58 posts categorized "Books"

October 29, 2014

Business development best practices: Follow up

This is one of a series of occasional posts summarizing the most important best practices from my book the Legal Business Development Quick Reference Guide which is now also available in a Kindle edition.

There’s no way around it: business development takes time. To build new business, you must follow up, week after week, month after month, and year after year.

In The Sales Bible (p. 197) Jeffrey Gitomer sums it up this way:

Most sales are made after the seventh no…It takes 5 to 10 exposures (follow-ups) to a prospect to make the first sale…[so] you’d better have what it takes to persevere through the follow-up process and not quit.

For many busy lawyers, the best way to assure that you will follow up is to “make an appointment with yourself” for one or two blocks of time that will be devoted to business development every week, such as 2-4 PM every Tuesday and Thursday. Put the time in Outlook or your weekly planner, and try to avoid scheduling anything else at that time. When something comes up that is more critical, as is sometimes inevitable, reschedule your marketing time.

We recommend setting this time block in the middle of the week, at a time when you are likely to be able to reach clients and prospects. If you think Mondays and Fridays are the best times to discuss new business with your clients, try it, track the results, and then decide.

It also helps to share your results with a colleague, a coach, or even a relative or friend. Simply knowing that someone else is watching will make you more likely to follow up.

Finally, you will need a good system for tracking To Dos.  Different lawyers prefer different approaches, and the best format is the one that contains the information you need, in a form that you will keep up to date.  My favorite is a simple list with three columns like this:

Who

Priority

To Do

Tom French

High

Hold telecon, based on key questions from the Quick Reference Guide 

COO at ABC Corp

High

If COO provides info for press release, finish a draft ASAP

Ms. Johanssen

Medium

Send agenda listing questions for the next meeting

Mary K.

Medium

Hold satisfaction interview

Tom S

Low

Call to set up a meeting

Falco Inc

Low

Meet in early June

This type of overt prioritizing will help you assure that if something simply doesn’t get done due to lack of time, it is likely to be the item that will have the least impact on the future of your practice.

Or better yet, use Outlook or any other program to keep your list.

And then don’t forget to actually follow up.  Week after week, month after month, and year after year.

October 22, 2014

Book excerpt: What should law firms do to improve profitability and LPM? (Part 4 of 4)

This series was adapted from my new book Client Value and Law Firm Profitability, which was published at the beginning of this month.

Given all the options and competing claims about LPM, what should a firm do to get started? Our answer is explained below at the end of this book: embrace experimentation and, as one of our clients put it, “just do something.” Start small, and find out what works for your firm.

Once you have grassroots support from influential internal champions, then you will be in a position to decide whether you might benefit from professional project management staff, depending on the unique needs of your practice area and your clients.

Remember that in this study’s ranking of LPM issues in Chapter 4, the two most critical were defining scope and communicating with clients. Neither can be delegated to project managers. Lawyers must first be committed to changing their approach before it makes sense to hire others to help them.

The big picture recommendations in the next section about starting “one practice group or lawyer at a time” include evidence that the development of internal champions and quick wins has proven its value in changing behavior in a wide variety of professions. So it is not surprising that a number of participants in this research cited the same approach:

I try to find an internal champion to move things forward. I worked with a partner in one department that bought into LPM and we gave a joint presentation on it. Word got out and another department asked to provide the same presentation to them. Many times once attorneys get a taste of LPM they get interested and want more. – Senior executive

We’ll have to have to have some guinea pig partners who are willing to try it and then be willing to testify as to how it has helped their numbers and their client relationships. – Senior partner

Because we’ve had some demonstrable LPM successes, enthusiasm for it is growing. – Senior executive

However, even with the support of champions, LPM is not quick or easy to implement. As one senior partner emphasized, there are no magic solutions:

Top management has to make it a priority and communicate it all the time, make it part of the culture. It will have to be ingrained in people, and it’s slow. When people use the tools and the resources, and they are successful, they will communicate their success to their partners. Others will want to use it, and LPM will work its way around. But that will take some time. We don’t know exactly how long it will take.

Some firms will find it valuable to hire professional project managers to support lawyers’ efforts, as in this quote from one chair:

We’re going to start hiring different people to manage the non-legal aspects of the practice, not the relationships. That’s what has to be done. Lawyers are notoriously bad managers. You could be a fabulous trial lawyer but not be able to get your hours in on time or bill on time. You might not be able to collect on the bill. With all these different components, it’s better to look to a project manager on accounts receivable, on AFAs, on collections, rather than the lawyer.

Another firm chair that has gone down this path has been very satisfied with the results:

I think that project management skills are absolutely critical to achieving value and managing well, which is why we have people who actually make this their life’s calling. People who are certified project managers, who are trained in it, who actually know what it means when you talk about Agile Scrum, as opposed to somebody thinking it’s a flexible rugby player. Project management is a profession, and the people in the profession need to understand how the legal business works, how lawyers think. How you would manage a project at IBM is not the same way you would manage a project in a large law firm. But when we have good project managers working as part of the client service delivery team with the clients, clients love it. They just love it. It adds so much value, it’s unbelievable.

(Agile Scrum is an approach to project management that starts from the assumption that customers often change their minds about what they want and need as a project proceeds. It therefore replaces extended upfront planning with rapid development of partial solutions which can be tried out on clients and adapted until they meet true needs. Many professionals believe that this will become an increasingly common approach to LPM as it evolves.)

There can be little doubt that the trend of using LPM professionals will continue to grow, especially in large firms. It is also safe to predict that the level of LPM sophistication needed to compete effectively will continue to increase.

In the next few years, the most interesting developments in LPM are likely to involve moving away from traditional project management models to cutting edge alternatives. For example, in one of the most widely quoted texts on LPM, Robert Wysocki talks at length about how traditional project management solutions apply only when the client’s goal is clear and the steps required for a solution are clear. In many legal matters, neither precise client goals nor complete solutions are known at the start. These complex and ambiguous situations will therefore require the more modern LPM approaches explained in Wysocki’s text, notably Agile project management that is derived from the “Agile Manifesto” signed in 2001 by 17 influential software developers and says in part:

We are uncovering better ways of developing [products] by doing it and helping others do it. Through this work we have come to value:

  • Individuals and interactions over processes and tools
  • Working software over comprehensive documentation
  • Customer collaboration over contract negotiations
  • Responding to change over following a plan

That is, while there is value in the items on the right, we value the items on the left more.

Agile project management is an iterative trial and error process that focuses on continuous improvement and responding rapidly to situations when they change in order to minimize the total work required.

But before firms can get to that level of sophistication, they need to start with the basics. And as one chairman in our research summed it up:

Most of our clients are no better at understanding or applying legal project management than we are. But in the future, the fact that you can actually do something on time and within budget is going to become an important indicator of whether or not you really are a good lawyer.

A pdf of this entire series can be downloaded from Altman Weil Direct, where it originally appeared.

 

October 15, 2014

Book excerpt: What should law firms do to improve profitability and LPM? (Part 3 of 4)

This series was adapted from my new book Client Value and Law Firm Profitability, which was published at the beginning of this month.

As law firms struggle with internal pressure to retain and improve profitability and external pressure to satisfy client demand for greater value, one tactic has risen to the top of most law firm lists: legal project management.

As discussed previously in this blog, the field of LPM is so new that experts have spent quite a bit of time arguing about what it does and does not include. If you accept the very broad definition that we have been using for the last several years—LPM adapts proven management techniques to the legal profession to help lawyers achieve their business goals, including increasing client value and protecting profitability—it is easy to see that the vast majority of law firms could benefit from implementing LPM in some form.

Which brings us back to the question of exactly how to do that. Educating is relatively easy, but changing behavior is very hard. It is also the central problem in legal project management. The Association of Corporate Counsel and the ABA conducted a meeting a few years ago, “at which leaders of corporate and law firm litigation departments rolled up their sleeves and tackled the complex issues surrounding present day concepts of value in litigation.” In an ACC Docket article summarizing the event, the authors noted that progress will not be based on improved understanding or increased knowledge. Instead, “The challenge is change/behavior management.”  It’s not a question of knowing what to do, it’s a question of getting lawyers to do it.

In this research, the managing partner of one firm that invested heavily in education but failed to see much behavior change had this to say:

Project management will probably have the longest-term positive impact, but it’s been the biggest challenge, because it’s something that hasn’t been easily absorbed by a lot of the lawyers. When busy lawyers start scrambling around, the inefficiency creeps right up. At our firm, project management has not met expectations. But it’s improving, and I do think long term it will have a really big impact.

If there is one thing that participants in this survey agreed on, it is that it is difficult to get lawyers to use LPM, as seen in these comments from five more firms:

Project management is not natural to lawyers. We’ve always been trained to get the case done well to win, but now we also have to get the case done efficiently, and that is not part of the natural toolkit for most people. – Managing partner

Getting people to manage engagements is very difficult in this business. So we’re at the discussion rather than the implementation stage. – Chair

We’ve done a better job on the front end, on the developing and pricing piece. Where I don’t think we’re doing as much as we could is on the legal project management end, thinking about whether there are more efficient ways to actually complete certain kinds of work. – Senior executive

We have clients, especially in litigation and corporate, who are saying we need to implement LPM. But it’s hard to get our lawyers off the dime. – Senior partner

I think that it will require a lot of work, and daily support from the top, not just lip service from the partner team twice a year. – Senior executive

Given that the formal field of LPM is so young, and that many lawyers resist its fundamental ideas, it is not surprising that there are still disagreements about what approach to implementation works best. Several major vendors—including my company—offer different solutions. Each believes strongly in its own approach and frankly has a vested interest in proving its effectiveness.

Generally, implementation approaches fall into three broad categories: training, coaching, and law firm staff. Of course, these are not mutually exclusive and many firms use all three, along with software, as described in the next section. All of these approaches can have positive effects. The hard question that every firm faces is one of cost-effectiveness: which approach will produce the greatest impact today for the lowest cost.

Historically, most firms have started with some type of training. Lawyers love precedent, so when Dechert announced in 2010 that it had trained its partners in LPM, a number of firms jumped in to do the same thing. This led to some great press releases about how these training programs proved that firms were committed to LPM, but precious little in the way of results. Consider these comments from three firms that invested in extensive LPM training programs:

Every shareholder and top level associate has had a full day of project management training. I’d like to tell you that they use it, but they don’t. – Chair

Training raised awareness, but I think it will take a longer campaign to significantly move the needle in terms of our ability to change the way we do business. – Managing partner

I don’t want to say it’s stillborn, because that’s too fatalistic, but it has not taken hold like I had hoped it would. I think that there are some attorneys who probably are using it in their own way, but as an institutional concept it has really been put on a back burner. – Senior executive

It took a few years for it to become clear that training every lawyer in the firm was not a cost effective way to go, and that led people to less ambitious programs such as short sessions of “awareness training” that set stage and identified the lawyers who need to dig in more deeply.

In our experience, the most effective way for firms to build LPM momentum is not with large group training, but rather with one-to-one coaching for influential partners to enable them to directly experience the benefits of LPM. As a result, they will become internal champions who will lead efforts to adapt LPM to the particular needs of their firms, practice groups, and clients.

A pdf of this entire series can be downloaded from Altman Weil Direct, where it originally appeared.

October 08, 2014

Book excerpt: What should law firms do to improve profitability and LPM? (Part 2 of 4)

This series was adapted from my new book Client Value and Law Firm Profitability, which was published today.

The key to success is to come up with information and systems that increase the behaviors that are of greatest benefit to the firm. But it isn’t easy:

When you start digging into profitability at the matter level, you get set back. You can make the numbers say whatever you want, but did you consider headcount or overhead? Some of the offices might not be as busy so you want to spread the work to them. We’re willing to take a little hit. There’s a big picture we’re trying to achieve, and when we’ve tried to get into the weeds a little bit too much, it can backfire because we get bogged down with some of this stuff. So my idea is to take the long view. It’s very difficult to understand profitability at the matter level, and in some ways that’s a misguided approach because there are just so many factors to take into account. If you can slowly start to chip away at all these areas, then that will have a beneficial improvement upon your profitability. It’s all about improving your portfolio. – Senior executive

The real challenge is to use our profitability tool in a way that motivates all of the partners to their maximum effort toward profitability, without creating the wrong sorts of behaviors, like hoarding work or fighting unduly over origination credits. – Chair

Many firms are getting serious about training their lawyers to think differently about revenue, discounts, and profitability:

Our firm has really invested a lot of effort in arming ourselves with the tools to try and deal with understanding profitability. – Chair

Our CFO visits offices and trains people on profitability. – Managing partner

We fully intend to educate our attorney base to be more aware of these things. In particular, when attorneys approach our AFA subcommittee with a project that involves an AFA, part of the response is to address the profitability of that proposal and to explain to them when the particular pricing doesn’t make sense for us to take it on. – Senior partner

Left to their own devices, most lawyers are probably at a 5, on a 1 to 10 scale of understanding. But we educate them up to a 9. So it’s something in the middle. We have a very keenly-focused financial accounting regimen at the firm that is constantly preaching this, that all work and all books of business and all new clients are not the same. And consequently, our lawyers have a better than average instinct on this. At the end of the day, our pricing reflects this because we don’t give our lawyers total carte blanche to open up a new client at a new rate. We encourage them to bring in the clients, but then we work with them very closely as to whether that client at that rate makes sense. And sometimes it’s very timekeeper-dependent, what kind of leverage we’re going to have on the assignment. – Chair

In summary, while there is still much uncertainty about the most effective tactics, there can be no doubt that firms are increasingly focusing on questions such as:

  • How should our firm define profitability?
  • How should we communicate this definition to our lawyers?
  • How should we train lawyers to manage legal matters more profitably?
  • How should we compensate lawyers for bringing in and managing more profitable work?

Of these, the last question is by far the hardest. It is simply not possible to create a compensation system that makes everyone happy. The trick is to figure out which lawyers are most essential to the continued health of your firm, and how much do you need to pay them to keep them from leaving. Basically, my advice is to ask around and find the best compensation consultant you can. You’re going to need help.  (This is not an advertisement. LegalBizDev does not provide compensation consulting. It’s too hard.)

Last year, an AmLaw 100 firm that was just beginning to think seriously about those questions 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 number of new pricing and management initiatives in place and a new pricing director. Clearly, firms are making progress. It is just very, very hard.

A pdf of this entire series can be downloaded from Altman Weil Direct, where it originally appeared.

 

Today’s publication of my new book Client Value and Law Firm Profitability

For months, I have been writing in this blog about my new book Client Value and Law Firm Profitability.  Today, it is available on our web page for $95, with volume discounts on orders of two or more copies. The book can also be ordered from Amazon, in both paperback and Kindle editions.

Here is part of the press release that came out with the book:

About two-thirds of the time, when legal clients say they want “greater value,” law firm leaders believe it is nothing more than a request to pay less. Although profitability is essential to law firms’ success and survival, about one-quarter of major law firms don’t measure it formally but only assess it intuitively. For those that do measure profitability, the two most consistently effective ways to preserve it are legal project management and adding new staffing in pricing, value, and related areas. 

 These are just a few of the findings of a study of law firm leaders I conducted in 2013 and 2014 for my new book Client Value and Law Firm Profitability, which is being released today. I confidentially interviewed law firm leaders from 50 AmLaw 200 firms. Forty-two percent were chairs or managing partners, and the rest were senior partners and executives.

Since the participants in the study were promised that they would not be quoted by name, they were unusually frank in their responses, including the law firm chairman who said that “lawyers are about as dumb as you could possibly be about understanding how our product is made. The lawyers who understand how to make it and who can manage that process efficiently are going to be the winners.”

The interviewees also felt free to speak about both the business problems they face and possible solutions, like the managing partner who noted that “I have a $10 million practice. But that could be a disaster for a firm, because it could cost them $11 million to get $10 million. But nobody ever talks about it that way.”

 

September 24, 2014

Book excerpt: What should law firms do to improve profitability and LPM? (Part 1 of 4)

This series was adapted from my new book Client Value and Law Firm Profitability, which will be published in a few weeks.

This research was designed to help lawyers make the best possible decisions about how to adapt to a rapidly changing marketplace by providing insights into the actions and opinions of their peers.  In the months preceding this book’s publication, a number of conferences have been held by law schools to discuss the challenges facing the legal profession.  Countless articles and several books addressing these changes have also been written by law school and business school professors.  And consultants have written far more – probably millions of words on how client demands are changing and what law firms should do about it.

The only thing that’s been missing from the conversation is public statements by the people who run large law firms.  These senior decision makers rarely publish anything on their tactics and strategies, or even attend conferences.  They are the ones who deal with these issues every day, and whose very livelihood depends on coming up with the right answers.  What do they think?

To answer this question, I interviewed chairs, managing partners, executive committee members, CEOs, CFOs and other senior executives at 50 AmLaw 200 firms between June 2013 and January 2014.

Based on those confidential interviews, there can be no question thatclients are demanding more value than ever before.  There is, however, much less agreement about the best way to remain competitive in an increasingly challenging environment. 

There are many signs that as times get tighter, firms are paying more attention to profitability and to its role in compensation:

I think you’re going to see the pressure in law firms increase about how the pie is split. When things were going well, it was easier to take care of the worker bee partners, who are great lawyers. It’s going to be tougher now, because everybody’s strategy is through lateral hiring, and you don’t want the great brief writer. What you want is the person who has five to eight million dollars following him or her, or the group that’s going to bring 20 to 30 million dollars. – Senior executive

As the pressure goes up, the emphasis on total revenue is being replaced by an emphasis on profitable revenue:

Historically, virtually all law firms overweighted revenue. Often two partners who produce five million dollars each are treated equally for compensation, even if one of those partners used six and a half million dollars of resources to produce that revenue, and the other used three and a half million. – Senior executive

We merged a few years ago with a firm that principally focused on total dollars in the door and allowed billing attorneys to set their own rate exceptions without much oversight. We focused on those decision points that reduced realization, and the lack of profitability in a million dollars received that takes two million dollars of effort to generate. Consistently reinforcing these basic concepts through our BI tools and in the compensation system has resulted in significant margin improvement. – Senior executive

There are still far too many lawyers who respond to cost pressure by offering discounts, without understanding the implications:

Most of our partners have been doing things in a particular way for a long time. And the carpet is moving under them, because the market is changing. A lot of times, their reaction to competitive pressure is to just cut rates but not examine the way they deliver the service—not change the way they practice to be able to offer more value for the same price, or reduce the cost to deliver the same value at a lower price. Demand is down. Price pressure is up. So some lawyers will just say, “I don’t want to talk about value based billing arrangement. I’ll just give clients a big discount. They’ll be happy, I’ll be happy….” It’s really remarkable how few attorneys appreciate the economics of discounting. They just don’t get the math. They never had to before. – Senior partner

It is easy to make clients happy by just cutting the cost.Not enough lawyers have really embraced building a better mousetrap that makes clients happy while at the same time maintaining profitability. – Senior executive

Lawyers are proposing a 10% discounted deal or a 20% discounted deal, or a blended rate deal, but then they’re going to literally do everything the same way they’ve always done it. They don’t think about it in terms of profitability yet. So we’ve got a lot of catching up to do. However, at one recent conference I attended, it sounded like there are still a lot of firms that aren’t much ahead of us. – Senior executive

Many firms are working to fill this gap and develop new tools and approaches:

I’ve been with the firm a little over a year, and part of the reason that the firm brought me in was that we needed to look at our operational infrastructure and basically get caught up with the rest of the AmLaw 100. We didn’t have the ability to really measure profitability. We could just barely measure it at the firm level and at the office level, but not at the practice level, not at the client level, or matter level. About three months ago we finally started using a business intelligence platform that allows us to measure those things, and we’re still trying to make that part of the culture. – Senior executive

Life used to be so much easier. The world has changed, and I think in the new environment, to preserve and enhance existing client relationships and to get our nose in the door for new client relationships, we’ve had to be more flexible on pricing, particularly in the alternative fee context. I think we’re in a brave new world here, where we have to learn a lot of new sciences and employ a lot of new techniques. – Senior partner

Some firms are providing lawyers with very detailed reports, like these:

We developed a real-time report on our intranet that is role-based. For example, if you are a client attorney, then your report will show all the clients on which you have any client credit on any matter, and it will show you the components of profitability. The report shows you collected revenue, the costs associated with that revenue, the profit, and the profit margin. Then it shows you the number of hours that are in it, the revenue per hour, the cost per hour. Then it breaks down timing differences on billing and collecting time. And then it shows you the traditional measures of profitability such as realization rates at the various levels. You can click on a client and it drills down to the matter level, so you see it for every matter. And then you can click on every matter and it drops down to all the timekeepers, and you see it across the board for all timekeepers on each matter, all those same metrics. We built the database to go back 10 years. You can do it for time periods of year to date, rolling 12 months, from inception, or for any other time period. – Senior partner

Other firms are concerned that too much data can be counterproductive:

One of the traps you can fall into is giving people a lot of data but not giving them information. Simply revealing realization or matter profitability, just putting it out there, would not really advance the management goals of getting people to focus more on profitability. What you would engender is more questions about “How come she got paid more than I did?” That kind of stuff. – Chair

Merely sending canned reports to partners will not result in many partners changing the way they manage their practices to improve profitability. We need to better develop a process whereby partners with profitability challenges receive the help they need to improve profitability in a manner tailored to the issues presented by that partner’s specific practice. Otherwise they look at the report and say, “This is crap. It’s wrong.” – Senior executive

A pdf of this entire series can be downloaded from Altman Weil Direct, where it originally appeared.

 

September 10, 2014

Case Study: Update on LPM’s benefits at Bilzin Sumberg (Part 1 of 2)

Last December I wrote in this blog that “no law firm on the planet has achieved more LPM behavior change, more quickly or more efficiently” than Miami firm Bilzin Sumberg.  Since then, the firm’s LPM success has been featured by others in books and at conferences.

As explained in my book Legal Project Management, Pricing, and Alternative Fee Arrangements, their breakthroughs were built on a foundation of providing LegalBizDev’s individual coaching program to the majority of their partners (26 out of 51).  That coaching was completed in May 2013.  By then, the LPM had reached critical mass and had developed enough momentum that no more coaching was needed.  The partners themselves and Bilzin’s internal staff took ownership of moving the effort forward.

No one at Bilzin Sumberg would say that their LPM work is done.  As the chair of one AmLaw 200 firm put it in my new book Client Value and Law Firm Profitability:  “It’s an evolving process.  I don’t think there’s ever going to be a point at which you can say: ‘Now I’ve arrived.’”  But Bilzin Sumberg’s continuing experience provides valuable lessons in the best and most cost-effective ways to get started, and what happens next, so we will continue to update their results from time to time in posts like this.

Jon Chassen, a partner in the real estate group at Bilzin Sumberg, was one of the three lawyers in the firm’s original pilot test of LPM coaching at the beginning of 2012 with LegalBizDev principal Steve Barrett, and his success encouraged other partners to give it a try. Jon’s practice focuses on complex real estate deals  and on real estate deals with unusual twists. He often works closely with litigators to solve his clients’ problems, although he is not a litigator himself.

Jon says that a lot of things that he learned in the LegalBizDev coaching were similar to techniques that he had been trying to implement throughout his career.  The coaching crystallized and formalized these methods and techniques.

In Jon’s practice, LPM works best for larger transactions, where at the very outset, you need to design an engagement letter that spells out what you will and will not do for the client. “This way, the engagement letter guides the entire project. It establishes the scope of the project so that everyone in the transaction, outside lawyer and client, knows what role they will play. Then, as the transaction changes in unexpected ways, the engagement letter can be modified to reflect changing expectations.”

“Sometimes it’s relatively easy to anticipate that the scope of work will change and that the project will become larger or smaller than originally anticipated,” Jon says. “Sometimes, the changes are completely unanticipated. Either way, LPM techniques permit the lawyer and client to make changes pretty much on the run. I can now see at a glance who needs to be added to the team, who is dropping off the team, and so on. I see immediately when we’re at a fork in the road, and what the possible choices are at that decision point.”

“LPM also permits me to delegate more effectively. Since all the assignments to attorneys are made well in advance and carefully specified, I don’t need to be the funnel point on everything. If I have a lawyer working on a particular set of documents, I can trust that he or she will complete that assignment.”

“I am a bit technologically challenged in terms of creating charts and work flows. But with the use of LPM techniques and with people in the firm who can help me, I can now create these charts in a very useful manner. The chart will tell me what happens next. Who needs to get involved? LPM helps me come up with answers to those questions.”

Carter McDowell’s practice as a Bilzin Sumberg partner involves land use, zoning, environmental, and other regulatory approvals for major building projects, including regional malls, resort hotels, industrial complexes, professional buildings and marinas. Carter completed LegalBizDev’s three month coaching program in its second wave, after the pilot test.

“At the end of the day,” Carter says, “LPM is mostly about organization.”

“It enables you to step back and look at the process and compartmentalize it. It also enables you to look at it in the largest possible sense, from the very beginning.”

For one major project on South Beach that Carter has worked on, he made a very specific LPM outline of all the aspects of the project and of the budget associated with each aspect.

“We separated the project into several parts,” Carter says, “and we made several updates to each part as we went along. The government, after all, doesn’t take a linear path in granting approvals, so this LPM document has helped us plan each step. Our client used the LPM document on an ongoing basis.”

“In the South Beach project, there have already been seven hearings at which some sort of approval was granted, and two more approvals remain to be granted,” says Carter. “Each hearing is before a separate board. So the LPM document was helpful in documenting and managing the whole process.”

“We actually prepared the LPM document as soon as our client acquired the property. It was that long ago.  The client had asked us to put together a list of the most likely tasks that needed to be accomplished. So we used the LPM document to prepare that and we have updated and expanded it on an ongoing basis.”

“The firm now has sophisticated budget software (ENGAGE). On this project, the financial department staff at the firm established the outline of the document before the current software was available. So in this case, I don’t manipulate the software myself. I do receive reports from the financial people. They have been very helpful and responsive.”

“The document has led us on more than one occasion to go back to the client and to say, Here’ s a hearing that we hadn’t anticipated, so we updated the budget to include that process.”

“The LPM process is working well to enable us to provide our clients with better service at a lower cost.  Some of the procedures that we documented repeat themselves in other projects, so I can reuse this outline for other clients and efficiently tailor it to fit their needs.”

 This post was written by Jim Hassett and Jonathan Groner.

 

July 23, 2014

Business development best practices: Plan Advances

This is one of a series of occasional posts summarizing the most important best practices from my book the Legal Business Development Quick Reference Guide which is now also available in a Kindle edition.

The concept of a sales “advance” comes from Neil Rackham’s book SPIN® Selling, which is based on the most systematic research ever conducted on the sales process, and one of the most widely accepted approaches to sales in other professions. According to Rackham’s website, “More than half the Fortune 500 train their salespeople using sales models derived from his research.”

When Rackham analyzed 35,000 sales calls over 12 years, he found that “In major account sales, fewer than 10% of calls actually result in an Order or a No-sale.” The other 90% of sales calls should be classified as successful only if the salesperson gets an advance: “A specific action taken by either party that moves the sale forward,” such as scheduling another meeting, getting introduced to someone new, or providing a list of references.

When a client says we should talk again, but does not specify a date or time, that is not an advance, because there is no specific action. Rackham calls this a “continuation” and considers the meeting unsuccessful. It does not mean that the sale is dead, but it does mean that you are not making progress.

Great salespeople succeed because they plan every sales call, and strategize how to get the largest possible advance. Rackham’s book The SPIN® Selling Fieldbook: Practical Tools, Methods, Exercises, and Resources provides guidance on how to brainstorm possible advances before a meeting, and then select the one that is likely to lead to the greatest progress. This takes effort and practice. But the ability to consistently get advances is often the difference between success and failure. 

In Rainmaking Made Simple, Mark Maraia provided a slightly different definition of an advance, rewritten for lawyers: “An advance has three elements: (1) a commitment (2) to take action (3) in a definite time period.” For complex legal matters, the advance often involves getting a meeting with others who may be involved in making the decision.

Any lawyer who feels that she has enough meetings with potential clients, but that they are not getting far enough, would be well advised to read Maraia’s chapter on how to “Avoid Random Acts of Lunch.” It explains how to prepare for every business development meeting by writing down the needs of the person you will meet, a few questions to ask, and the advance you would like to achieve.

As Rackham summed it up (on p. 171 of the SPIN Selling Fieldbook):

If there was just one piece of advice we could give to people to improve their selling, it would be this: Plan your calls…Do you know exactly what outcome you hope to achieve? […] Plan what to ask, not what to tell.

 

 

June 11, 2014

Book Review: Smarter Pricing, Smarter Profit

Six months ago, if you had asked me what book to read for a complete analysis of legal pricing, I would have said “Nobody has written that book yet.”  (At that time, my book Legal Project Management, Pricing and Alternative Fee Arrangements was the only one that even provided a 20,000 foot overview.)

But now there are two.  Jonathan Groner and I reviewed the first, by Toby Brown and Vince Cordo, last February.  Today’s review focuses on a brand new book by Stuart J.T. Dodds, director of global pricing and legal project management at Baker & McKenzie,one of the largest law firms in the world. 

Smarter Pricing, Smarter Profit is the only book on the market that 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.  Until a few years ago, lawyers could make a great deal of money with only a basic understanding of these stages, so that’s what most did.  Since the dawn of the new normal of a few years ago, competition has gotten much tougher, and lawyers have learned that they must improve their business practices to remain profitable.  Several books have appeared that provide useful advice on the third stage of legal project management (LPM).  But Stuart’s book is the first to review all the practical steps a lawyer should take from the first moment she becomes aware of a new opportunity, through negotiating a deal and managing the work to the final post-matter review.   

I was particularly interested in the chapters on LPM, especially the ten steps which Stuart recommends at the start of every 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 upfront
  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

All this before you begin working on a matter!  While it is true that in some legal situations there is simply not enough time to accomplish all ten steps upfront, it is also true that in many matters there IS time, and a little initial planning can save a lot of  long-term expense.  At this moment in history, any lawyer that follows even a few of Stuart’s steps will be ahead of most competitors.  But as one managing partner said in my soon to be published research on Client Value and Law Firm Profitability:

Project management will probably have the biggest long-term positive impact [of all the things that are changing in law firms], but it’s been the biggest challenge because it’s something that hasn’t been easily absorbed by a lot of the lawyers.  When busy lawyers start scrambling around, the inefficiency creeps right up.

That’s why the key to success is changing behavior.  Stuart has been a panelist on several of my Ark workshops on “LPM:  Changing Behavior within the Firm”, and underlines a key lesson we’ve seen one law firm after another learn the hard way when he writes “Educating is easy (relatively), but changing behavior is much harder, and the change is especially difficult for lawyers.”  (p. 213)

In addition to all its business insights, there are also many small things to like about this book.  Stuart is based in Chicago but spent most of his career in London, including 14 years as a management consultant at Accenture.  (He often reminds people that he is actually from Scotland.)  Anglophiles will especially appreciate the references to UK research which has not been widely cited in the US, and the occasional British colloquialism.  For one example, read the story of a lawyer who put a procurement officer “on his back foot” (p 148) by threatening to walk out of a meeting about discounts, when the meeting should have focused on “protecting your company from losing a potential multi-million dollar claim.”

I’d love to keep writing about this book, but the best advice I can offer is that you stop reading this review and order a copy.  Read the book and act on it before your competitors do, and you will earn back the $169 price many times over.

Full disclosure:  I have worked closely with Stuart over the last several years, since he manages our LPM coaching program for Baker & McKenzie.  Whenever Stuart quoted me in this book, I smiled a little.  But to be honest, I also got a little jealous when I saw how well he presented some of the key concepts.  When I saw the title of Chapter 14, for example -- Thinking Big, Starting Small – I thought:  Why didn’t I think of that catchphrase?

 

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.