration with the marketing department is currently unusual, but may reflect a growing trend.  In 2015, we published an article related to this topic in Bloomberg BNA’s Corporate Counsel Weekly™ entitled “Why Law Firms Must Change Their Marketing Priorities.”

The article started with an account of how Kramer Levin, a firm with over 350 lawyers in New York, Silicon Valley, and Paris, hired Jennifer Manton as its Chief Marketing Officer in 2014 in part because of her experience in using LPM to meet client demands for improved communication and efficiency.  One of the first things she did after starting at the firm was to arrange for seven lawyers to complete LegalBizDev’s one-to-one LPM coaching.  This pilot program led to increased confidence and ability to provide better price estimates, client communications and more.  Since then, Kramer Levin has gradually expanded this program with more coaching and other LPM initiatives.

However, our Bloomberg article also noted that

One of the many interesting things about this story is that Manton is a former president of the international Legal Marketing Association (LMA), which in the past reflected the nature of the profession by being associated with a more traditional approach to marketing. Marketing is often defined by the ‘Four Ps’: price, product, promotion, and place. Historically, law firm marketing departments have been involved almost exclusively in promotion. In today’s economic environment, that is a recipe for disaster.

It would be nice to report that since that article was published the approach of legal marketers has changed rapidly, but the phrase “rapid change” is rarely found in articles about law firms.

In fairness, LMA has recognized the importance of these issues by organizing an annual “P3 conference” (focusing on the “three Ps” of pricing, project management and process improvement, all of which are included in our definition of LPM).  However, to see how little integration has occurred to date between marketing and LPM, one need look no further than the titles of the speakers at this conference.  Of the 69 speakers at the most recent P3 conference, only 10% had titles that included words like marketing, business development or sales.

Nobody has ever said that implementing LPM will be fast or easy.  But the firms that are effective today in changing lawyers’ behavior, delivering more value, and meeting client needs will be tomorrow’s leaders in business development.