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2 posts from July 2018

July 25, 2018

Keeping litigation costs down and clients happy

 

By Jonathan Groner

At the recent conference of the Corporate Legal Operations Consortium (CLOC) one panel was titled “When the Red Phone Rings: Managing Litigation to Keep Costs Down and Clients Happy, From Crisis to Completion.”  We recently discussed their conclusions and more in this interview with panelist Jason Osnes, Director of Strategic Finance and Project Management at Dorsey & Whitney LLP.    

 

LegalBizDev: Do you believe that the growing emphasis on legal operations, on the client side, and the focus on Legal Project Management (LPM), on the law firm side, go well together?

Osnes: Definitely. Our clients are looking for efficiency and predictability, and LPM helps to achieve that. At CLOC they say their goals are to be “efficient, innovative and aligned,” and these represent very similar objectives to what we are striving for with LPM. In fact, when we see this quest for efficiency occurring with such frequency on the client side, it helps me internally to legitimize what we are trying to do here with LPM.

LegalBizDev: You presented at CLOC on a panel with an associate from your firm and two people from a client, one lawyer and one legal operations person. In addition to you, the panelists were Ben Kappelman of Dorsey & Whitney; Paul Dieseth, Vice President, Associate General Counsel, U.S. Bank; and Matt Wahlquist, VP, Head of Outside Counsel Management, Pricing, and Analytics, U.S. Bank. Tell us a little about how that discussion went.

Osnes:  We explained how we work together from the initiation of a legal matter to its end. We discussed how our roles overlap and how we all attempt to increase efficiency and predictability in the spirit that CLOC promotes. The process can sometimes begin with the client, who may request a budget for a matter, and then the Dorsey & Whitney attorney will work with the LPM department to develop a litigation plan and scope the matter out in a way that meets the client’s objectives. Sometimes the lawyer at Dorsey & Whitney moves proactively to develop a budget and wants tools for that purpose, both from my department and from the client. The primary takeaway from our presentation was that true client collaboration involves a lot of proactive communication between attorneys and operations, at the firm and the client, throughout the entire matter lifecycle.

LegalBizDev: What effect do you think the rise of legal operations will have on the importance of LPM and on client development?

Osnes: Legal operations and LPM began as functions to facilitate administrative tasks, but both have grown beyond that to play a key role in improving the relationship between law firm and client. I believe that the demand on the part of clients for law firms with a real LPM capacity will only increase, and that means LPM can become a differentiator for law firms. I’m talking about firms that really do LPM, not those that just check the box that says they do it.

LegalBizDev: Many things can occur in litigation that are not predictable from the outset. Can clients and law firms, each armed with their new management tools, work together to reduce uncertainty?

Osnes: Yes. Just because something is unpredictable, that doesn’t mean you have to throw up your hands. If you as a law firm attorney talk to the client as early as possible, you can develop a solid baseline to manage a case, which ensures everyone is on the same page from the beginning. You may only be able to budget from the outset through a certain phase, rather than all the way through a possible trial, but it’s important to just develop, far in advance, a set of expectations that both sides will be comfortable with. Then, you need to be disciplined in tracking and communicating changes from that baseline when they inevitably occur.

The key is to explain this to the client from the outset. Another key is to remember that pricing and budgeting are something that you do with a client and not to a client.

LegalBizDev: How might this work in practice as a legal matter proceeds?

Osnes: If both the law firm and the client are working with a budget and using it as a management tool, they can almost instantly talk about new cost issues as they come up. They can ask: How will this development, say the need for the law firm to do a task that was originally out of scope, affect the budget? Attorneys on both sides now know this is out of scope or wasn’t contemplated in the budget and can talk readily about how this unexpected event can be handled in terms of the existing budget, or whether changes need to be made.

LegalBizDev: What role do outside litigation vendors play in this process?

Osnes: Some clients have preferred vendors that they use for e-discovery and other important litigation tasks. That is often part of their commitment to improving efficiency through “legal ops.” In our planning and budgeting process, we need to be aware of those. At the conclusion of a matter, when we and the client are evaluating what worked well and what didn’t, we need to look at the work of those vendors as part of the evaluation. Also, we at Dorsey & Whitney have our own in-house e-discovery and document review service called LegalMineTM, and if that team is part of the litigation, we and the client need to evaluate its performance after the case is over, as well.

LegalBizDev: Has anything changed in the way in which your pricing and LPM group presents itself internally to the firm’s attorneys?

Osnes: In the past, we have always described ourselves as a resource for our internal clients, Dorsey & Whitney lawyers. Now that the firm’s clients are asking for so much more, we also emphasize how our LPM team can improve client service, help lawyers meet each client’s expectations, and keep client relationships healthy and strong.

 

July 12, 2018

Leading study confirms that ongoing LPM training and support significantly improves performance

By Tim Batdorf and Jim Hassett

If you work at a law firm and care about its future, you must find the time to download Altman Weil’s free report of findings from its 2018 Law Firms in Transition survey.

For the last ten years, this survey “has tracked a continual shift in awareness, acceptance – and some persistent resistance to – legal market change” (p. i). This year’s report by Thomas S. Clay and Eric A. Seeger provides the best available data on law firm efficiency, profitability, pricing, staffing, productivity, and much more. 

To collect the data, Altman Weil sent questionnaires to 801 managing partners and chairs at US firms with 50 lawyers or more.  In other professions, questionnaire surveys like this typically “average [a] 10-15% response rate.”  One might assume that the response rate for a survey sent to law firm managing partners and chairs would be much lower, since they are often too busy to respond to anything that is not on fire.  But Altman Weil received an astonishing 49.7% response rate (398 firms).

The resulting report summarizes the experience and opinions of managing partners and chairs from nearly half of the 500 largest firms in the United States.  It provides information about what law firms have tried, what’s worked, and what hasn’t.  There is simply no better source for this type of up-to-the-minute insight into a rapidly changing profession. 

The findings that caught our eyes first, not surprisingly, were the ones most closely related to our interest in legal project management (LPM), starting with the fact that “Nearly unanimously, law firm leaders see a need to focus on improved practice efficiency” (p. xii).

So, what are law firms doing to meet this need?  Not nearly enough.

One survey question asked, “How serious are law firms about changing their legal service delivery model to provide greater value to clients?” on a scale from 0 (not at all serious) to 10 (doing all they can).  Less than half of firms (43%) gave themselves a rating of 6 or higher, and only 2.6% answered 9 or 10

But wait, it gets even worse.  In its most recent 2017 Chief Legal Officers survey,  Altman Weil asked the exact same question of clients.  Only 9% of clients (vs 43% of firms) rated this commitment at 6 or higher, and not one single client gave law firms a 9 or a 10.  Obviously, a huge discrepancy exists in how law firms perceive themselves vs how clients perceive law firms. Viewing these results optimistically, law firms that are committed to changing their legal service delivery model could have a significant business opportunity. 

From our perspective, the single most important graph in the 2018 Law Firms in Transition report (p. 55) is reproduced below:LFiT_EfficiencyTactics_2018B“Rewarding efficiency and profitability in compensation decisions” was the most effective tactic for improving performance, as almost anyone could have predicted.  You get what you pay for. 

Much to our surprise, however, more than half of law firms say they are already using this tactic.  Of course, the other law firms may not want to engage in the difficult process of re-evaluating compensation policies, particularly when they know how difficult those conversations can be.  And if this is the only tactic a law firm takes, it could derail significant progress for several months, if not years.  Unfortunately, in today’s market, time may not be a luxury that law firms can afford.

In addition, law firms have historically had trouble measuring and rewarding profitability.  A few years ago, when we interviewed AmLaw 200 managing partners and senior executives for our book Client Value and Law Firm Profitability, we reported that many firms are struggling with measurement, like the participant who admitted:

We don’t calculate profitability by formula.  It’s really seat of the pants. (p. 52)

As more and more firms improve the ways they measure and reward profitability, we predict that the impact of compensation on performance will increase far beyond the 47% figure in the graph above.  But again, this type of approach will likely take a few more years to fully materialize in many firms and is definitely not a “magic bullet” solution for any firm.

So, what exactly should law firms be doing now to help lawyers increase efficiency?  They should engage in “ongoing project management training and support,” because:

  • It is the highest-rated tactic for obtaining significant improvement in performance (other than changing compensation policies, as discussed above),
  • It is grossly underutilized with only one-third of law firms actually using this tactic, and
  • It is the easiest and most cost-effective way to significantly improve performance, especially when compared to other less effective tactics like systematically reengineering work processes or using technology tools to replace human resources.

Whatever tactics law firms decide to pursue, Altman Weil’s report (p. viii) concludes that law firm leaders must “pick up the pace:”

The challenge for leaders is to enlist a small cohort to start the innovation process with urgency and pace and begin to educate and bring others into the fold as rapidly as possible.  Leaders should focus daily on supporting the continued efforts of early adopters by providing encouragement, resources, time, and staff support.

We couldn’t agree more. 

For details of exactly how several leading firms have engaged this process, and the successes they have achieved to date, see the case studies section of our web page.

Full disclosure:  Altman Weil is a strategic partner of LegalBizDev, but not a single word of this post would be different if they weren’t.