49 posts categorized "Books"

April 23, 2014

The most critical issues in legal project management (Part 1 of 3)

This three-part series previews results from my book Client Value and Law Firm Profitability, which will be published this summer.  All quotes are from managing partners, chairs, and other senior decision makers at AmLaw 200 firms.  Each participated in 30-minute in-depth interviews and spoke freely based on the understanding that they could review their quotes before publication, and they would not be quoted by name.

In 2009, when many firms first started talking about how to apply traditional project management techniques to legal matters, we proposed that lawyers think about the field in terms of these eight key issues:

  1. Set objectives and define scope
  2. Identify and schedule activities
  3. Assign tasks and manage the team
  4. Plan and manage the budget
  5. Assess risks
  6. Manage quality
  7. Manage client communication
  8. Negotiate changes of scope

When we coach lawyers on LPM, we always start by asking which issue is most important to a particular client or matter, so that we can focus on the low hanging fruit. Not surprisingly, the answer depends on the situation, and each of the eight has sometimes been rated as most important. However, in this research we wanted to get a sense of which issues seemed most important to the profession as a whole, and so one of the questions we asked was, “Which of these eight LPM issues do you consider most critical for client value and/or profitability in the short-term and why?” Of the 37 people who answered that question, 8% said that they were all basically equal:

It’s very difficult to rank order them. They are all important. There may be subtle variations, but these all work together, and I really can’t differentiate in terms of which is most important and which is least important and what’s in the middle. They all have to come together.

However, 92% were willing to single out one or more issues as particularly critical, as in the following quotes, the first from a managing partner, the second from a C-Level executive:

There are two that I would rank the most critical: the setting of objectives and scope, and managing client communication and expectations. Those, to me, are linked at the hip. You really have to understand what the client’s expectation is, and you also have to have a good relationship to be able to tell them whether or not their expectation is real and achievable. A lot of things can happen in litigation that can change the scope of an engagement. You can run into difficult parties and unforeseen problems, and that’s where an understanding between you and the client has to be solid enough that you can have those kinds of conversations and work your way through it.

There are three things I don’t think we do very well. The first thing is negotiating changes of scope up front. The second is clearly setting and understanding the objectives and the scope from the beginning. Lawyers think they do it, but I don’t think they get the right level of detail. The third is assessing risks to budget and schedule. They don’t wear the project management hat and think through what might go wrong.

When we analyzed the answers from people who saw some issues as more critical than others, they were ranked in the following order:

Most critical short-term issues in LPM
Set objectives and define scope 50%
Manage client communications and expectations 38%
Plan and manage the budget 28%
Assign tasks and manage the team 22%
Negotiate changes of scope 20%
Identify and schedule activities 12%
Assess risks to the budget and schedule 10%
Manage quality 10%

The top two – defining scope and communicating with the client – are especially interesting because they have nothing to do with software or Gantt charts or anything a relationship partner should delegate to an outside project manager. Instead, they come down to understanding what clients want, and giving it to them.

In this three part series of posts, we will briefly discuss each issue, arranged in this order of importance.

Set objectives and define scope

The short-term issue that was mentioned most often as critical starts on the very first day of each new matter, or before:

Setting objectives and defining the scope are crucial. You can budget. You can do anything you want. But if you don’t know what those objectives are, and what the client is willing to do or wants to do, you’re just putting stuff on paper. – Senior partner

Defining scope is the most critical in my mind. That’s where we struggle the most on the front end. – COO

The critical issue is sitting down with the client at the beginning and deciding what their goals are with the matter. Is it getting it done quickly? Is it getting it done so that nobody ever brings a matter like this again? Is it getting it done in advance of the big merger on the books a year from now? There are all different considerations as to what will lead a client to think this was a successful representation. And I find that the more you push your client to think through what they care most about, the better off both of you are. – Managing partner

Obviously clients have got to know what they’re paying for. How many times in a litigation matter do the clients say, let’s beat the guy, and then after you spent the money, they have buyers’ remorse? – CFO

I think the lawyer really has to understand what the client’s objective is, and manage to that objective, which is a hard thing for a lot of litigators to learn, in particular those who are from the win-at-all-costs school. – Chair

However, defining scope properly can be quite difficult. As I noted in our Legal Project Management Quick Reference Guide (3rd ed., p. 20), lawyers who are trained to prepare for every possibility can get in trouble if they try to be too specific:

If a list of carve-outs gets too long or too specific, it can annoy the client and lead to lost business. Unfortunately, there is no simple general way to create assumptions that balance client needs and firm needs. The details must be worked out case by case. This can be especially difficult in a highly competitive environment.

One way to deal with this challenge can be seen in the following comments from a C-level executive:

I counsel people against a three-page list of assumptions, because it just drives clients crazy. I tell them to pick the big ones, and I say, “If you’re assuming very limited document review under 300,000 documents, and then it comes in that you’re going to have to review two million, you’ve got to be able to identify that that’s a huge variable and cost driver, and you’d better make sure that you’ve been very clear in your assumptions, so that if that happens, you can quickly pick up the phone and say, ‘We’ve got a major change in scope. Let’s talk about how to deal with it.’”

Another major complicating factor in defining scope is that with large clients, different stakeholders may have different objectives:

There is sometimes less than optimal communication within some of our client organizations, between the legal department and the corporate higher ups, as to objectives, priorities, timing, and budgets. We often receive our work directly from the legal department. The legal department at times may not quite understand what top management wants done, at what cost and in what timeframe, and that leads to inefficiency.

There’s no question that this is an art that needs to be developed further. We find sometimes with clients that the people we work out the sale with aren’t the same people that we work out the delivery with, so whether the scope has been properly defined or not becomes a really big deal, and changes in scope needing to be negotiated depends upon how well you defined the scope in the first place. This is something law firms have not historically done well, compared to, say, contractors and others who are used to a fixed fee type environment. So there’s a lot of room for improvement on that.

Finally, it is worth noting that the emphasis on scope does not apply to all clients and all law firms. In the statement below, one AmLaw 200 chairperson argues that it applies to only a small percentage of his firm’s clients:

In a world where your client is cooperative and just as accountable as you are, then I would say that setting objectives and defining scope would be the most important. We just haven’t found clients to buy into that, for the most part. For our firm, about two-thirds of clients use the word value just as a polite way of asking for a discount. Right off the bat, those two-thirds are not interested in setting objectives and defining scope. They’re just interested in price. Another sixth of my practice has no need for this at all, because they’re completely price insensitive. They just want really good work. They trust us. So it’s only that last sixth that actually cares about scope.

In Parts 2 and 3 of this series, we will discuss the remaining seven issues.


February 26, 2014

Book review: Law Firm Pricing

In the current competitive environment, many law firms are struggling with three key questions:

  1. Pricing: How do I bid high enough to make an acceptable profit, but low enough to get new work? 
  2. AFAs: When are non-hourly alternative fees best?
  3. Managing: After I set a price, whether AFA or hourly, how do I manage the work to make a profit?

Based on the data we are currently analyzing in our study of Client Value and Law Firm Profitability, most firms are making a lot more progress on the first two questions than on the third.

The new book Law Firm Pricing: Strategies, Roles, and Responsibilities provides a guide to this progress.  It was written by two of the leading pioneers in this new field – Toby Brown of Akin Gump and Vincent Cordo of Reed Smith – and provides an excellent overview of the current state of this rapidly evolving area.  (Full disclosure:  Vince has been a LegalBizDev client for the last few years.)

This book should be required reading not just for pricing directors and their staffs but also for managing partners, executive committee members, and pretty much anyone who wants to understand how large law firms are changing the way they price both hourly and AFA work.

In 2012, we wrote an article for Bloomberg Law Reports entitled “The Rise of the Pricing Director.” At that time, despite extensive networking we were able to find only a handful of people who held the title of pricing director in a law firm, or performed that function. Law firms generally move a little more slowly than glaciers, but the growth in pricing directors in the two years since has been meteoric.  There is now even a blog site that tracks the names of senior managers at large firms with the word “pricing” in their title.  The total stands over 70 as this is written, and may be higher by the time you read this. 

With 20/20 hindsight, it is easy to see the reason for the rapid growth of the “pricing director” title and function. The well-documented changes in the legal profession over the last few years have placed intense pressure on profits. It is therefore not surprising that a new host of high-level executives has emerged to help law firms set their prices in a way that will help them to maintain and grow profitability.

This book is quite well written, with a notable absence of legal and business jargon. Brown and Cordo discuss, clearly and thoughtfully, the responsibilities of the pricing director; the director’s multiple roles, both internal and client-facing; the crucial importance of pricing strategy to long-term profitability; the need for data-based solutions in all contexts; and the frequent resistance of law firm partners to many of these developments.

The authors are especially incisive in their analysis of the behavioral incentives and factors that affect law firms, which are after all made up of human beings:

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)

They are also extremely thoughtful about the role of technology in today’s law firm and about its limitations:

The core systems of a law firm – the client database, document database, financial database, and people database – all stand alone. Getting data from one to another is very difficult. Therefore, understanding which clients are buying specific types of services, the staff resources committed to resolving the legal challenges, as well as the profitability of the effort, is a significant challenge. (p. 50)

This wouldn’t be much of a review if we didn’t find something to criticize, and there are a number of places where we wished the discussion went deeper.  For example, Chapter 3 – Pricing and Profitability – begins with a two page introduction to how profits are defined differently by different firms, a topic that we think requires far more detail, including the implications of different definitions of realization (which many lawyers confuse with profit) versus cost accounting and other models.  Lawyers will never agree on how to become more profitable if they don’t first agree what the word means.

Another problem can be seen in the book’s discussion of “four drivers of profitability”:  rates, realization, productivity and leverage.  Leverage is defined “as the percentage of partner time worked per matter or per client” (p. 18).  The authors go on to argue that:  “The basic economic concept of leverage is that the more workers work, the more owners (partners) benefit. Workers generate the profits that pay partners. Therefore, the more work is pushed down to them, the better leverage you have and the more profit is generated (p. 19).”

That is certainly how firms thought about profit under the “old normal” pyramid model, but the world has changed.  For example, in a fixed price environment, efficiency is king, and leverage can lead to higher costs and more unbilled time.  Suppose a $1,000 per hour senior partner can solve a problem in one hour, but a $300 per hour associate will require ten hours to come to the same answer.  If the firm is paid the same fee regardless of who does the work, it is obvious that solving the problem at the unleveraged partner “cost” of $1,000 is more profitable than at the leveraged associate cost of $3,000.  (Of course, billable rates are really not a cost, but let’s keep it simple.) 

In a post I wrote in 2009 entitled the “Law Firm of the Future,” I quoted Fred Bartlit, founder of Bartlit & Beck, as noting that to maximize leverage “some big firms traditionally hire over 100 new associates per year, and that most leave within a few years.  This means a significant portion of the firm’s workforce is inexperienced.  ‘Who cares? Their inefficiency is billable,’ he said.  ‘In the future, the ideal firm will be underleveraged with about 50 partners and three associates in training.’”  Thus, in Bartlit’s view of the future, leverage is not a driver of profit, it is a driver of loss.

But enough quibbling.  Discussions like this can get very complicated very fast, and it may be years before law firms reach a consensus.  So this criticism of the profitability chapter says more about the state of the art of pricing than it does about the book.  I am hoping that in a few years Toby and Vince will write a second edition with the expanded explanations we are waiting for.   

In the meantime, the practical experience of these two industry leaders places them in the forefront of critical changes in the legal industry, and they have written an extraordinarily valuable book.

As they summed it up: “From the authors’ experiences, the pricing director role has been very challenging, but quite rewarding. It exists at the vanguard of change for an industry in desperate need of it. . . . The last word on legal pricing is that it is a roller coaster ride and nobody is sure yet exactly how it will end.” (p. 2)


This post was written by Jim Hassett and Jonathan Groner.

February 18, 2014

Announcing a new Kindle version of our Legal Business Development Guide

Amazon is now selling a new Kindle version of my Legal Business Development Quick Reference Guide.  This book lies at the heart of the highly successful Adams and Reese program I’ve described in the last few posts, and is used in all of our business development coaching and training programs.  See our web page for sample chapters, reviews, and ordering information for the printed book, including volume discounts up to 50% on orders of multiple copies.

September 11, 2013

Why is legal project management growing?

Some background on this post: Lawyers often ask us for a one page summary of what LPM is, and why they should care.  But summarizing all the facts in a single page is very difficult.  As Mark Twain once put it“I didn't have time to write a short letter, so I wrote a long one instead.” Over the last few months, LegalBizDev Principal Ed Burke and I have been exchanging drafts of this post.  If you want to prove to yourself that we met the challenge, feel free to download the one-page pdf version.

Clients have been using project management for decades to reduce risks, cut costs, streamline processes and protect profits.  Now they’re pressing law firms to adapt it to legal services, to provide more value and improve the predictability of budgets and schedules.


What is legal project management?

Though new to law firms, project management has long been used by businesses to protect profits through efficiency and predictability.   Their projects – from the design and production of a new line of jet engines to the acquisition and integration of a billion-dollar company -- can reach nearly unimaginable levels of complexity, variability and risk.  Businesses from engineering to investment banking have developed a rich and deep body of knowledge about how to manage projects on time and within budget.  Legal project management adapts these proven techniques to the unique challenges of managing unpredictable legal matters and disputes.  


How it works.

Project management applies templates, checklists and other recognized management tools to planning, managing, delegating, budgeting, tracking, meeting deadlines and avoiding risks.  A 2011 meeting of litigation experts hosted by the Association of Corporate Counsel and the American Bar Association found that, while lawyers are quick to grasp new management techniques, “the challenge is change/behavior management.”  As a result, the quickest path to ROI is one-on-one coaching, in which experts advise lawyers on immediate legal project management tactics each lawyer can use to address the issues they face today.


What’s new?  

Any lawyer who has ever planned a budget or managed a team has served as a legal project manager.  But clients are now choosing law firms based on their ability to apply a more systematic and disciplined approach that delivers more value, more quickly. “More efficient project management” is now one of the top demands of in-house Chief Legal Officers, according to a recent survey by Altman Weil.  


The benefits.

Project management was initially adopted by many firms to protect profits in fixed-fee arrangements.  But then they saw its benefits in billable-hour matters, including decreased write-offs and write-downs through more accurate budgeting and tracking.  It also enabled firms to take on more work without adding headcount or cost. A recent American Lawyer Media Legal Intelligence survey found that firms that use legal project management report more productive client relationships, improved communication, greater cost predictability and other benefits.   

*  *  *

The first “how to” text in the field – the Legal Project Management Quick Reference Guide by LegalBizDev founder Jim Hassett – was published in 2010 and is now in its third edition.  For more information, see www.legalbizdev.com/projectmanagement. 

July 17, 2013

Book review: Time Management Handbook for Lawyers

In the good old days of few fixed fees and many billable hours, firms had little reason to care if lawyers were inefficient, as long as they billed their 1800 or 2000 or 2200 hours per year.  If they might have found a way of doing something faster… well, why would they even try if they were being paid by the hour?

But all that has changed in the “new normal.”  When clients demand efficiency, all of a sudden personal time management matters. 

When we first designed our project management coaching, and the Certified Legal Project Manager® program, we felt that this would be a very important topic for some lawyers.  So we not only included a section on this topic in my Legal Project Management Quick Reference Guide, we also identified supplementary readings for lawyers who were interested. 

Several years ago, when we searched Amazon for “time management books,” we came up with hundreds of options.  We did not read them all, but we did buy quite a few of the top ones to see which we thought would be most useful to lawyers.  A separate Amazon search on “time management books for lawyers” came up with a much smaller number.  But when we looked at the top sellers, we were not impressed.  We ended up picking a book written for a general audience for our coaching and certification:  The 25 best time management tools and techniques by Pamela Dodd and Doug Sundheim. 

The book is very easy to use quickly, because each of the 25 techniques is described in a separate chapter such as “minimize interruptions,” “delegate more/better,” and “hold better meetings.”  When lawyers in our coaching program express a special interest in improving personal time management, we buy them a copy of this book, tell them to scan the chapter titles for topics that could help them personally, and then come up with practical and immediate steps to improve one thing at a time.

But many lawyers prefer books written specifically for lawyers, so we’ve been keeping our eyes open for new books.  When I heard a few months ago that Gary Richards, one of our principals, was writing a new book called the Time Management Handbook for Lawyers, I couldn’t wait to see it.

Well, Gary’s book just came out, and since I work with him every day, of course I will understand if you think my review may be a bit biased.  But I can say in all honesty that Gary’s book is the best legal time management book that I’ve seen.  His subtitle says it all:  “How-to tactics that really work.” 

I especially liked the practical tools in the appendices, including “how to take and analyze a time log,” “the top 40 most common time barriers,” “typical complaints of associates and staff about how partners delegate,” and examples of a new client information letter and requirements for engagement letters.

Some of the material overlaps with concepts covered in my Legal Project Management Quick Reference Guide including chapters on meetings, delegation, and client communication.  (To see Of Counsel’s review of the Guide, published yesterday, click here.)  Gary and I took slightly different approaches in some cases, and have different writing styles.  But who knows, maybe you’ll like his more than mine.

If you need to improve your personal time management, would you benefit more from a book specifically written for lawyers or from one of the many written for a more general audience?  The answer depends on you. 

In the future, when we offer selected lawyers in our coaching program a free book on time management, we will give them two choices:  the Dodd book if they want a quick high level overview of common techniques or Gary’s book if they want a more detailed discussion of time management techniques specifically for lawyers.  If they want both, we will send both.

If you need help on time management, and are not sure which book sounds better, you might as well buy both.  The total cost of the two books on Amazon is just $24.40, so it’s hard to go wrong.  The first time you are able to bill just one more hour based on your reading, you will already be way ahead of the game.

July 10, 2013

The top ten best practices in legal project management

 This post was adapted from the new Third Edition of the Legal Project Management Quick Reference Guide.

When you begin to think about your first LPM action items, you may find it useful to begin by reviewing this list of the top ten best practices to determine what matters most in your situation:

  1. Make sure you understand client needs early on. What would the client consider to be a successful outcome? What are their priorities, both overall and for this particular matter? Also determine who the primary decision makers are on the client side, especially about cost issues.

  2. Divide a large complex matter into a number of smaller tasks. Then schedule a meeting of key team members to define the schedule and budget the tasks. Bottom-up planning (which is interactive and iterative) is more effective than top-down planning (which is linear and one-way). Remember that it is human nature to be optimistic; don’t underestimate how long tasks will take.

  3. Aim for a cohesive team approach, with one lawyer managing all assignments and monitoring the time of all lawyers assigned to the matter. Also assign primary responsibility for each task to a single individual. When specific people are assigned to tasks, each person will have a sense of ownership and you will have a clear view of who is responsible for what.

  4. Individual tasks should be easy to track. Each activity should be budgeted for a manageable chunk of time (typically 8 to 80 hours) to give team members freedom to perform the task as they think best while still assuring accountability.

  5. Communicate the budget and hourly expectations for each task to the team. Then ask the person who is responsible for each task to estimate how long they think it will take. If there is a large gap between their estimate and yours, discuss why and consider revising the estimate.

  6. Always know what you have spent so far, and what you expect to spend in the future. Check at regular intervals to make sure the work is being done within the projected budget. Compare the percentage of the budget you have spent with the percentage of work you have completed. Focus attention on the largest tasks that will require a high percentage of the budget.

  7. In large projects, schedule regular team meetings to review progress and remind members of the overall goals of the project and of upcoming tasks. Create status reports that are easy to review. Watch for roadblocks that interfere with team progress and remove them.

  8. If cost reduction is required, look for procedures that can be simplified or standardized. Also consider delegating some tasks down if they can be performed efficiently at lower hourly rates. But note that the cost will often be lower if you “delegate up” to more senior lawyers who need less guidance and feedback.

  9. Keep clients informed as the matter progresses. Consider whether it would be useful to send monthly one-page status reports which summarize what was accomplished last month, what is planned for next month, and any issues or challenges.

  10. Effective managers spend twice as much time planning as ineffective ones. Find the balance between planning too little and planning too much. (For the data behind this claim, see the book Alpha Project Managers: What the Top 2% Know that Everyone Else Does Not.)  

May 20, 2013

Today’s publication of the third edition of the LPM Quick Reference Guide

The first two editions of my Legal Project Management Quick Reference Guide were purchased by firms with over 85,000 lawyers.  Today we are publishing the third edition, which adds over 100 pages of new tools and templates that law firms are using to increase client satisfaction, new business, and profitability.

Last February, I published Legal Project Management, Pricing, and Alternative Fee Arrangements to explain WHY firms are focusing on these new areas.  This 226-page Quick Reference Guide is a companion volume and is the only book that explains HOW to implement LPM.

A number of sections were written by 13 contributing authors, including lawyers that have been leading the LPM movement at such firms as Squire Sanders, Morgan Lewis, McDermott Will & Emery, and Valorem. The book also includes a complete list of the readings and assignments from our Certified Legal Project Manager® program.  Readers of this third edition can now complete much of this program on their own, without signing up for certification.

See the book’s description on our web page for reviews by noted experts a description of what’s new in the third edition, and a downloadable free excerpt.

February 14, 2013

Announcing the publication of my new book

Press release

Boston, February 14, 2013: Today, LegalBizDev published the new book, Legal Project Management, Pricing, and Alternative Fee Arrangements: What Firms Are Doing, by Jim Hassett, Ph.D., the founder of LegalBizDev. 

Unlike any other book about legal project management (LPM), this 258-page volume relies heavily on interviews with partners at several dozen law firms across North America who have recently adopted LPM techniques. Much more than an introduction to the subject, this book contains reports from lawyers in the trenches who have used these techniques to plan their projects efficiently, develop budgets, price their legal work appropriately, and gain advantages over their competitors.

“This new book will help lawyers understand the theory and the practice of legal project management,” says Hassett. “Law firm partners will see how LPM can assist them on a day-to-day basis by building on the lessons that have been learned at large firms and at small ones.”

As Hassett points out early in the book, “The reason LPM is growing so rapidly is that it helps law firms meet client needs and their own needs.”

The key portions of the book are Chapters 3, 4, and 5. Chapter 3, “Eight key issues in LPM,” describes the fundamental concepts that lawyers must learn if they are to adapt successfully to the “new normal” relationship between large-firm lawyers and their corporate clients.

Chapter 4, “A variety of approaches to LPM,” gives brief accounts of the different ways nine law firms have begun to adopt the principles of legal project management. Chapter 5, “Case studies in behavior change,” describes how four additional firms have offered targeted training in LPM and changed their approaches to planning, budgeting, and managing their matters.

“I appreciated the casual conversational nature of the writing, along with the formality and detail of the citations to other sources. It is a nice mix that makes the text a quick read, but also a resource guide for more detailed research and study of the topics,” says Paul A. Williams, a partner at Shook Hardy & Bacon.

Says Kim Craig, director of the legal project management office at Seyfarth Shaw LLP, “Jim’s book is a true testament to the changing legal landscape supported by numerous case studies and facts representative of firms in various states of their LPM maturity. For an industry historically known for asking, ‘What is everyone else doing?’ this book answers that question and ignites a sense of urgency for lawyers and law firms to pay attention to the drum beat of the cultural transformation taking place within the legal industry.”

What is unique about this book, in addition to the case studies, is the way that Hassett integrates the latest thinking and research on the relationships between project management, pricing, and alternative fees.

Several hundred copies have already been pre-ordered by dozens of law firms before today’s publication date. 

The book is available now from LegalBizDev ([email protected], 800-49-TRAIN). An excerpt and an order form can be downloaded from: www.legalbizdev.com/projectmanagement/lpm-pricing-afas.html

A Kindle edition is available now on Amazon, and the printed book will also be available soon through Amazon and Barnes & Noble.

December 05, 2012

Business development tip of the month: Don’t argue

An argumentative personality can be an extremely valuable  asset in many legal situations, but when it comes to developing relationships and new business, arguing is a very bad idea.  As Ben Franklin once said: “If you argue and rankle and contradict, you will achieve a victory sometimes, but it will be an empty victory because you will never get your opponent’s good will.”


The first Wednesday of every month is devoted to a very short and simple tip like this to help lawyers increase efficiency, provide greater value to their clients and/or develop new business. This month’s tip was adapted from my book the Legal Business Development Quick Reference Guide

October 31, 2012

Law firm winners and losers

The demand for lawyers is going down, and the supply keeps going up. With clients spending less, the result is a worldwide game of legal musical chairs, with a growing number of lawyers being left with nowhere to sit down.

In 2005, in the first post in this blog, I wrote about an RFP that Tyco had issued to increase the value their law firms provided. Before then, Tyco had used 167 different law firms for product liability cases. The RFP was designed to combine all that work within a single firm to maximize efficiency. To me, the most interesting fact was that when Tyco made their choice, they selected a firm that was not one of the 167: Shook Hardy & Bacon, a firm that they had no previous relationship with.

According to an ABA Journal article seven years later, the relationship grew, and “today Shook Hardy is Tyco’s sole legal services provider for product liability, automobile, and general liability matters.”

The article quoted Dennis Lynch, chief litigation counsel at Tyco, “I think it has worked well because we’ve truly partnered with them…They’ve gotten to know well the players here, the business, products and obviously the law department.”

But that is not to say that building a partnership was easy. The article also quoted Shook Hardy partner Paul Williams who “admits the learning curve for Shook Hardy was steep.”

Firms need to reduce that learning curve, since a recent survey found that 46% of law departments report that they are working with fewer law firms than five years ago, and another 16% report that the number of firms is the same, but they have switched to different ones. When the music stops, you may need some new skills to make sure you still have a place in the game.

Improved skills could even help you save your firm.  You think your firm is perfectly safe now? That’s what they thought at Dewey LeBoeuf, Howrey, Heller Ehrman, Thelen, and Thacher Profitt. Each of these firms had hundreds of lawyers a few years ago, but now the firms are gone. A large number of smaller firms have died as well.

Every law firm that has gone out of business had its own unique problems. But people often use this as an excuse to say: This could never happen to us. Actually, it could.

When the American Lawyer ran a cover story on Dewey’s demise  they interviewed nearly three dozen former partners and staff and conducted detailed reviews of documents ranging from audited financial reports to the firm’s bond offering circular. They concluded that “Dewey’s death was the product of years of bad decisions, and of greed on the part of senior partners.” The implication for lawyers at other large firms was: Don’t worry. It was just a few bad eggs. You are safe.

I have no reason to doubt the facts quoted in the American Lawyer, but I interpret them differently. Dewey failed because its leaders were overly optimistic that the kinds of strategies that had worked in the past would continue to work in the future.

Their business decisions would not have led to bankruptcy a decade ago. Bad decisions simply did not lead $900 million dollar firms to fail at a time when larger economic forces were pushing all large law firms up.

As pricing pressures increase, so do the bad decisions.  For example, in “Growth is Dead,” the Adam Smith Esq definitive series on the current state of the profession, Bruce MacEwen has written about “‘suicide pricing’ in response to RFPs… 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.. in a desperate and/or deluded attempt to keep the factory whirring away.”

Ten years ago, there was a lot of room for error. Now there isn’t. As Warren Buffet famously said, "It’s only when the tide goes out that you learn who’s been swimming naked."

Large law firms had a great run of success through the first few years of this century, with constant expansion and ever-rising salaries. But that’s over now. As Dan DiPietro, Chairman of Citi Private Bank, put it, “The industry will not return to the golden era of double-digit profit growth any time soon.”

And, as Microsoft founder Bill Gates stated, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”

In other industries, many people have experienced great success and thought they couldn’t lose. Here are some of the companies they used to work for: TWA, Pan Am, Eastern Airlines, MCI WorldCom, American Motors, Montgomery Ward, Woolworth’s, Standard Oil, RCA, Compaq, Digital Equipment Corporation, Wang, Drexel Burnham, E.F. Hutton, PaineWebber, and Lehman Brothers.

But the world changed, they didn’t, and now all those companies are gone. So are lots of others.

In the last few decades, the forces of global economic change and technology have radically transformed many industries including telecommunications, airlines, retail, mass media, and medicine. As jazz great Miles Davis said in his autobiography: “The world has always been about change.” These same forces are now transforming the business of law.

In his apocalyptic book The End of Lawyers? Richard Susskind argued that, “For many lawyers, it looks as if the party may soon be over.” (p. 270) As a result of advances in information technology and pressures toward commoditization: “The market is increasingly unlikely to tolerate expensive lawyers for tasks (guiding, advising, drafting, researching, problem-solving, and more) that can equally or better be discharged by less expert people, supported by sophisticated systems and processes.” (p. 2)  As a result, Susskind wrote, “Lawyers who are unwilling to change their working practices and extend their range of services will…struggle to survive.” (p. 269)

Change is never easy, and it will require both inside and outside counsel to make a substantial investment in learning new skills and experimenting with new ways to do business. As Harry Trueheart, the chairman emeritus of Nixon Peabody, put it:

Law firms will pay dearly as we as a profession learn to do this. There will be winners and losers.

There’s still time to decide whether you will win or lose.  If you want to lose, ignore the need to change your behavior and better meet client needs. 

But if you want to win, it is a time to stop acting like a risk-averse lawyer, and start acting like an entrepreneur, and turn your clients into raving fans.  As Camden Webb, a partner at Williams Mullen, put it after completing one of our project management programs:

Don’t hold a series of committee meetings for a year and then do a top-down analysis. Just do something


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This post was adapted from my new book “Legal Project Management, Pricing, and Alternative Fee Arrangements” which will be published in February.  A draft of the book is currently being reviewed by experts from over 50 law firms.