158 posts categorized "Legal Project Management"

September 17, 2014

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

Jose Ferrer is a commercial litigation partner at Bilzin Sumberg who has an extensive practice in international disputes and arbitration. As noted in Part 1 of this post, a majority of Bilzin Sumberg’s partners completed our three-month individual coaching program, but Jose is part of the “other half” who attended an initial retreat presentation, and then developed LPM tactics on his own, and in collaboration with partners who were coached. 

As a litigator, Ferrer says, “you always work with your strategy in mind, and LPM helps you better define your strategy. It tells you what the next 90 days will involve and it enables you to think through your case.”

“Sometimes we compete with firms that have lower hourly rates, and then we have to provide something else to our clients. Part of that “something else” is certainty and the ability to budget. Of course, most clients’ litigation departments see outside counsel as a cost item. Our ability to produce and adhere to a budget improves a company’s ability to predict its own bottom line, which is of great value to the client.”

“We track every hour billed by an attorney or any other timekeeper by task code. It takes longer to put your time into the system, but it represents a significant value-add to any client,” Ferrer says.  This task-code system was developed at Bilzin Sumberg starting from standard ABA task codes and it is extremely well suited to the types of litigation they specialize in.

“The task codes force you to think about your strategy,” Ferrer says. “If you see that in the past 30 days, you have used only the discovery task codes, it forces you to think, ‘Did this discovery add or detract from your progress in the case?’”

“I have an icon on my computer that represents our budgeting software, ENGAGE. If I click on it, it will help me compare the planned budget with actual expenses, for example. It is relatively simple software and is easy to use. The benefit of the software is that it draws on past experiences in similar cases and tests how realistic the budget is when compared with them. We’ve been populating that system with our cases for two years, and we now have a reasonable amount of data in front of us.”

“ENGAGE offered training in the software, and it’s very hands-on.  For example, for one footwear chain client, we are using it to budget for current cases – breach of contract cases, landlord-tenant cases, other commercial cases – based on prior experience in similar cases. We have prior history that we can draw upon. Not only do we have an idea of what the current case will cost; we also can have an educated conversation with the client in advance about how the case will go and what strategy to use.

Al Dotson is a government relations partner and leader of the land development practice group at Bilzin Sumberg. His work primarily involves public-private partnerships in economic development in South Florida. It involves securing land use, zoning and other key government approvals and permits for large real estate developments. 

Al was one of the three lawyers in the initial pilot test of LPM coaching, and says he is now using LPM principles “in just about every matter that I have here. These principles are flexible and important enough to apply to nearly everything that I do.”

One key area is communication with the client and among team members. “Early communication with the client is absolutely essential for us to mutually understand what the expectations are,” he says. “In addition, I routinely set up non-billable team meetings  to ascertain the status of the work at any given stage, to avoid duplication of effort, to identify issues sooner rather than later and to communicate quickly with the client if there are any issues. This is done early and frequently throughout the project.”

“You really can’t say you are engaging in LPM,” Al says, “unless the budget and the assumptions are continually being reviewed and updated on a going forward basis. It’s an ongoing process, not just the mere act of creating a budget for a project. For example, changes occur regularly within a project. The initial assumptions will change, and we will need to change the staffing on a matter. Similarly, changes in a project will even begin to change how we define the concept of success for the project. Because of our use of LPM, all of these matters are now top of mind.”

Al shared that he has access to the LPM reports and budget tracking for the matters on which he is working.  To ensure consistency of data and to provide additional "eyes on the target," Bilzin Sumberg has a centralized process supported by finance staff who input budget information into the budgeting software.  One of the finance team's responsibilities is to “provide us with ticklers when certain milestones are reached.”

“Bilzin Sumberg provides attorneys with access to real-time information and this is critical to LPM.  It enables better communication with the client and allows me to be  even  more timely and efficient on my matters.”

 This post was written by Jim Hassett and Jonathan Groner.

 

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.

 

September 03, 2014

Tip of the month: Increase the pace of change

According to the chairs, managing partners and leaders of AmLaw 200 firms interviewed for my new book Client Value and Law Firm Profitability,the faster firms act, the more likely they are to survive and prosper in today’s increasingly demanding marketplace.  In Altman Weil’s most recent Chief Legal Officers Survey, the top three things that clients want are improved budget forecasting, greater cost reduction, and more efficient legal project management (LPM). Since LPM will help meet the first two requests, you could say the top three things clients want are LPM, LPM, and more LPM. To date, the response at too many firms has been delay, delay, and more delay.

 

The first Wednesday of every month is devoted to a short and simple tip to help lawyers increase efficiency, provide greater value to their clients and/or develop new business. This month’s tip is explained in detail in Chapter 7 of my new book.

 

August 27, 2014

LPM Case Study: Loeb & Loeb (Part 4 of 4)

Livia Kiser is a Chicago-based partner at Loeb & Loeb who represents defendants in consumer class actions, primarily those that relate to claims by consumers of a defect or a false claim about a product. She also reviews product advertising in advance to counsel clients on their advertising and what is likely to be a “red flag” for plaintiffs’ counsel.

Her LPM coaching, with Michelle Stein, focused on the litigation side of her practice. 

“This training has made me more cognizant of how to create and implement a realistic budget on every matter, even one that can seem historically hard to quantify or to control, such as a class action brought by a plaintiff,” Livia says. “Even for cases which are hard to predict, I have learned how to provide more accurate budgets, not only because it is important for internal business reasons, but these days clients understandably expect it.”

“I am very interested in strategies for how we can stick to a budget.  Will this particular task really take ten hours? Should we budget it for that amount of time? These are the kinds of questions LPM causes you to consider,” Livia says.

Livia says that as a partner and lead counsel, she is also required to get involved in planning the time of other attorneys such as associates. She says many associates don’t think about these issues until they become partners.  When the issues become relevant to them, they’re not prepared. LPM, Livia says, is not only about numbers and budgets; it’s about human beings.

Livia uses Excel to prepare budget documents – just garden-variety Excel that she’s already familiar with. She receives weekly updates on her projects from Stephanie Flitcroft and also speaks with Stephanie at least once a week, if not more often.

Stephanie reports that “We provide many ad hoc reports so that lawyers can compare budgets to actuals along the way.  If there is a variance, they can determine if it was caused by a change of scope or whether some timekeeper simply didn’t understand the requested task.  This allows them to deal with issues before they get too far off course.”

Livia says Stephanie and her team are involved both in ongoing client matters and in pitching new matters. They are also extremely helpful in working on alternative fee arrangements (AFAs). “We cost out all the scenarios that make sense before we propose an AFA,” Livia says, “and Stephanie helps provide the assumptions and ideas that we need.”

The more lawyers take this approach, the easier it gets.  As Andrea Danziger explained, “We endeavor to share the actual tools and templates that have come out of the coaching program, as well as others that we’ve developed for proposal bids. This has been a grass roots effort. We’ve tripled the number of people in the program since you first wrote about it, and we want to keep going, because the more lawyers incorporate LPM into their matters, the more the ideas spread.”

What does the future hold?  According to Deputy Chairman David Schaefer, “I think legal project management is going to become one of the core business skills of running a law firm. Even in situations where we still bill hourly, every client wants to know:  How much is this going to cost? How long is it going to take? What’s involved? It may take a few years, but it will become part and parcel of how we do business. Lawyers will be comfortable having those discussions. They will expect it. And I think that you’ll see an increasing growth within our firm, and other firms, of non-legal professionals who will take a bigger and bigger portion of these tasks under their wing.”

Schaefer has also seen that the benefits of LPM go not just to clients, but also directly to the firm’s bottom line: “LPM has already protected our profitability in very significant ways. These days, lawyers are more prepared to provide accurate bids. We have better data and more reliable information. In the past, when we looked at a class of cases or of deals, and there was a fairly significant range between the high and the low, we really didn’t know why we had such a wide spread. Now we understand what the key considerations are. We can look for those at the outset of a matter, and try to address that with the client, rather than letting it catch everybody by surprise. And so I think that LPM has made our processes much, much better.”

 

This series was written by Jim Hassett and Jonathan Groner.

 

August 20, 2014

LPM Case Study: Loeb & Loeb (Part 3 of 4)

Ross Emmerman is a Chicago-based corporate and M&A lawyer at Loeb & Loeb who was coached by Fred Kinch.  Ross says that although many attorneys at the firm start out by considering LPM to be just one more thing that management wants them to engage in, Loeb & Loeb’s National Business Manager Stephanie Flitcroft has “taken the laboring oar” and helped the firm add a great deal to its capacities through the use of LPM. He is in constant touch with Stephanie and says he uses LPM tools at least twice a week.

Ross knows that the firm uses ENGAGE “behind the scenes,” but he works with easier to use Excel spreadsheets prepared by Stephanie.  (A sample format for a typical spreadsheet for a sell-side M&A transaction appeared in a previous post.)

From a practice standpoint, the most important aspect of LPM for Ross is that his sophisticated clients “understand that changes in scope are inherent in transactions” but matters still need to be on budget and on time. In comparing an attorney’s role with LPM to a general contractor’s role to a construction project, Ross mentioned that no builder would tell a prospective homeowner in advance that a new home would cost anywhere between $300,000 and $600,000; that is much too large a range and does not contain any analysis. A home builder would not be expected to have enough data to hit the number on the spot before all the variables were known, but bids would be expected to fall within a much smaller range, such as $420,000 to $450,000. In today’s marketplace for legal services, the same is true for predicting legal costs.

The essence, according to Ross, is not whether a firm uses Excel or ENGAGE or other software. What matters is the data that a firm retains and how the firm tracks and uses that data to come up with a reasonable advance analysis of the cost of each phase of a project. As a partner, he says, “I am accountable to the client,” and his ability to provide accurate estimates in advance is very helpful to creating and maintaining client relationships.

During the coaching, he not only developed more detailed budgets himself, but also sent out budget hours by task to the team members at the start of matters to get their input and buy-in. In the future, he expects that the team members will become accustomed to this process and may even be call upon to set the initial budgeted cost and time estimates.

Back in the old days, he says, lawyers simply did this by the seat of their pants, and no one knew where you were going with the deal or its costs. That is no longer acceptable. One of the reasons that better budgeting was not possible years ago was that firms did not retain their data for this purpose or kept their data in a “big lump,” with no effective way of breaking it down. Now Loeb & Loeb and other leading firms retain their data in a form that can be broken up into pieces as needed. They can then use the data “quickly and intelligently.”

Ross joined Loeb & Loeb in March 2013, and in his previous firm he had received LPM training. But LegalBizDev’s coaching was able to take him “from theory to practice.”

According to Andrea Danziger, Loeb & Loeb’s director of business development and practice management, a number of people who went through the program had similar experiences:   “Once they started working with a coach, they realized right away, I’ve been doing LPM all along. But now it’s more methodical and sophisticated, supported by new resources, including business managers, budgeting software, and the various reports that we run.  That makes lawyers much more confident to explain to clients how they will use LPM to manage a matter within budget, and communicate effectively about mutual expectations.”

This series was written by Jim Hassett and Jonathan Groner.

 

August 13, 2014

LPM Case Study: Loeb & Loeb (Part 2 of 4)

Last year, I wrote Part 1 of this series about our pilot test of legal project management coaching at Loeb & Loeb LLP a law firm with more than 300 lawyers in Los Angeles, New York, Chicago, Nashville, Washington, DC, Beijing and Hong Kong. At the time, I did not know that there would be a Part 2.

Since then, Loeb & Loeb has selected a total of 19 lawyers to complete our two to three month coaching program, with more on the way. They have also expanded the role of their internal business managers in LPM, refined their use of ENGAGE software, and even added a section to their firm web site describing Loeb & Loeb’s commitment to LPM

One reason they are expanding the program is that clients are demanding LPM in increasingly sophisticated ways.  According to Andrea Danziger, the firm’s Director of Business Development and Practice Management: 

A year or two ago, most clients simply asked whether you used LPM, and it was enough to just say "we’re committed to efficient project management" and explain our tools and resources. These days, clients ask harder questions: "Show me how you’re going to apply LPM, walk me through it." The attorney who’s making a presentation has to really prove that they understand LPM and know how to use it.

Why do clients care about LPM?  According to the firm’s Deputy Chairman, David Schaefer, one reason is that:

It’s clearly of benefit to clients when we provide a high level of certainty that we can work within a budget.  For example, we have a significant financial institutions practice, where we represent banks and others who make loans and extend credit, and the borrower pays the fees. The ability to come up with a budget and a fee arrangement that is agreed to at the outset has enabled our clients to be more competitive in their marketplace, because borrowers look at the total cost of funding, including legal costs.

Miriam Cohen is a finance partner in Loeb & Loeb’s New York office, whose practice primarily involves representing lenders on secured loans. She recently completed a three month program with LegalBizDev coach Michelle Stein.

The most important advantage of LPM, in Miriam’s view, is that it helped her to come up with a system to obtain and present information for clients quickly and readily, so that clients understand the entire array of time and budgeting data for a project -- based on a single document.

“I can now create this quickly for any client,” she says. “[Clients] just want the bottom-line numbers, and there are so many assumptions that go with the numbers. I just plug in the numbers and I have something that a client can understand. If you don’t get them the data fast enough and in this manner, they will give the work to someone else.”

Miriam says this applies to existing clients, who, when they need a new project done, will usually obtain three bids – one from Loeb & Loeb and two from competing law firms. Since the borrower typically pays the bill for lender’s counsel in these transactions, both the borrower and the lender have an incentive to keep the bill low and to know in advance how much it will be.

The document that Miriam prepares is a budget worksheet that contains all the assumptions regarding the upcoming transaction – staffing, time, complexity, and so on.

“For example, the assumptions I typically make in preparing the document,” Miriam says, “include that borrower’s counsel will be competent and can deliver an appropriate product and that there will be no more than four turn-arounds of the lending documents before they are final.”

In the past, Miriam says, most lawyers made these budgets and assumptions “on the back of a napkin” but not surprisingly that process didn’t consistently result in accurate estimates.

These days, much of the calculation at Loeb & Loeb is done in the background by Stephanie Flitcroft, a national business manager working out of the firm’s Los Angeles office. When Miriam needs information and budgets based on past experience, Stephanie and her team use ENGAGE to find the best information and send Miriam the info she needs. Stephanie prepares the output in Excel, and Miriam uses it in a Word table that lays out the budgeting and task information in a logical fashion. When they win the work, Stephanie also provides weekly spending reports.

The LPM coaching, Miriam says, “helped me to create this document where everything is in one place. Now, no client should be surprised by the bill when they receive it.”

In addition, Miriam says, everyone in her group uses standard task and billing codes now.

“This is a great way to force discipline from my team. I created my own time and billing codes, based on the type of work that the team does, and this accurately reflects their time.”

That’s a great example of the value of improved communication, Stephanie says: 

LPM coaching has enabled billing lawyers to have much better communication with both the client and with the timekeepers. The client knows what’s going on in the matter. They feel part of the process, not left out. They have an idea of where fees are going to end up, because we’ve provided them with estimates and monitored spending.  And on the other side, with the increased communications between the relationship partner and the timekeepers, tasks and expectations are being relayed more clearly. So you don’t have timekeepers going off and looking under every rock to get an answer.

For Miriam, LPM has already led to new business as a result of the more systematic approach to engagement letters, and the increase in client confidence in budget estimates.

 

This series was written by Jim Hassett and Jonathan Groner.

 

July 30, 2014

Five questions to ask lawyers before they begin LPM coaching

You won’t get a second chance to make a first impression, so if your first legal project management (LPM) program is not well designed and executed, it may be quite some time before there is a second one.

We have consistently found that the most effective way to change LPM behavior and build momentum within a firm is for motivated attorneys to directly experience immediate benefits and then become internal champions who spread the word. And the most efficient way for lawyers to experience those benefits is to work one-on-one with a legal project management coach.

Who should be coached first?  We recommend starting with the motivated: lawyers who are open to new ideas and who have the most to gain. They could be the key partners who are responsible for new alternative fee arrangements. Or they might be relationship partners who are worried about protecting business with key clients who are looking for greater efficiency. Or maybe an entire practice group is considering new checklists, templates and processes to improve its competitive position.

The exact individuals and groups will vary from firm to firm. But in every case, the best lawyers to start with are those who are open-minded about change and efficiency, in a position to benefit when it works, and influential enough to quickly spread the word of their success.

That’s the model we used when we began working with Hanson Bridgett a Northern California law firm with more than 150 attorneys that has launched many new initiatives to increase client satisfaction by providing greater value, including several focusing on project management.  As Managing Partner Andrew G. Giacomini put it:  “The legal marketplace is changing, and as a result Hanson Bridgett is making a significant commitment to what we are calling 'Pricing to Client Value':  fairly pricing the creative scope of work and efficiently delivering what's most important to the client.”

Last August, we began an LPM pilot program test with eleven of their lawyers, who were split between our two most popular programs.  Five lawyers completed three months of individual coaching, and six others were enrolled in a just-in-time training program that began with a group workshop and also included one month of coaching. 

Based on the testimony of the first group, firm management was interested in expanding the program, so the firm was faced with the task of identifying the candidates who would provide the greatest return on investment.

Program leaders Garner Weng – a partner who participated in the pilot program -- and Chris Fryer – their IT Director and internal project management guru -- developed a very brief questionnaire to pick the best candidates.  When we saw the questionnaire, our first question was:  Why didn’t we think of that?  Our second question was:  Could we share it with others through this blog?

They said yes, so here are the five questions Hanson Bridgett asked, emphasizing the need for each lawyer to provide specific and concrete examples:

  1. Have you used any flat-fee or other alternative-fee arrangements in the past?
  2. Are you willing to commit at least 2-4 hours per week to your participation in this program?
  3. Describe two challenges you commonly face in managing your work.
  4. What benefits or skills do you hope to gain by participation in our project management coaching program? 
  5. With greater or improved use of project management, describe the impact or long-term benefit you hope to achieve for the firm or on behalf of firm clients.

Hanson Bridgett used the results to select ten more lawyers to begin a LegalBizDev coaching program in April.  It is a hybrid which combines the just-in-time workshop with two to three months of coaching.  We will describe the results of these programs in future case study posts.

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.

 

 

July 16, 2014

Research update: What clients should do to increase value (Part 2 of 2)

This post previews results from my book Client Value and Law Firm Profitability, which will be published in October, and can be pre-ordered now for a 25% discount.

 

The second most important client issue raised by research participants was the need for more transparency and better communication. Lawyers are trained to hold their cards close to their vest, and there are many situations where that is exactly the right thing to do. But when clients are trying to establish a long-term partnership with a law firm, secretiveness does not help.  Here are quotes from five different firms highlighting the problem: 

The pricing and delivery process needs to be transparent. Clients and firms need to be forthright when they come to the table. The client needs to declare what they’re trying to achieve and how they want to achieve it and the law firm needs to be transparent about what they can do and how much they need to charge. It’s too often a negotiation when it should be a collaboration. You need to figure out if you can service the work in an economically meaningful way… so that we’re not trying to squeeze the last nickel out of each other.

The more information the law firm has, the better their budget, the better the flat fee. If we get really spotty information, then we’re grasping to come up with something. And sometimes you know clients have the information, they’re just not sharing it for whatever reason.

Clients have to communicate with us about what’s important to them, what they want us to do, what they don’t want us to do. Otherwise, alternative pricing becomes impossible.

I don’t hear a lot of partners or clients initiating honest and open conversations with each other. Most in-house counsel are former law firm counsel and they’re reluctant to have a candid conversation about the relationship. Not enough of them talk about their challenges and the pressures on their department, or explore openly with their law firm partners how they could work more effectively. It’s almost easier to avoid that conversation and instead get fed up and switch law firms.

Clients are as afraid as we are about bills. They have budgets and they’re worried we’re going to blow them. But they’re like us in thinking that if they don’t talk about it, maybe it will go away. When they’re willing to say up front, “Give me a scope on this. How much are you thinking?” they get better value.

A previous post about this research emphasized the importance of better project management by law firms. However, to maximize results you must increase efficiency on both sides of the table. Greater value demands that in-house departments, too, embrace legal project management.  Below are unusually frank comments from four firms that made this point (anonymously):  

When you’re working on a fixed fee or a sophisticated alternative fee, clients have to change how they deal with their outside counsel. If you’re going to do all their work for a million dollars and they keep you on the phone every day for hours with questions, they’re going to burn up all the value they could get and we’re going to be unhappy. So those kinds of things need to be real partnerships. Some clients get it and other clients don’t.

Clients, too, have to shed the restraints of thinking in billable hours. They want a deal, cost certainty, the best value. That doesn’t mean throwing everything you can think of into the shopping cart. If the client wants to micromanage and review drafts and revise drafts and do it again and get it to somebody else for revision, it makes the AFA much more challenging.

We get clients who don’t give the appropriate time for a matter, and there are a bunch of clients who are just managing the matter to reduce the fee, like insurance companies. They say they’re not going to pay for an internal meeting, which is pretty short-sighted. You need people to talk. I think some people are just trying to show their bosses they beat up their lawyer…. Clients have to work more as a team with their lawyers and not make it as adversarial as they sometimes do. It doesn’t engender loyalty either way.

Like firms, clients too can be inefficient. They can be bureaucratic and take a long time to make decisions. If it takes them 90 days to decide about a settlement, a lot of fees may have been incurred. You may have a trial date in six months, and you can’t say we’re going to take 90 days off while the client is deciding.

Similar issues came up several years ago, when I published the LegalBizDev Survey of Alternative Fees and the chair of one AmLaw 100 firm remarked:

It is very difficult for a law firm to tell a client that a matter is not going well because of what is going on in the legal department. I think we’ve all had experiences over the years with in-house counsel who are just not good managers. A lack of skills in project and relationship management on the part of either in-house counsel or the project leaders in a law firm can increase cost and reduce the quality of outcomes. I believe both sides could use more training in these areas.

After reviewing a draft of this report, Michael Roster, co-chair of the ACC Value Challenge Committee, had some related advice for clients:

The most important thing clients can often do to increase value is to get out of the way. Stop micro-managing. Stop insisting on memos that aren’t important to the ultimate client, that is, the relevant business unit. Harness firms more effectively for their legal expertise. One of my former partners confirms that client cost could easily be reduced at least a third if both sides simply focused on what matters.

Each of these issues – better definitions of scope, increased transparency, and improved in-house LPM – reflects the need for clients to consider ways to improve their role and their relationships. They may also represent an opportunity for law firms to start some of the difficult discussions mentioned above. Outside counsel should try to be a little more courageous and assertive in raising these issues tactfully and repeatedly, rather than rely 100% on in-house counsel to get it on their own.

July 09, 2014

Research update: What clients should do to increase value (Part 1 of 2)

This post previews results from my book Client Value and Law Firm Profitability, which will be published in October, and can be pre-ordered now for a 25% discount.

Over the past year, I have interviewed managing partners, chairs, senior partners and executives from AmLaw 200 firms about how to meet client demands for greater value while protecting profitability. 

The 50 firms who were interviewed are listed on our web page, but I agreed to keep the name of every individual I spoke to confidential, and gave them complete editorial control over what appears in print. (In fact, participants are currently reviewing a Preview Edition of our final report, to insure its accuracy.)  This approach enabled senior decision makers to speak frankly and openly about highly sensitive issues. The research provided a platform that made it easy for firm leaders to say what they really think, since they would not be quoted by name.

Most of the book focuses on internal operations:  what has worked and what hasn’t in such areas as measuring and managing profitability, legal project management, software, new staff positions in pricing, contract attorneys and more.

But one chapter focuses on participants’ answers to this question:  “To maximize value in a sustainable way, do clients need to change the way they work with law firms?”  98% said yes they do. 

Today’s post describes the single most important thing clients should do to increase the value they receive:  Better define objectives and scope at the beginning of each matter.

However, before we begin, it is important to note that several participants noted an important caveat: the client is always right.  In fact, as one firm chair put it, these days,

Clients can do whatever the hell they want to.

A senior executive from another firm put it a bit more diplomatically:

If law firms are sitting back saying, “Well we’re in the right and we’re just going to wait it out, and clients need to be doing this or that,” I wouldn’t want to bet on that horse.

The underlying problem is that the legal profession is in the middle of a period of historic change, and both clients and law firms are still finding their way:

I think there have been some false starts in the in-house world, things that have been tried and have not really worked out.

The belief that clients have this figured out, and if these darned law firms would just get on board, everybody would be in a better spot, is, I think, a complete mischaracterization. Take a look at some of the RFPs. It’s just laughable, the questions that are being asked. We have to come together as an industry to do a better job of defining value and doing things that will help relationships on both sides.

In our view, this respondent really hit the nail on the head:

Clients only need to change if they perceive that a change is necessary for them to either reduce their cost or to improve their outcome.

That is the answer to the client-is-always-right quandary. Clients only need to change if firms can persuade them that it’s in their own interest. It puts the burden on firms to think through how to raise these issues diplomatically and persuasively enough so the client sees the benefit.

While no respondent claimed to have a roadmap for conducting these difficult discussions, the discussions below of problematic client attitudes, policies, and practices suggest that the best place to start is with this key issue: Define objectives and scope at the beginning of each matter.

In a previous post about this research, I quoted evidence that the most important thing law firms can do to increase efficiency is to start each engagement by getting a better sense of the client’s objectives and what is inside and outside the scope of a particular engagement.

The fault lies not just with law firms but also with clients who fail to spend enough time thinking through what they need vs. what they want, how much they are willing to pay for what they want, and communicating those decisions to their law firms.

As one chair put it:

If there was one single thing that clients could do to make it easier to assure their satisfaction, it would be to help me identify at the outset of the project what the client would consider to be success. What would make them smile? So many things evolve from that. How do I spend my time on that objective? How do we structure our fee arrangement so that we are providing value to the client? What sort of communication does the client want from me?

Many other respondents echoed this concern:

Often, what we’re hired to do is not clear, and so we have a lot of people sitting around, treating all of this as research of documents, and it turns out that’s not what the client really wanted. Then they change what they want.

We can certainly reduce the cost, but clients have to jointly work with us to figure out what it is they want us to do less of in order to meet their expense goals. You can’t do scorched-earth approaches to matters at reduced fees.

It’s important for clients to really understand upfront what they’re willing to spend and how far they’re willing to go. You can try to explain as things are going on, but if a client didn’t anticipate something would take so much time, it’s hard to explain it when you’re in the middle of the process.

Our biggest issues are in getting our partners and our clients to sit down to properly scope and budget prior to a project. Clients want lower cost, but they want to do it the way they’ve always done it. When you sit down and talk to a client about the practical nuts and bolts, things work out great. When our partners dismiss the conversation or the client doesn’t have time, that’s where we have some matter management issues.

Some clients understand that working with the lawyer in advance makes it easier to get what the client wants, at their price, time, and so on. Others are a harder sell. Some general counsel communicate better than others and know what outside counsel is saying. Others misunderstand, which can create inefficiency.

Next week, in Part 2, I will talk about two additional things clients should do: increase transparency about client needs, and improve in-house project management.