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2 posts from March 2018

March 21, 2018

A model for LPM success:  The case of Bilzin Sumberg (Part 2 of 5)

By Tim Batdorf and Jim Hassett


The benefits of LPM discussed in this post and the next illustrate how LPM can help lawyers better meet the needs of clients.  In its 2017 Chief Legal Officers (CLO) Survey  (p. 37), Altman Weil provided 280 CLOs with a list of ten possible service improvements and asked them to “please select … [the improvements] that you would most like to see from your outside counsel.”  The top three needs were: 

  1. Greater cost reduction (51%)
  2. Improved budget forecasting (46%)
  3. Non-hourly based pricing structures (39%)

Meeting client needs for cost reduction 

When clients ask for lower costs, the first thing many lawyers think of offering is a discount on their hourly rates.  This may be necessary in some cases, but it should be the last thing lawyers consider, not the first.  Lower hourly rates lead to lower realization and profitability.  (Unfortunately, many lawyers do not understand that a 10% discount on a particular matter may cut profits by 20% or 50% or more, depending on the firm’s economics.  Very few lawyers know the exact implications of a particular discount at their firm, as discussed at length in Chapter 3 of our book Client Value and Law Firm Profitability.)   

A much better approach is to use LPM to improve planning and management.  At Bilzin Sumberg, most significant matters now start with the responsible partner specifying a complete list of major steps in the process (a matter plan), and then estimating the cost for each step.  Once this budget is in place, tracking systems compare actual costs to budgeted costs as the matter proceeds.  Then, if actual costs are higher than planned, the partner can work with the client to manage and reduce future costs.

To ensure consistency of data and to provide additional “eyes on the target,” Bilzin Sumberg now has a centralized process supported by finance staff who input information into their budgeting software. LPM staff then provide partners with “ticklers” when certain milestones are reached.

In many cases, this analysis is based on lawyers tracking the work they do by means of task codes.  As the number of lawyers using these task codes has grown, information about the true costs of past matters, by task and phase, has become more accurate.  This enables lawyers to produce better budgets in the first place and to determine which steps can be accomplished at a lower cost without affecting quality.  

For example, litigation partner Jose Ferrer noted:

If you see that in the past 30 days you have used only the discovery task codes, it forces you to think, “Did this discovery add or detract from your progress in the case?”

Litigation partner Scott Wagner added that this type of planning and tracking can also reduce costs right from the start:

Perhaps instead of two associates assigned to a task, you may find that you need just one, or you might conclude that a partner could complete a task for a lower total cost even if his or her hourly rate is much higher. 

Wagner went on to describe how this type of planning and tracking applied to one matter:

We had spent a lot more money on discovery than we had planned. When I went back to look at it, I realized that we had budgeted ten hours for meet and confers in this phase, which at the time seemed like a very reasonable estimate. But we had actually spent over 100 hours on meet and confers. The truth was, it was time that was very well spent, and we were able to accomplish a lot with it. But I never envisioned that the meet and confers would be as extensive as they were. 

Real estate practice group leader Suzanne Amaducci-Adams commented that: 

Although our practices are completely different, “meet and confer” was the exact same hole we had in our budget on all of our initial loans budgets.

While some issues were similar across practice groups, in other cases different practice groups required different approaches to LPM and different solutions.  Consider, for example, the idea of having all partners begin with the same standard forms for routine matters.   

At Bilzin Sumberg, this has been quite effective in the corporate practice, where many lawyers work with similar sales and financing transactions every day.  By adopting a standard set of forms and agreements as their starting point, they have been able to reduce costs and avoid “reinventing the wheel.”  Bilzin Sumberg is in the process of redeveloping its intranet site so that each department has its own home page, which includes approved standard forms.

Within the real estate group, however, the idea of standard forms has proven more useful to some lawyers than others.  Lawyers who focus on Commercial Mortgage Backed Securities have developed a very solid set of starting forms.  But other lawyers in real estate, like partner Adam Lustig, more often represent borrowers than lenders.  His practice does not require a standard set of starting documents:

These documents are usually drafted by banks.  So the idea of starting from forms isn’t all that useful to me. More often than not, I’m the one reviewing and responding to documents prepared by opposing counsel. 

In this case, the LPM initiative led in a different direction.  As Amaducci-Adams explained:

We came up with the idea of checklists and issues lists.  For example, when you review a borrower’s contract, what are the 50 or more things you need to know? We developed a borrower’s issue list so none of the key issues would fall through the cracks. Then we started adding in the best language we had seen for certain provisions.  Our borrower issues list worked so well that we started breaking it down for different types of loans.  For example, there are unique issues with construction loans, leasing, hotel management agreements, franchise agreements and more.  So we gradually rolled out issues lists for each major category.

The lists not only led to lower costs, Amaducci-Adams explained, but: 

They became helpful in quality assurance. When we had an associate who reviewed a set of loan documents for us, they had to refer back to our list, and they had to confirm that every single thing in there either did not apply or was already in the documents. So our work product became better.


Meeting client needs for predictable budgets 

The same matter planning process that yields lower costs also leads to more predictable budgets and fewer client surprises.

According to litigation partner Scott Wagner:

The conventional wisdom is that budgeting is not possible in litigation. But based on my LPM coaching and subsequent discussions with my colleagues, we have found that you can indeed come up with a budget that is useful to your client and can lay out all the contingencies to know what a particular litigation will likely cost.  The result is that we became much better at giving both clients and the internal team a more realistic estimate of what a case will cost.

This type of budgeting has become a standard operating procedure for Wagner, who offered the following example:  

A few weeks ago, a long-term client described a new case and asked for “an idea of what this is going to cost.” I said, I really need to go back and sit down and look at the numbers. And he really, really pushed. I said, let me go back and sit down and figure this out.  I saw two immediate benefits.  First, when clients realize that you’ve given some thought to it, they take your estimate a lot more seriously, and that can lead to a detailed discussion.  If clients are going to push back on cost, it is much better to do this in an informed negotiation before the work begins than at the end of the matter when the client gets a surprise in the bill.  Second, you just do a lot better job. If you do off-the-cuff estimates, you always forget to include something. 

Carter McDowell, a partner in the Land Development & Government Relations Practice Group, reported a similar experience:  

For us, it began when one large client asked us to produce a budget for the upcoming year. This request forced us to sit down and take each of the hearings we were going to have and to break down each of the component parts of how we went about processing an application to get to hearing, who we met with – neighbors, staff, board members, etc. – and to assign essentially ranges of time for each of those. That gave us a framework that we’ve subsequently used to talk to other clients about the process that we go through to process an application.  It’s broken down in writing, in chart form, with hourly projections for each of the tasks. 

Meeting clients’ needs for predictable budgets can also lead to new business.  Al Dotson described a recent matter in which a large international client asked for an estimate:

We took a look at the sheet that we have been keeping and updating on an annual basis that brings forward all of our matters using today’s rates, and the manner which we staffed it, to give them a range of what we thought this would cost.  They got the legal spend approved, and we came within pennies, literally pennies, of the budget that we set for them without writing off a single dime of time. And that was simply because we actively use our task codes, apply the historical information we have, and then manage the process carefully.

 

A pdf of the complete case study can be downloaded from our web page. 

March 07, 2018

A model for LPM success:  The case of Bilzin Sumberg (Part 1 of 5)

By Tim Batdorf and Jim Hassett

Executive summary

This series of posts describes the process that Bilzin Sumberg has used to implement LPM over the past few years, and provides examples of the benefits they have achieved in six major areas:

  1. Increased new business and profitability
  2. Meeting client needs for cost reduction
  3. Meeting client needs for predictable budgets
  4. Improved AFAs
  5. Improved definitions of scope
  6. Improved communication

As this series will make clear, Bilzin Sumberg has had many successes in changing the way they practice law to better meet client needs, and their LPM initiative has paid for itself several times over.  But their work is not done.

The final post in the series describes implications for other law firms based on Bilzin Sumberg’s experience with LPM.  Some of the tactics Bilzin Sumberg found to be effective are quite simple to implement.  For example, in the early stages of implementation there was some lawyer resistance to the term “legal project management.”  By changing the terminology, using a less intimidating term like "efficiency" as opposed to “legal project management,” Bilzin Sumberg was able to overcome lawyer pushback and develop broader buy-in. 

Other Bilzin Sumberg strategies required more effort, such as unrelenting support from senior management, bringing in external consultants, and a gradual increase of internal LPM staff. 

Nobody at Bilzin Sumberg – or any other law firm we’ve talked to – has ever said LPM is easy.  But they do say that well-planned LPM investments will pay off for their firm and their clients.  Greater efficiency and predictability is an absolute necessity for law firms wanting to survive and prosper in an increasingly competitive legal marketplace.


Introduction

Lawyers often ask us to name law firms that serve as models for cost-effectively implementing legal project management (LPM).  

Our first public answer to this question appeared in this blog in 2013,  when we wrote “no law firm on the planet has achieved more [LPM] behavior change, more quickly or more efficiently” than Bilzin Sumberg, a Miami-based law firm with more than 100 lawyers.  Now, five years later, this series of posts will explain how the unrelenting support and follow-up by Bilzin Sumberg’s management has enabled it to hold the number one spot, and to achieve substantial benefits both for clients and for the firm.

Some firms are sure to disagree with this assessment, and a few may lay claim to the title for themselves.  It is certainly true that some groups at other firms have made greater progress in particular sub-areas of LPM, such as process improvement, pricing, and knowledge management.  But based on our research and consulting with hundreds of firms, we believe that no other firm has achieved greater LPM progress and experienced greater benefits across the board.  And the reason is simple: Bilzin Sumberg has produced more behavior change amongst its lawyers than any other firm.

Last fall, our CEO Tim Batdorf facilitated a 90-minute panel discussion at Bilzin Sumberg, in which eight of the firm’s leading LPM champions described what they had achieved to date, and what they had planned for the future.  Every lawyer in the firm was invited, and the discussion also provided a brief overview of two new LPM resources that Bilzin Sumberg recently adopted:  the digiral tools and templates in the fifth edition of our Legal Project Management Quick Reference Guide, and Prosperoware’s Umbria software to improve budgeting, tracking, and more.

The first speaker was the firm’s managing partner elect Al Dotson, who spoke about the benefits already experienced through the firm's adoption of LPM as well as the expected benefits with future progress. When Dotson held his first LPM meetings with each practice group leader:  

Every practice group said LPM didn’t apply to them. Every practice group said that they were unique. Every practice group said they could not use LPM. Every single one.

In the final section of these posts – “Implications for other firms” – we will explain that this sort of initial resistance is almost universal.  To overcome this resistance, in our experience, the support of key leaders is an absolute prerequisite for success.  

In some cases, we have worked with firms that made significant LPM progress when they were led by a partner who strongly believed in it.  But then the leader left, and the initiative fizzled as new management stressed new priorities.

At Bilzin Sumberg, Dotson, along with managing partner John Sumberg and COO Michelle Weber, have persisted in gently prodding partners to see how LPM could help them, following the five key approaches explained in our white paper “The Keys to LPM Success.” 

  1. Focus on changing behavior and solving problems
  2. Aim for quick wins to create internal champions
  3. Publicize successes within the firm
  4. Use just-in-time training materials
  5. Take action now and follow up relentlessly

Although these approaches are important for success, LPM is not a “one-size-fits-all,” well-defined linear process or a simple set of steps.  It is a mindset which must be constantly reinforced.  And the behaviors that lawyers change as a result of this new mindset evolve over time in response to changes in the legal marketplace.  

As Bilzin Sumberg COO Michelle Weber summed it up: “LPM is not a silver bullet.  It is an ongoing and continual process of gradually modifying behavior, with little moments of clarity.  To create LPM acceptance in a law firm culture, you have to keep reinforcing it.”


LPM Benefits

Increased new business and profitability 

To evaluate any LPM initiative, it makes sense to start by going directly to the bottom line, to see whether LPM has increased new business and/or improved profitability.  

At the panel discussion last fall, Al Dotson, Bilzin Sumberg’s managing partner elect and head of the firm’s Land Development & Government Relations Practice Group, began the discussion by saying:

I have successfully used legal project management to generate business many times.

In a previous LPM panel discussion – held to kick off their firm-wide LPM initiative in 2012 – Dotson described how one of his clients was so impressed by the legal project plan he had produced in his coaching that the client awarded Bilzin Sumberg a significant amount of new work.

This success encouraged other partners to volunteer for coaching, which in turn has led to many other examples of new business which can be directly attributed to LPM.  To cite just one example from the 2017 panel, real estate chair Jim Shindell described how a new client needing a series of condominium construction loans had first heard of Bilzin Sumberg:   

We had just saved another client with that same bank a ton of money with the speed and efficiency in which we were able to do the deal.

The new client then hired Bilzin Sumberg because of their proven efficiency on this same subject matter with the exact same lender.

Proof of new business from LPM is relatively easy to find, but exact figures for how much the LPM initiative has increased realization and profitability is harder to come by.  Like most firms, Bilzin Sumberg does not publicize its exact realization or profitability figures.  But there can be no doubt that many of the changes described in this series have increased both figures.  As COO Michelle Weber summed it up:

As a result of LPM, we have definitely decreased write-offs and reduced the number of times we need to go back to clients to discuss budget changes.