71 posts categorized "Books"

January 18, 2017

How Agile is being used to increase legal marketing innovation at Fasken Martineau

Agile is a highly flexible approach to project management which law firms are just starting to use. I’ve written several posts in this blog about how Agile works and how some lawyers are applying it to improve legal efficiency by focusing on two key questions:

  • How can we deliver value more quickly to our clients?
  • How should we measure our progress?

So when I heard recently that one of our clients was using Agile techniques to increase innovation in their marketing and business development department, I immediately scheduled an interview with Brenda Plowman, the Chief Marketing Officer (CMO) at Fasken Martineau, an international business law and litigation firm with more than 700 lawyers.

The Fasken Martineau marketing and business development department includes people operating from eight offices, six in Canada, one in the UK, and one in South Africa. Plowman has worked in the department for more than 10 years. When she was promoted to the CMO position in July 2015, she noted that:

Over my history here I’d seen many underutilized talents with the potential to help us transform and offer better services to our lawyers. I wanted to reinvent our group. But how could I get people to change when I was coming to work at the same place and with the same people I’ve known for a long time?

We did a survey of the marketing and business development team because we wanted to see what they were thinking. One of the responses was, "The firm doesn’t ask us to innovate enough. It doesn’t expect us to be creative." People didn’t feel that they could bring their ideas forward and they felt that, frankly, they weren’t expected to bring their best game.

Plowman decided to start by adapting two Agile-related concepts: hackathons to creatively generate ideas for improvement and scrum to deliver them and “make sure we were actually accomplishing what we had set out to do.”

Hackathons originated in the software development world and consist of intense meetings in which groups of programmers and others collaborate intensively to solve a particular problem. With the help of a consultant, Plowman adapted the hackathon concept to legal marketing, and in June of 2016 they held their first three-hour hackathon with the team (two sessions with multiple locations involved in each) aimed at coming up with creative ideas to improve marketing efficiency and results on a specific topic. Candidly she admitted that:

At first people were saying, "I don’t know why I’m here." But when a second session was held in October, there was much more engagement and people began to focus on, "How can we go faster and get more done in the limited time we have?”

They created a list of key areas “in which we wanted to improve what we had been providing previously and increase the value we were delivering to lawyers.”

One of the unique aspects of these hackathons is that they were led by the Manager group. Historically, real opportunities for leadership and development were only handled by the Senior Marketing Team (the Director level). That team was committed to developing their Managers and creating opportunity for their growth and development. The Managers were empowered and did a great job working with the teams and bringing the recommendations forward to the Senior Marketing Team (SMT). This aspect is key in Plowman’s vision to leverage the talent on her team.

In addition, the marketing and business development team has started a significant transformation with many changes in place. The Directors have taken on pieces of this transformation and are leading this change with Plowman. There are a lot of moving parts and demands on the team. This led Plowman to adapt another Agile software development technique: scrum. Initially she provided the Directors (the SMT) a copy of the book Scrum: The Art of Doing Twice the Work in Half the Time as part of the “book club” for this group. After the SMT read it and met on it during an in-person meeting, they then expanded to the Managers as a part of their development and a way to encourage them to innovate and drive their project forward. (This book is an excellent resource for law firms and I will write a separate blog soon describing its key concepts.)

This has now evolved into a 30-minute weekly telecon held every Monday by this group to discuss four substantial projects and several other key initiatives that the team is working on (including digital transformation and social media), in which Fasken’s marketing and business development department is concentrating its efforts to become best-in-class:

The group is using some of the techniques from the scrum book to establish and measure specific goals for the next 30, 60, and 90 days. The Monday meetings are organized around three key questions familiar to anyone who has ever been involved with scrum:

  1. What did we accomplish last week?
  2. What is planned for this week?
  3. Are there any obstacles to progress?

One result of the Monday meetings is that, “People collaborate to identify obstacles. It’s also been really helpful for me as the leader of the group because I learn how I can expedite what needs to get done this week.”

This initiative is very much a work-in-progress, but participants in the weekly meetings have already produced results. “Scrum has helped us to go faster, do more, and get obstacles out of our way. It’s increased transparency, which drives efficiency and effectiveness. And it’s created cultural change within our team. The learning is coming faster and faster.”

Plowman and her team would like to expand the program in the coming year to include lawyers. She predicts that the next steps will be even more exciting “when we get to working with our lawyers and going through the process together with them.”

December 28, 2016

Pricing legal matters (Part 4 of 4)

In the fifth edition of The Strategy and Tactics of Pricing, one of the most widely respected texts in this field, Thomas Nagle, John Hogan, and Joseph Zale noted that:

In many business-to-business markets, where high-volume repeat purchasers negotiate their purchases, buyers are ahead of sellers in thinking strategically…. Buyers have goals and a long-term strategy for driving down acquisition costs, while suppliers rarely have comparable long-term strategies for raising or at least preserving margins (p. 98).

The problem of salespeople discounting too deeply in order to close deals is also common in other businesses:

Customer satisfaction can usually be bought by a combination of over-delivering on value and underpricing products… The purpose of strategic pricing is to price more profitably by capturing more value, not necessarily by making more sales (p. 4).

Nagle’s text goes on to describe five basic concepts that can be used in any profession, including the law, to improve the way prices are set:

1. Differentiate. You may have heard legal marketers use this word quite a bit, and it is just as important to pricing experts. The features of a law firm that add differentiating value must be communicated to the client. Are you different because your legal project management expertise makes you more efficient than others or because you communicate progress better? Let the client know.

2. Communicate value. According to Nagle:

In our research, we have found that business managers rated “communicating value and price” as the most important capability necessary to enable their pricing strategies (p. 72).

Nagle makes special note of the value of an endorsement from a client known to be discriminating. For example, in the health field, Kaiser Permanente has an excellent reputation for being an informed buyer. As a result, “When other hospitals and health maintenance organizations (HMOs) learn that Kaiser Permanente has adopted a more expensive product or service, they assume that its price premium is cost-justified” (p. 75).

3. Have a clear and consistent pricing policy. It is important to have a clear and consistent pricing policy and to avoid commonly granting price exceptions. Discounting to win business creates client expectations of future discounts. In setting up your policies it is important to keep in mind that people are more affected by perceived losses than perceived gains, and you should frame your pricing with this in mind. If the client is offered a service package, it is better to have a policy that allows a reduction in cost if a service is dropped (a perceived gain) than a policy that requires an extra fee to get that service (a perceived loss).

4. Know your market segments. Clients are not all the same; they fall into different market segments. The Strategy and Tactics of Pricing gives an example of a company selling a scientific device to be used in DNA analysis. The device is a great improvement over existing competitor products and the company estimated the differentiation value in order to set a price. However, the company sold to two different market segments—the industrial market and the academic/government market. The differentiation value was not the same in industry and universities, so the ultimate pricing strategy involved different pricing policies in the two segments. As long as this policy is clearly stated it does not violate consistency requirements. Airlines do this all the time when they distinguish between refundable fares for business travelers and nonrefundable fares for vacationers with flexible schedules.

5. Know your client types. Within a given market segment there may be different classes of clients, and knowing their classification may help you to deal more intelligently with each group. The Strategy and Tactics of Pricing divides clients into four categories:

a. Value-driven clients have sophisticated analysis strategies for studying value-added, and you will need to work to establish your value-added for them.

b. Brand buyers (also known as relationship buyers)—For this group, the cost of analyzing value-added is perceived as too high. This “buyer will buy a brand that is well-known for delivering a good product with good service without considering cheaper but riskier alternatives” (p. 105). This is an easier client to deal with so long as you do not disappoint them.

c. Price buyers are looking for a specified service at the lowest possible price. Here you will need to “strip out any and every cost that is not required to meet the minimum specification” (p. 107). It is also important to fence off this job so that more lucrative clients who receive a higher level of service understand that this lower-priced work is at a different level.

d. Convenience buyers “don’t compare prices; they just buy from the easiest source of supply” (p. 108). They know that they are paying a premium for immediate convenience and will not complain.

But whatever price strategy a law firm uses, the simple fact that they are paying more attention to this area will have positive effects. In their book, Law Firm Pricing: Strategies, Roles, and Responsibilities, Toby Brown and Vince Cordo give this example:

Lawyers live in a reputation world, and [financial] monitoring exposes that reputation to risk. Once lawyers realize that others in their firm can see their financial performance on matters, their behavior often changes. In one example, a lawyer was losing money on the first phase of a fixed fee arrangement. Once a monitoring program was put in place, performance on the second phase dramatically changed, leading to a reasonably profitable result (p. 39).

This post was adapted from the recently published fourth edition of The Legal Project Management Quick Reference Guide.

December 21, 2016

Pricing legal matters (Part 3 of 4)

If law firm management has trouble defining profitability, it can hardly be surprising that lawyers are confused by the concept. Several of the AmLaw 200 firm leaders I interviewed for my book, Client Value and Law Firm Profitability, expressed frustration with the implications, including these two:

Lawyers don’t understand what profitability means or how they can influence that number. So it’s a case of sometimes being focused on revenue, but not necessarily the right revenue, because they don’t understand the profit trade-off. They say they’ve got an account that’s giving two million dollars a year. Well that’s fine. But if you’re getting a three-percent profit margin, stay in bed.

We’re still struggling with trying to communicate to our billing attorneys that when you agree to a 10% discount or a 20% discount, you’ve probably given away 100% of your margin. They don’t get that. They say, “It’s only a 10% discount.”

In the interest of improving understanding, Stuart J T Dodds, the director of global pricing and legal project management at Baker & McKenzie, has proposed in his book, Smarter Pricing, Smarter Profit, that when lawyers price matters, they focus on his simple 1-3-4 Rule™:

For every one percent improvement in price, the potential increase to profitability is three percent. To get the same level of improvement in profitability without increasing price, you would need to work four percent more billable time (p. 36).

Dodds goes on to explain that these numbers are an approximation and that the precise relationship depends on the firm’s margin (p. 38). He even provides a table showing exactly how discounts from 1% to 20% reduce margin for firms whose margin before discount ranged from 20% to 50%.

But for the vast majority of lawyers, the 1-3-4 Rule™ will be enough and will be a great way to simplify a mathematically complex relationship.

Smarter Pricing, Smarter Profit goes step by step through everything lawyers need to know to survive and prosper in today’s rapidly changing marketplace. It is divided into four main sections: set the price, get the price, manage to the price, and review the price. So setting an initial price is just the start of the process. LPM is vital for actually living within that price and collecting profit. Dodds notes that:

When getting started on a project or matter, there are three important themes it is important to address at the outset… better communication, greater clarity, and easier review. These break down into 10 key steps for those responsible for leading a matter:

  1. Confirm what the client wants and expects
  2. Group the work into the main areas
  3. Agree how to address changes of scope up front
  4. Develop and agree on the matter plan
  5. Agree on the fee and fee approach
  6. Agree on the engagement letter and share with the team
  7. Agree on the reporting format and schedule
  8. Establish your matter phases and tasks
  9. Approve new timekeepers
  10. Staff the core team and agree on client responsibilities (p. 222)

Taken together, all of the observations in this discussion of pricing could be interpreted as reflecting a glass half-empty (so much remains to be learned) or half-full (firms are moving quickly to focus more on the pricing function). It may make you feel better to know that the law is not the only profession that could greatly improve its pricing strategies.

This post was adapted from the recently published fourth edition of The Legal Project Management Quick Reference Guide.

December 14, 2016

Pricing legal matters (Part 2 of 4)

There are many challenges in defining law firm profitability and then managing the firm to become more profitable. For my book, Client Value and Law Firm Profitability, I conducted in-depth interviews with managing partners and other leaders of 50 firms from the AmLaw 200. One question I asked was, “If you compare profitability for two lawyers in your firm, is there a software program or formula used to calculate profitability or is the comparison more intuitive?” (p. 52). Seventy-four percent said profitability in that case was defined by a program or formula, but 26% said it was more intuitive.

As one senior executive put it:

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

The managing partner at another firm put it this way:

Profitability is to some extent in the eye of the beholder. We’re still looking for good tools to evaluate what is profitable and what is not.

Other evidence suggests that even the firms that have formulas are measuring profitability in a variety of different ways. A growing number of software programs are available to handle the calculations. The two long-time leaders in the field—Intellistat Analytics from Data Fusion Technologies and Redwood Analytics from Aderant—have been providing sophisticated tools to quantify law firm profitability for several decades. But to use these tools one must make a series of assumptions, and that’s where the trouble lies.

At the LMA P3 conference a few years ago, Jeff Suhr, senior vice president of products at Data Fusion Technologies, noted that his company then had 91 clients actively using their tools, including 10 of the top 35 AmLaw firms. Exactly how did these 91 clients calculate profitability? Ninety-one different ways. The fundamentals were the same but there were important differences in the details, which can have significant implications for the way profitability is interpreted and used to motivate changes in behavior.

Suhr distinguished between the relatively straightforward science of calculating profitability and the art of determining the exact methods that best fit the needs of each firm. He also discussed the different challenges of “macro strategies” for analyzing profits for a firm, an office, or a practice group vs. “micro strategies” for analyzing a book of business or a particular matter. These sometimes require different assumptions and different approaches.

As Suhr summed it up:

The right way to measure profitability is one that is accepted in your firm. The art is to measure it in a way that keeps everybody happy.

In an email exchange, Donald Ware, chair of Foley Hoag’s Intellectual Property Department, summed up the state of the art more critically:

I’ve never heard of a law firm that has a good way to measure matter profitability. Many say they do, but when you push on the details it becomes clear that they really don’t.

This post was adapted from the recently published fourth edition of The Legal Project Management Quick Reference Guide.

December 07, 2016

Tip of the month: Make sure every team member knows exactly how to define work that is in scope vs. out of scope for each matter

In many cases, legal team members do not have a clear understanding of the tasks that are within scope for a particular legal matter vs. those that fall outside scope. The inevitable result is that the cost of the matter increases when lawyers perform work that is not included in the original agreement.

 

The first Wednesday of every month is devoted to a short and simple reminder like this to help lawyers increase efficiency, provide greater value to their clients, and/or develop new business. For more about this tip, see Chapter 8 in the fourth edition of our Legal Project Management Quick Reference Guide.

November 30, 2016

Pricing legal matters (Part 1 of 4)

When it comes to offering fee estimates at the start of a matter, far too many lawyers still rely on ballpark estimates that they sometimes pull out of thin air. But even if you follow the “high detail” estimation techniques described in our Legal Project Management Quick Reference Guide (p. 152), the fact that you have a budget does not necessarily mean that you have a price which should be quoted to a client.

Wikipedia lists 25 different pricing strategies suppliers use in other businesses, ranging from loss leaders to premium pricing. The two that are used most often in law are cost-plus and value pricing.

Cost-plus pricing is similar to the traditional hourly billing approach and is exactly what it sounds like: a price is based on the cost of delivering a service plus a markup or profit margin. Normally the markup is already built into the hourly rate, so with this approach you could in fact quote your budget as the price.

Some of the most popular new alternatives for lawyers are built around the idea of value pricing, where the client’s perception of value is the most important factor. The best-known proponent of this approach is Ron Baker, author of several books on the topic. In practice, value pricing is much harder than it sounds. (For details, see chapters six and seven of my book, Legal Project Management, Pricing, and Alternative Fee Arrangements.)

In today’s highly competitive marketplace for legal services, where some firms seem downright desperate for new work, price competition is a giant wild card.

In his book Growth is Dead: Now What? legal consultant Bruce MacEwen has described:

“Suicide pricing” in response to RFPs. These are bids—from name-brand firms, mind you—that are so breathtakingly low one wonders how they could possibly make any money. The short answer is they can’t. These bids come in 5, 10, 20, 40% under what my clients think would be reasonable for the matter. But… firms in an industry with excess capacity face an almost irresistible compulsion to cut prices, even to unprofitable levels. The goal is simply to keep people busy, in service of keeping the firm alive and satisfying clients, and in the hope that once market conditions recover, everything can get back to normal.

The bad news for most law firms is that low prices are the new normal.

When Altman Weil’s Law Firms in Transition survey asked 356 managing partners and chairs of US law firms about current trends which represented a permanent change in the legal landscape, the top trend was “more price competition.” Ninety-five percent of respondents said this was a permanent change in the legal profession. (Interestingly, number two on their list was a “focus on improved practice efficiency” or LPM, which was rated as a permanent change by 93% of respondents.)

Another challenge is posed by the growing popularity of alternative fee arrangements. When the same survey asked, “Compared to projects billed at an hourly rate, are your firm’s non-hourly projects more profitable or less profitable?” 28% said non-hourly matters were less profitable. Of the remaining respondents, 18% said non-hourly arrangements were more profitable, 42% said they were about the same as hourly, and 13% were “not sure.”

Would you invest in a company that didn’t know which deals were profitable? Of course not. But if you are a partner in a US firm with 50 lawyers or more, there’s a 13% chance you already own one.

A few years ago, an AmLaw 100 firm that was just beginning to think seriously about pricing invited me to speak at a practice group leader meeting about pricing trends. When one participant asked what I thought was the most critical issue, I said it was determining the difference between low prices that are acceptable and prices that are simply too low to make business sense for that firm. “Where do you draw that line in the sand?” I asked. The chairman replied, “We don’t even know where the sand is.”

But that was then. Now that same firm has a pricing director and a number of new pricing and management initiatives in place.

This post was adapted from the recently published fourth edition of The Legal Project Management Quick Reference Guide.

November 16, 2016

Agile legal project management: What works and what doesn’t (Part 1 of 2)

By Paul Saunders, Practice Innovation Partner, Stewart McKelvey

Background on these guest posts: When we published the fourth edition of our Legal Project Management Quick Reference Guide a few weeks ago, some of the most important articles were the new sections on Agile, a flexible approach to managing projects that is well-suited to the rapidly changing nature of many legal matters. Two of the book’s Agile articles were written by Paul Saunders, the author of these guest posts. While many experts have written about the potential value of Agile to lawyers in theory, Paul is one of the very few who has actually applied and tested the concepts in his firm. A few weeks ago, when Ivan Rasic of LegalTrek contacted me to provide input to his “How to Make a Strong Legal Team with Agile Project Management,” I suggested that he also contact Paul. Paul wrote a long and informative email which evolved into the guest posts below.

I wrote in our fourth edition that I “expect the fifth edition to include many more examples [of Agile, as the approach] continues to spread” (p. 25). This prediction is already becoming true. At this time, the evolving fifth edition is available only to firms that subscribe to our new on-line version. (The printed fifth edition will be published in a few years.) However, in the meantime, LPM is growing so rapidly that occasional sections from the fifth edition will appear in this blog, starting with these posts. – Jim Hassett


I recommend that law firms start Agile with something simple and easy – a minimal solution to acclimate the group to this new way of thinking. Then repeat and revise that solution over and over again, based on feedback from the group. (This approach is based on the “Build-Measure-Learn” feedback loop Eric Ries described in his book, The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.) This avoids the potential problem of spending months building something that no one is prepared to use.

I often start by introducing a team to the basics of Kanban and Scrum in an hour-long meeting and put together a quick task board on a whiteboard. The team then maps out all the standard stages that a portfolio of matters would proceed through and places cards within the stages to represent active matters they are working on. As a follow-up, the team conducts the equivalent of Scrum stand-up meetings at a frequency that makes sense for the team, with each team member answering in no more than two minutes the three core questions of Scrum:

  1. What did I do since the last meeting?
  2. What will I do before the next meeting?
  3. What’s blocking me or what do I need help with?

I then schedule review meetings (perhaps every month or two) to see how things are going and try to reach team consensus around three other questions:

  1. What’s working?
  2. What isn’t?
  3. What should we try differently?

When trying something differently (say, for example, transitioning to a digital Kanban tool), we come back to the minimal solution again. Change something, get feedback from the group, and change it again until it works well for the team.

I’ve found that these methods require one magic ingredient to work well: each team member must have a vested interest in the outcome of the work of others on the team. We’ve run projects applying this method which didn’t work well, where participants weren’t really part of a team but just did similar work within a similar department or with the same manager. They found the time spent giving their updates and hearing what others were doing was a waste of their time since they were all working independently anyway. Managers found it helpful to give them a sense of what everyone was working on, but if the team members themselves don’t see utility in it, it won’t have the desired effect.

However, within groups that did have a vested interest in the outcome of other members and who were expected to work together (for example, a project team on a big matter or the client service team for a major firm client), we have found these methods very effective at eliminating bottlenecks and in increasing transparency and creating accountability within the teams to progress their matters between meetings.

September 28, 2016

Fourth edition of our Legal Project Management Quick Reference Guide published today

Vincent Cino, the chairman of Jackson Lewis, calls the fourth edition of our LPM Quick Reference Guide, “A must read.” According to Toby Brown, the chief practice management officer at Perkins Coie, “Every partner should use this book.” And Melissa Prince, the director of pricing and LPM at Ballard Spahr, calls it her “LPM bible.” The book opens with extended comments from these three experts, and 19 others, who describe how this encyclopedia of tools and templates can help lawyers increase value, client satisfaction, and firm profitability for both hourly and alternative fee arrangements.

When the first edition of this Guide appeared in 2010, LPM was essentially a brand new field, and this was the only book that explained “how to do it.” Since then, LPM has grown rapidly and become a mainstay of law firm practice.  At 400 pages, the fourth edition is almost twice as long as the third edition was, reflecting recent advances in the field.  

The philosophy of this Quick Reference Guide is summarized in its first few pages:

Please do not read this book.

This Quick Reference Guide is an encyclopedia of techniques to help lawyers become more efficient. Very few lawyers have the time to read this encyclopedia cover to cover. And even for the ones who do, merely reading about LPM will not make anyone more efficient. This book is designed to help you quickly identify the tactics that will have the greatest impact on your practice and adapt them to meet your needs.

Legal project management increases client satisfaction and firm profitability by applying proven techniques to improve the management of legal matters. It is not a simple set of steps that lawyers should apply to every case or matter, but rather a toolbox which includes a broad array of procedures and templates. Each lawyer must find the tools and tactics that will have the greatest impact for them…

Our examples draw on a rich and deep body of knowledge that project managers have developed over the last several decades to help businesses run more efficiently. This book describes and adapts the tactics that lawyers find most useful and ignores the rest.

LegalBizDev principal Mike Egnatchik is my co-author for the fourth edition, and the book also includes sections written by 25 contributing authors, including such thought leaders as Stuart J T Dodds of Baker & McKenzie, Richard G. Rosenblatt of Morgan Lewis, Tom Clay of Altman Weil, and the Law Firm Value Committee of the Association of Corporate Counsel.

The 412-page, 8.5” x 11” paperback can be ordered for $99.95 by email (info@legalbizdev.com), fax (917-386-2733), phone (1-800-49-TRAIN), or mail (LegalBizDev, 225 Franklin Street, 26th Floor, Boston, MA 02110). More information appears on our web page, including an order form showing the volume discounts on orders of two or more copies.

In association with the publication of this book, LegalBizDev is also introducing several new LPM products and services which use these tools and templates in:

  • Just-in-time training
  • Just-in-time support
  • Traditional training
  • Certification

For more details, contact us today (info@legalbizdev.com, 800-49-TRAIN).

July 27, 2016

Using outsourcing to reduce legal costs (Part 2 of 2)

By Jim Hassett, Mike Egnatchik, and Jonathan Groner

Michael Bryant, the CEO of nSource, stressed that help desk functions are only one of many operations that law firms can and are outsourcing with the help of companies like his.

For example, DLA Piper asked nSource to manage a “captive operation” for it in an off-site location in Tampa, Fla. Bryant says that some law firm functions that were at first thought of as requiring attorneys on site actually were susceptible to being done off site by contract employees. One of them, in DLA Piper’s case, was conflict checking – a crucial function that a law firm must undertake before it takes on a new matter.

“We distinguished between the strategic and the tactical aspects of conflict checking,” Bryant said, “and we found that the tactical, day-to-day aspects could be done off site. By doing so, we reduced the firm’s costs for this function by 50 percent, and we also achieved a 50 percent decrease in the time required to hire a new conflicts analyst and bring him or her up to speed.”

nSource did this by carefully studying the conflict checking process – what steps were involved, who did them, and how long each step took. After completing this process mapping, it was able to advise its client, DLA Piper, on how to outsource that task.

Bryant said DLA Piper’s leaders were so pleased with the way outsourcing worked in the conflict checking arena that they expanded it to other functions as well, saving money, increasing efficiency and improving the way the tasks were done.

Legal marketing, like conflict checking, has aspects that are highly strategic and can’t easily be outsourced. But, DLA Piper and nSource found, it has many routine aspects as well.

“Although there are some people in marketing who really need to be near the lawyers,” Bryant said, “when you think about all the external and internal communications demands on a marketing team, the RFP responses, the responses to honors and awards submissions, these can be leveraged and done in a centralized way, off site. For DLA Piper, we moved to a factory-like setting, where they really churn these things out. We placed rigor and precision around an area that has historically been chaotic.”

In similar ways, nSource has set up outsourced offices for other functions such as library services and human resources for DLA Piper and other clients. 

The new world of legal outsourcing does however raise some new management issues.  The challenge of managing subcontractors is familiar in other professions. The 11th edition of Harold Kerzner’s widely quoted textbook, Project Management, has an entire chapter devoted to working with external suppliers. The perspective is interesting, since the chapter makes it clear that a firm using an external source for some of its work on a matter is now in a role reversal. The firm is a client of the outsourcer it has hired, and has the same responsibilities to monitor that outsourced supplier that its own client has to monitor the firm’s work.

If XYZ Corporation has hired your firm for a matter, the legal department of XYZ had the job of hiring you in the first place and has the responsibility to monitor your work. Similarly, if you hire supplier DIS for discovery work, you had the job of hiring DIS in the first place and then you have the responsibility of monitoring DIS to assure that their work product is acceptable. The law firm is responsible for the entire work product, and must make sure that all the parts work.

Lawyers are just starting to become familiar with the idea of subcontracting work, and the use of outsourcers presents new challenges.

As Mark Ross noted in a paper entitled "The Ethics of Legal Outsourcing", “It is clear that to satisfy the duty of competently representing one’s client, a US lawyer engaging a legal process outsourcing provider cannot rely on the provider to evaluate its own work product and must himself or herself be able critically and independently to evaluate the work product received.”

Oversight can be complex. For example, consider the eDiscovery technique of predictive coding. Unlike simpler forms of eDiscovery—such as keyword search, concept searching, and looking for clusters of similar document groups—in predictive coding attorneys train software algorithms to find the most relevant documents by using samples of documents called training sets. According to Predictive Coding for Dummies (p. 8):

Training the predictive coding system is an iterative process that requires attorneys and their legal teams to evaluate the accuracy of the computer’s document prediction scores. If the accuracy of the computer-generated predictions is insufficient, additional training set documents are selected from the document population being considered. Multiple training sets are reviewed and coded until the required performance levels are achieved. Once the desired performance levels are achieved, decisions can be made about which documents to produce.

The great advantage of this approach is that attorneys will be able to explain the decisions made by the computer, since they worked to train the computer algorithms. This can satisfy the obligation of competent representation, so long as things are properly done. But there is always the danger that things will not be properly done. Predictive Coding for Dummies (p. 11) goes on to say:

Understanding how to use predictive coding tools properly is critical for several reasons. First, predictive coding is relatively new to the legal field and introduces additional complexity to the eDiscovery process. Second, many different predictive coding solutions are available on the market that vary in quality and approach. Third, even though predictive coding solutions can be difficult to use, clear instructions and training are often lacking, which can increase the risk of error. These and other factors have combined to create confusion about the proper methodology for using predictive coding tools.

The message is clear: A firm that uses predictive coding cannot rely on it as a black box that gives right answers at all times. Not all providers are equal. There must be a procurement process that evaluates and selects an appropriately qualified provider.

Competent representation includes understanding and monitoring the provider’s work. If that does not happen, the law firm may be at risk.

Due to the growth in outsourcing, in 2008 the ABA Standing Committee on Ethics and Professional Responsibility issued an opinion to provide ethical guidance to lawyers about how to outsource in a manner that is consistent with the profession’s core values. State and local bar associations have also offered guidance in this area.

In August 2012, the ABA Commission on Ethics 20/20 concluded that outsourcing did not require changes to the Model Rules of Professional Conduct. However, it did propose new Comments to identify the factors that lawyers need to consider when retaining outside lawyers (Model Rule 1.1) and non-lawyers (Model Rule 5.3) to assist on a client’s matter. The Commission also proposed a new sentence (for Comment 1 on Model Rule 5.5) to clarify that lawyers cannot engage in outsourcing if it would facilitate the unauthorized practice of law.

Like many obligations described in the Model Rules, these proposals were intended to be “rules of reason” and were not intended to preclude consideration of broader legal concerns, such as malpractice and tort liability. But they did reflect the fact that new trends in outsourcing place new demands on the supervising lawyers.

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

 

February 15, 2016

A preview of the fourth edition of our Legal Project Management Quick Reference Guide

When the third edition of our widely used collection of LPM tools and templates was published a few years ago, here’s what some of the best known experts in the field had to say:

“Every partner should read this book.” – Toby Brown, Chief Practice Officer, Akin Gump

“Not only will every lawyer benefit from this book, but so will those who provide support to practitioners.”  – Kim Craig, Global Director of Legal Process Improvement, Seyfarth Shaw LLP

“This book demystifies LPM, providing tools that lawyers can actually use.” – Stuart Dodds, Director, Global Pricing and Legal Project Management, Baker & McKenzie

As the field has grown since then, we have continued to develop new tactics and job aids to help lawyers increase efficiency and client satisfaction.  Last week, we released a preview of the fourth edition that includes over 100 pages of new tools and templates.  This special preview is now being used by our coaching and training clients, while we solicit advice for improvements from a distinguished board of advisors from over 40 firms, and finish researching and writing a few more templates on some of the hottest topics in LPM including pricing, task codes and Agile.

After we add the finishing touches, the fourth edition will go on sale in October 2016.  If you’re not in one of our coaching or training programs and don’t want to wait until October to get started, we are selling a limited number of copies of the third edition for $99 (a 75% discount from the original list price of $395 per copy), plus shipping and handling.  As in the past, this book will be sold only to law firms and to select in-house counsel and only through this web page.