268 posts categorized "Legal Business Trends"

May 25, 2016

Task codes and budgeting: What works and what doesn’t (Part 3 of 7)

The third conclusion from our research was that firms should train lawyers and staff to use the codes.

Whatever system is used, many experts have written about the problem of accuracy. Keith Lipman is the president of Prosperoware, a legal technology firm that created Umbria, one of the best known legal process management software packages. In a 2015 blog post entitled “The Task Code Conundrum” he wrote:

The problem with all these codes is that a significant number of lawyers don’t use them accurately. Anecdotally, I’ve been told on many occasions that 60 to 80% of time entries have inaccurate codes.

Ken Grady, one of the most widely quoted experts in LPM, has worked both in-house, as the general counsel at Wolverine, and on the law firm side, where he currently holds the position of Lean Law Evangelist at Seyfarth Shaw. He is unenthusiastic about task codes, in part because:

Self-reported data, especially when it involves things like measuring time spent on tasks, is notoriously unreliable…. We have to make sure each timekeeper is well-trained in how to apply the codes to work.

Similarly, several of the experts we interviewed described problems of inaccurate coding, including these eye opening examples:

I did an analysis of a certain type of litigation, where partners thought that analyzing the task codes would be very helpful. Instead, I showed the partners that the L100 codes, which are supposed to be used for trial preparation, were used during the week of trial…. The lawyers explained that secretaries at the firm picked the task codes…. I told the partners in a different matter that it was just not possible for a case to have the amount of effort in a particular category that the task codes indicated. They said that when the secretaries reach some pre-assigned limits for the amount of time in a particular code, they just stop using that code and start using another code. If a secretary knows that, say, the L330 code will always be fine to be used, he or she will just keep using it. They just dump time there. That makes the results really inconsistent.

Several of the people we interviewed, however, reported that accuracy can be increased if time is taken to train lawyers to use task or phase codes properly:

When we first started using task codes, we had problems with consistency. Five lawyers who attended the same meeting sometimes coded their time five different ways. That is not happening anymore, because now at the beginning of every project everyone involved discusses all the possible codes, to put everyone on the same page.

Different lawyers have widely different views of the application of the ABA task codes, so when they are used, we have to have meetings in advance to explain their use.

If it appears to my group that time is not entered correctly, we re-educate the lawyers on how to do it.

For present cases, lawyers can’t enter their time without task codes. If we see a sign of “garbage entries,” it is part of my job to hold discussions with the group involved to make sure that we get better data.

Some lawyers do give us “junk data” or refuse to participate, but lately that number has been fewer than five percent of our attorneys. We do have some lawyers who use task codes that are obviously incorrect or irrelevant, so we explain the proper use of task codes to them and this usually corrects the problem. We have met with many attorneys in person and we have emailed many secretaries to show them how this should be done.

The role of staff should not be ignored. A number of firms we’ve spoken to have trained admin staff to save lawyers time by entering the codes for them, and they have reported that this not only saves lawyers time, it also increases the accuracy of data entry.

This general issue is so important that the Association of Legal Administrators (ALA) is planning to release a new set of ALA UTBMS codes which are intended to capture or reflect all activities performed by non-attorney personnel. The head of the committee that developed these codes, Bill Mech, a principal at ofPartner Consulting Services, notes that:

One reality often overlooked is that a lawyer never practices alone. They are supported by numerous administrative personnel [including]… legal secretaries and paralegals… These essential members of the legal team can significantly increase compliance and accuracy of coding efforts – assuming they are provided the necessary training and support.

When he reviewed a draft of this series of posts, Peter Secor, the Director of Strategic Pricing and Project Management at Pepper Hamilton, emphasized a similar point:

Secretaries and billers often work on time entry edits. That group is key… they need to understand the value that codes can add. I just cannot emphasize that enough.... We have developed cheat sheets for certain engagements on which task codes to use for what. We have also have cheat sheets on the practice group level, including how narratives should be worded so we can data-mine the cost of a particular type of deponent or specific motion.

At the end of the day, the value of the data collected with any kind of coding system is based on everyone using the same terminology in the same way. Note that this is true whether one uses UTBMS-type codes, or simple English language task titles. Many legal accounting software packages can make this easier by enabling “forced” categorization of time entries according to a preset list of categories defined by the matter manager. While this alone will not eliminate miscoded time entries, it goes a long way toward improving accuracy.

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

May 18, 2016

Task codes and budgeting: What works and what doesn’t (Part 2 of 7)

The first conclusion from our interviews with the twelve experts listed in Part 1 was: Use standard UTBMS codes whenever possible.

One of the challenges in working with task codes is that the original UTBMS committee developed just four sets of codes: litigation, bankruptcy, counseling, and “project codes” for transactional work. Later committees issued several revisions and also approved new codesets. The UTBMS webpage currently also includes codes and standards for eDiscovery, governance risk and compliance, intellectual property, workers’ compensation, and mergers and acquisitions.  The last of these codesets was developed by the ABA Task Force on Legal Project Management and approved by the LEDES Oversight Committee in February 2016.

So the question about using the standard UTBMS codes applies only to a subset of lawyers. At this time lawyers in many other areas of law have no standard codeset to begin from. Some software vendors have included starter codesets in these areas, but there is no ABA-approved version. In addition, practice groups in many firms have developed their own codesets.

The key question in areas like litigation, where a standard set exists, is whether to use the codeset as is or to customize the codes to better fit the needs of a particular firm. The experts we interviewed agreed that while the UTBMS codes may not be perfect, they have the great benefit of standardization and it’s best to stick with them:

If we had it to do over, the firm would have turned more quickly to existing task codes like that of the ABA rather than starting from scratch.

Originally, the firm developed its own set of task codes from scratch, but at a certain point, we realized that the ABA codes were similar to the firm’s own codes and were required by some clients. So we transitioned to the use of the ABA codes.

Our firm does use the UTBMS codes when they are applicable. But we are also developing special phase and task codesets for specific types of matters such as financing deals.

The ABA task codes do work well, but only for litigation. In other areas, the challenge is using enough task codes to get the granularity that you need for budgeting, but not so many codes that you have a problem with “garbage in, garbage out.”

The second conclusion listed in Part 1 was: Avoid excessive detail; focus on phases not tasks.

In UTBMS, each time entry has both a high level phase code and a more detailed task code. For example, litigation was divided into five phases: case assessment, development, and administration (coded L100); pre-trial pleadings and motions (L200); discovery (L300); trial preparation and trial (L400); and appeal (L500). Each of these phases was further broken down into tasks. For example, the discovery phase included tasks for written discovery (L310); document production (L320); and depositions (L330).

Many lawyers are detail-oriented by nature, so it is not surprising that when they modify existing codes or create new sets, they often increase granularity by adding more and more new task codes. In our 2012 article, we quoted pioneers who favored the movement toward increasingly detailed codes and others who felt they were counter-productive. Now, several years later, most of the experts we interviewed believe that less is more. Some have entirely given up on task codes and simply look at phases:

We’ve learned that we get better data with more general codes that are not too granular, because this makes it easier for lawyers to code their time.

In the last 12 to 18 months, we have undertaken an effort to customize the task codes for our own purposes and to make them broader and less granular so that they can be used more easily.

In general, the lower the number of task codes we use, the more accurate the data is. Ironically, if there are too many codes, some lawyers will just give up and toss all their time into a bucket called “due diligence” or something similar, and then the data will be useless. Giving lawyers too many options decreases accuracy.

Say there are 12 to 15 possible task codes. Many timekeepers will pick the first one on the list simply because it is first, and my office will need to look back and review this data because it is unreliable.

There is always some uncertainty and judgment involved in task coding and as a result, it is usually better to roll up the task codes into phases which are better for estimating.

This type of observation is not limited to US firms. In February 2016, the UK firm Jomati Consultants published a 39-page white paper entitled Re-engineering Legal Services.”  (Full disclosure: Like LegalBizDev, Jomati is a strategic partner of Altman Weil.) It included only two quotes about task codes, and both made a similar point, in surprisingly strong language:

We’ve banished the use of task codes in our LPM initiative, unless a client requires [them]…. Our new approach has hugely simplified what we do, but still provides us with rich project data. What is important is how long a phase takes to complete. By contrast, you get nothing from trying to undertake a granular analysis of task codes.

I am not a fan of task codes. People think there’s pricing magic about them. But, after reviewing thousands of matters, I can tell you – there isn’t.

It is also interesting to note that the most recent set of new codes, developed by the ABA Task Force on Legal Project Management in M&A, consists almost entirely of phase codes, not tasks. In an interview for these posts, task force Co-Chair Byron Kalogerou, a partner at McDermott Will & Emery, noted that:

The task force is confident that coding by phase, in a way consistent with the way M&A clients demand budgets, will speed adoption and lead to more robust data collection, which in turn will support better budgeting.

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

May 11, 2016

Task codes and budgeting: What works and what doesn’t (Part 1 of 7)

By Jim Hassett, Jonathan Groner, and Steve Barrett

This is one of the longest series of posts in the eleven year history of this blog, because there is currently so much controversy about the best uses of task codes.  A much shorter summary of this research was published recently by the Bloomberg BNA Corporate Counsel Weekly and reprinted in the Bloomberg BNA Corporate Law & Accountability Report. 

In 2012, we published an article in Of Counsel entitled “Tracking Legal Costs with Task Codes: Different Firms Take Different Approaches.” Since then, the number of firms using task codes has grown dramatically and a consensus has started to emerge about what works best.

This series of posts summarizes new conclusions and recommendations based on our experience working with lawyers in numerous firms, on published reports by a number of experts, and on interviews we recently conducted with 12 experts who have had significant experience using task codes to plan and track legal budgets:

Nicole Beck, Senior Client Value Pricing Lead, Reed Smith

Diane Bertrand, Partner, Fasken Martineau DuMoulin LLP

Toby Brown, Chief Practice Management Officer, Perkins Coie

David Cohen, Lawyer, Project Management, McCarthy Tétrault

Stephanie Flitcroft, Director of Pricing, Loeb & Loeb

Bill Garcia, Chief Practice Innovation Officer, Thompson Hine

Sam Goldblatt, Partner, Nixon Peabody

Jon Hulak, Director of Pricing and Client Service, Mintz Levin

Keith Maziarek, Head of Strategic Pricing, DLA Piper

Megan Panchella, Legal Project Manager, Reed Smith

Robert Parker, Practice Group/Client Matter Management Administrator, Quarles & Brady

Scott Wagner, Partner, Bilzin Sumberg

To maximize the frankness of participant responses, we promised that while their names would be listed in our research summary, no quote would be attributed to a particular person or firm. In addition, all of them reviewed a pre-publication version of this section of this summary and had an opportunity to remove or edit any of their quotes before publication.

The main reason that these and many other experts have increased efforts to implement task codes over the last few years is easy to understand: To remain competitive in an ever more challenging marketplace, firms are being forced to predict and control legal costs better than ever before.

Several of the people we interviewed reported that their use of task codes had already produced a payoff:

We have seen immediate benefits in tracking our alternative pricing arrangements and working to budget. The use of task codes takes the guesswork out of the budget.

Some partners have actually landed new work because the firm has a task code system in place. A number of potential clients won’t even deal with a law firm that doesn’t have such a system.

Task codes have been useful in helping track matters against budget, so they are already paying dividends.

We use task codes to price better, to help attorneys manage better, to determine what our profitability drivers are, and to make the business case for alternative staffing models.

Task codes make it easy to have a conversation with the client who wants to know where things stand in terms of the matter and its budget. For us, task codes have also been an integral part of the AFA process. We can offer a flat fee for, say, a motion to dismiss because we can see how much a motion to dismiss has cost us historically. Also, task codes help attorneys see the budget vs. actual reports for any matter and see what, if anything, has changed from the original budget. Was there a change in scope?

Even at firms where there has been resistance to using task codes, the lawyers that have used them have reported benefits:

In my personal practice, the use of phase codes has been very helpful in improving estimating and budgeting.

One expert we talked to has developed about 10 different templates so far for various transactions:

If an attorney is starting one of those types, he or she just goes to the template and builds a budget. These templates can compare actual versus budgeted time on any phase of the matter. You simply look at a picture of what the transaction will probably be in advance and compare it to what actually happens. In addition, there is another advantage: You never forget anything. The template prompts you to remember each needed step, and each task within the step, so you budget better as a result.

Originally we included a brief history of the most widely used system – UTBMS, the Uniform Task-Based Management System – starting from the fact that the system was designed in the 1990s primarily by clients who wanted to standardize e-billing and understand and control costs rather than by law firms who wanted to predict costs.

Many clients, especially in insurance defense, require law firms to use task codes in e-billing as a condition to getting paid.

Unfortunately, what started out as an effort to create a universal language for analyzing legal work later evolved into a system in which many clients tweaked the system to fit their unique demands. For example, in 2007 the UTBMS Insurance Update Initiative issued a slightly revised set of codes to better meet the needs of insurance companies.

As one expert put it:

Sometimes it seems every client wants to use a different set of task codes. For example, one Fortune 50 firm doesn’t use L-codes [for litigation], it uses what they call K-codes. If the clients think the codes don’t tell them what they want to know, they just make up some new codes.

Another summed up the situation like this:

The problem with standards is that so many people have different ones.

In some cases, a single lawyer may have to use two different codes for exactly the same type of work performed on the same day for two different clients. If one wanted to maximize human error, it would be hard to come up with a better system.

This problem is so common that some legal financial software vendors have added automatic translation features so that all the lawyers in a firm can use one standard codeset and have it automatically translated into different codes for different clients. However, these algorithms require painstaking mapping and assume that there is a one-to-one correspondence. If a code in one system overlaps with two or more codes in another system, no algorithm in the world can do an automatic translation.

Despite these barriers, in the last few years many law firms have invested significant effort in using task codes to better track time and cost and ultimately to respond to client demands for more predictable costs. The remainder of this series will explain six key lessons they have learned to date:

  • Use standard UTBMS codes whenever possible
  • Avoid excessive detail; focus on phases not tasks
  • Train lawyers and staff to use the codes
  • Use task codes selectively rather than on every matter
  • Limit retrospective analysis of past matters
  • Create an internal code for work that is out of scope

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

April 27, 2016

How to evaluate legal project management programs (Part 3 of 3)

When you want to evaluate an LPM program, the best source of information is to rely on the opinion of the people who are in a position to make an informed judgment: the lawyers themselves. In our coaching, for example, if a lawyer gets new business that seems to be related to their LPM activities, we simply ask them: what do you think? Was LPM partly responsible for this? Whether they say yes, no, or maybe, we don’t second guess them; we merely record the opinion and move on.

At the highest level, this means listening to the opinion of the decision makers who ultimately decide whether to invest in LPM or not. For example, as Hanson Bridgett Managing Partner Andrew Giacomini summed it up in the middle of one of our ongoing coaching programs, “I don’t have any statistics, but if I didn’t believe that LPM was producing a return, I wouldn’t keep investing in it.” After each program concludes, he continued, “You can see the energy that lawyers are putting into applying it to their practices. As they pass these tools along to others, it creates new strengths for the entire firm. And if our lawyers become the best at LPM, they will get noticed.”

In the first few years we offered LPM coaching, lawyers’ reports of its effects were limited to internal reports and occasional public case studies. More recently, we’ve created systematic reports of results both when a program ends and 90 days later, in a format like Table 1 below. This can be circulated internally to assess what works best and to publicize success and generate enthusiasm for spreading the approach.

Note in Table 1 that we recommend that the first column identify the person who first made the change. However, depending on its culture, some firms may prefer to eliminate the “who” column. Since LPM takes time, the benefits column should include not just benefits experienced to date but also the potential benefits for the future. The more specific this can be, the better.

Table 1

Sample format for tracking LPM benefits

Who?

LPM behavior change

Benefits

     
     
     
     
     

 

Table 2 includes typical results from past coaching programs, with some details changed slightly to protect the confidentiality of the firms.

Table 2

Examples from past LPM coaching programs

LPM behavior change

Benefits

For every matter over $50K, lawyer shared a description of project scope and assumptions with everyone on the project team

Team members became more familiar with what each budget included and excluded, which improved cost predictability and client satisfaction

Required lawyers to use a special task code to identify any work that was performed despite the fact that it was technically beyond scope

Kept lawyers more aware of the scope of the agreement, enabled relationship partner to negotiate increased scope with the client where appropriate

A lawyer established a procedure to provide written summaries of strategic objectives to clients for their review at the beginning of every new matter.  This later was adopted by his entire firm

Improved client satisfaction, led to more accurate budgets and increased realization

At the start of a large matter, one lawyer used our matter planning template to create a list of key sub-tasks and assignments, then asked team members to estimate how many hours each sub-task would take them

Team members completed most tasks within the time estimates they provided, which led to more accurate bids, increased realization, and new business

A litigator explained our risk analysis template to a key client and then used it to assess their budget in an early case assessment

The client loved the template and used it to structure their discussion of risks vs. costs. The result was increased client satisfaction and cost control.

The lawyer developed a new fixed fee product for consultations in a specialized area by working with a coach to identify all sub-tasks required and the range of possible time to complete each

Increased new business by offering a fixed price product in a specialized area before competitors did

One lawyer added a cover memo to monthly invoices with a bullet point summary of the progress of each matter on the invoice and the expected remaining costs

By explaining the rationale for each fee and what to expect, the lawyer avoided surprises and increased realization

A litigator developed a checklist of questions to ask at the beginning of each case to better define scope and assign lawyers to cases

More accurate bids, better team assignments, lower costs to clients

The lawyer arranged to have the accounting department to provide “tickler” emails sent automatically when certain financial milestones were reached, such as when 50% of the budget was spent.

Improved budget tracking led to cost control and avoided surprises to clients by enabling early discussions of possible scope changes

For a multi-million dollar flat fee for handling a large number of litigations, the relationship partner designed spreadsheets showing cost to date and cost to estimated completion for each case. This made it easier to quickly spot where there were significant overages in attorney time spent, above the flat fee for a given month

Early identification of possible problems improved discussions of why any cost overruns may have occurred in a particular case and ways to control overruns in the future. Ultimately, this led to the fixed fee arrangement becoming more profitable

IP lawyer used our matter planning template to simplify the steps required to complete patent applications for a key client. The lawyer identified 12 steps that were required for every patent application and a likely range of hours for completing each step

Team members were able to easily compare their effort on each phase against expectations and increase efficiency. This improved client satisfaction and increased new business

At the end of a matter, the relationship partner conducted a short lessons learned review with the client

The discussion led not only to ideas for increasing efficiency but also to being assigned similar matters in the future

Senior partner who had to approve write downs identified a few key partners with high write-down rates and interviewed them about the causes and possible cures

Each lawyer developed a personal action plan to reduce write-downs, and the firm improved realization

A practice group required team leaders to hold weekly internal team status meetings for each matter over $100K

Avoided duplication of effort and led to early identification of issues that could increase scope

As firms increasingly use this type of evaluation to document the results of their LPM programs, the approaches that work best for each lawyer and each practice group will gradually spread to the entire firm. The firms that follow this path first will achieve the greatest benefit by giving clients what they asked for in the Altman Weil CLO survey quoted at the start of this piece: LPM, LPM, and more LPM.

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

April 20, 2016

How to evaluate legal project management programs (Part 2 of 3)

Identifying the best way to evaluate a particular training or coaching program is challenging for any business. Donald Kirkpatrick “wrote the book” that most professional trainers use in this area: Evaluating Training Programs: The Four Levels. The title refers to four different ways Kirkpatrick says training can be evaluated, from the easiest approach to the most difficult:

  • Level One – Reaction – measures how students feel at the end of a program. For example: “How useful was this workshop to you?” This level requires just a questionnaire and is often the only way training programs are measured, since it’s so easy.
  • Level Two – Learning – measures how well students have mastered the course content with test questions such as “Please define LPM.” This is considered more compelling evidence of whether a training program works. However, again it only requires a paper test and may or may not influence job performance.
  • Level Three – Transfer to the job – measures how the knowledge and skills from a course or coaching program are used on the job, often several months after the program ends. For example, one could conduct interviews asking lawyers whether they had changed specific aspects of their practice after LPM coaching or training, and if so to provide specific examples.
  • Level Four – Organizational impact – measures the business impact of a program such as quality improvements. In the case of LPM, these could include such benefits as:
    • Increasing client satisfaction
    • Delivering greater value to clients
    • Protecting business with current clients
    • Increasing new business
    • Increasing the predictability of fees and costs
    • Minimizing or eliminating surprises to clients and to the firm
    • Improving communication with clients
    • Managing budget and schedule risks
    • Improving realization
    • Increasing profitability

As you ascend from Level One to Four, each level requires a bit more time and money to measure. As a result, while Level One evaluations are nearly universal, Levels Three and Four are far less common among professional trainers. Unfortunately, they are also the only levels that most businesses ultimately care about. It’s nice if employees smile at the end of a workshop (Level One) or can pass a test (Level Two), but unless it actually changed what they do on the job (Level Three) and ultimately benefits the organization (Level Four), few firms would invest in training.

Interestingly, when the LPM movement was just getting started, a report from the Association of Corporate Counsel and the ABA reinforced the idea that Levels One and Two were not enough. An article published in ACC Docket described a meeting “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.” After the meeting, the organizers concluded that future progress in LPM 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 helping lawyers to do it.

When firms get serious about evaluating LPM, the first thing many think about is somehow measuring its ROI (return on investment). The underlying math is simple: ROI = (Return – Investment) / Investment. For example, if you invest $1000 in a one year bond that pays $1050, your ROI is 5% (($1050-$1000) / $1000).

This simplicity is appealing, but it is also deceptive when it comes to training and coaching. For one thing, according to Dominique Hanssens, UCLA Anderson Graduate School of Management’s Bud Knapp Distinguished Professor of Marketing, these are not good examples of one-time investments. (As your CFO would say, training and coaching are expenses on the firm’s profit and loss statement, not assets on the firm’s balance sheet.)

For another thing, the full impact of a training program could come months or years after its completion and is almost impossible to isolate from other factors. If a lawyer completes an LPM program, increases client satisfaction by avoiding surprises, and gets more business from that client in the future, did LPM coaching CAUSE the increased satisfaction and new business? Of course not. It was just one factor in a complex situation.

There is some evidence that investing in efficiency pays off for law firms. Altman Weil’s 2015 Law Firms in Transition reported that firms that said they had changed their strategic approach to efficiency were more likely to report that revenue per lawyer was up (76% of firms that changed had increased revenue per lawyer in the previous year vs. 62% of firms that had not changed) and that profits per equity partner were also up for a higher percentage of the firms that had changed (76% vs. 61%).

While this is thought provoking, scientific purists would point out that correlation does not imply causality. Perhaps it was a third factor such as effective firm leadership that produced both the efficiency and the increased revenue and profitability.

At the end of the day, it is a fool’s errand to try to scientifically PROVE that LPM – or any other single activity in a complex situation – is solely responsible for any of the possible benefits listed above.

Despite these barriers, convincing ways of evaluating LPM programs have started to appear, as explained in next week’s final post in this series.

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

 

April 13, 2016

How to evaluate legal project management programs (Part 1 of 3)

Clients want law firms to improve legal project management (LPM).

In its 2015 Chief Legal Officer (CLO) Survey, Altman Weil asked 258 CLOs, “Of the following service improvements and innovations, please select the three you would most like to see from your outside counsel.” The three that clients picked most often were greater cost reduction (50%), improved budget forecasting (46%), and more efficient project management (40%). Since LPM leads to improved budget forecasting and to cost reductions, you could say that the top three client requests were LPM, LPM, and more LPM. Just as they were in the previous year’s Altman Weil survey, and the one before that.

And CLOs are not impressed with what law firms have accomplished to date. In the CLO survey, Altman Weil asked respondents to rate how serious law firms are “about changing their legal service delivery model to provide greater value to clients” on a scale from 0 (not at all) to 10 (doing everything they can). The median rating was just 3.

Law firm leaders also recognize the need for change. In a separate Altman Weil survey – the 2015 Law Firms in Transition Survey – managing partners were asked for their opinions on which of 14 current trends were most likely to be permanent. The number one need, according to 93%, was an increased focus on practice efficiency, which is the goal of LPM. But when the same survey asked, “Has your firm significantly changed its strategic approach to efficiency of legal service delivery?” only 37% said yes. So 93% of firm leaders think more LPM is needed, but only 37% are doing something about it. Why?

One key reason for the slow pace of change is that if there’s one thing lawyers are good at, it’s being skeptical. That’s what makes it so important to evaluate LPM programs in this time of transition: lawyers need proof that it helps them increase client satisfaction and more.

To date, most “evaluations” have been intuitive judgments. And they have not always helped the cause of LPM, because there have been a number of false starts and missteps.

In 2010, Dechert announced that it had trained all its partners in LPM. Lawyers love precedent, so this led to a small fad of large-scale LPM training programs, which in turn led to some great press releases but precious little in the way of behavior change. As the chair of one AmLaw 200 firm that invested heavily in LPM training put it in our survey of Client Value and Law Firm Profitability (p. 193):

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

To this day, training programs enable firms to write responses about their commitment to LPM in their RFP responses. But they have not convinced skeptics nor gotten many attorneys to change the way they practice law.

With the wisdom of hindsight, this lack of impact of education on behavior change should not have been a surprise to anyone. Taking a course or reading a book about how to lead a healthier life by quitting smoking, eating more vegetables, and exercising regularly does not mean that you will actually do any of these things. Training professionals have amassed a large body of research from other professions showing that education does not necessarily change behavior.

For example, according to one medical white paper:

Traditional medical education programs are effective for the transfer of knowledge, skills, and attitudes, yet ineffective in changing physician behavior… Physicians report spending about 50 hours per year in continuing medical education (CME) activities… There is an underlying belief associated with CME activities that health care professionals will improve how they practice, which will in turn improve patient outcomes. Despite this belief, many studies have demonstrated a lack of effect from formal CME.

A white paper from the engineering profession makes a similar point and then explains what does work:

Using skills and knowledge within the work environment makes learning stick, causing behavior change… In this step it is important to experience early success. This early success depends on leadership support and coaching. The system, and often the people, resists change. Employees need someone supporting them with encouragement and coaching, and running interference as they attempt to adapt their behavior.

How did experts in other professions learn these lessons? They conducted formal evaluation programs.

The only way to find out what works is to try it and measure the results. What works with one client may fail with another. What works for you may fail for your partner. And what works this year may fail next year. The world changes, and clients and law firms must change along with it. The only thing that does not change is the need for testing. As it says in the Bible (1 Thessalonians 5:21): “Test everything, retain what is good.”

There is a large body of research about the best ways to promote behavior change in large organizations. In the book Leading Change (p. 123), John Kotter, professor emeritus at the Harvard Business School, argues that one of the most effective tactics is to create short-term wins which help create internal champions. This is also the key to behavior change in law firms. In its survey Legal Project Management: Much Promise, Many Hurdles, ALM Legal Intelligence concluded (p. 17) that, “The quicker there are demonstrable positive benefits, the faster other partners will take notice.”

Once firms overcome the initial resistance to LPM by providing examples of its success, they must continue to monitor its application and results.

What gets measured gets done. The origin of the phrase has been attributed to management gurus from Tom Peters to Peter Drucker, as well as Lord Kelvin, the 16th century astronomer Rheticus, and others. Whoever said it first, the idea is important for a very simple reason: It’s true. What gets measured does get done.

Do you know anybody who wears a Fitbit to track the number of steps they walk every day? If you don’t yet, you will soon. According to one recent estimate, Fitbit has over 19 million registered users, and its revenues for its most recent fiscal year were $1.86 billion. Not bad for a company that was founded less than a decade ago. And when you add in competitors such as Garmin, Jawbone, Misfit, and others, the total market for wearable fitness trackers is much larger.

Why has the demand for these devices grown so rapidly? There is also an important truth behind the popularity of these devices: if you count your steps each day, look at the results over time, and maybe even use Fitbit’s online features to compete with friends, you are likely to walk more and ultimately become more fit.

So if lawyers want to improve their legal project management behavior, measuring the results will help assure that they reach their goals.

As Lou Gerstner, former chairman of IBM, put it in his book Who Says Elephants Can’t Dance? (p 231):

Execution is all about translating strategies into action programs and measuring the results… Proper execution involves building measurable targets and holding people accountable for them.

One way or another, it always comes back to measurement. When sales training guru Tom Snyder reviewed several decades of research on sales training, he concluded that, “Only those things that are measured will get done; the engine of change is measurement.”

By evaluating LPM programs more carefully, changing tactics based on what works, creating internal champions, and continuing to measure results, firms will be in a much stronger position to prosper in challenging times by offering clients what they want and need. They will also be better able to invest their limited time and money in the programs that are most likely to produce results.

But what exactly should firms do to evaluate LPM programs? The rest of this series will summarize the state of the art.

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

March 30, 2016

Agile vs. traditional approaches to LPM

By Ed Burke, Jim Hassett, and Michelle H. Stein, LegalBizDev

 

As more and more law firms have begun to adopt LPM to increase client satisfaction and their own profitability, a number of experts have begun to discuss the potential value to law firms of “Agile” approaches to project management.

The traditional approach to project management (also called the “waterfall” approach) is based on a sequential series of steps, such as:

  • Initiating
  • Planning
  • Executing
  • Monitoring and controlling
  • Closing

In this model, a project starts by creating a plan, and you then work your way to the end, one sequential step at a time. Agile speeds up the process with an iterative approach that gets client feedback more quickly.

The Agile alternative first emerged in software development, when programmers found that the old saying “Perfect is the enemy of the good” was delaying many technology rollouts. The goal of getting a complex, diverse collection of needs correct on the first try was getting in the way of rolling projects out in a timely manner.

This alternative iterative approach was first described in the Agile manifesto written by a group of influential software developers in 2001. Under Agile, technology firms:

  • Develop programs as quickly as possible
  • Try them out on users
  • Make changes based on feedback
  • Then try them out again

Rather than starting out by defining the perfect requirements document, they recommended developing release after release until they had a product that truly met user needs. Anyone who owns a computer or a smartphone has seen Agile in action. Regular updates are common, delivering incremental improvements that benefit the customer while giving the company feedback quickly. Today Google, Facebook, Twitter, and thousands of other technology companies rely on Agile.

But what is the exact definition of Agile project management? Unfortunately, as Alan Shalloway has noted in an article written for Eric Verzuh’s Fast Forward MBA in Project Management (Fifth edition, p. 57) , “There is a lot of confusion about the answer… a movement was created around the term agile but the movement is not governed by a single body and agile methods continue to evolve.”

Shalloway defines the essence of Agile as focusing on the following questions:

  • “How do we deliver value quickly to our customers?
  • How do we discover as early as possible what is needed?
  • How do we accurately gauge the progress we’re making in our project?
  • How can we accelerate the learning of the development team?”

These questions hit the nail on the head for many areas of the law, so it is not surprising that a variety of experts are now working on ways to apply Agile to LPM. To date, this has had the greatest impact as a general mindset rather than as a particular collection of well-defined techniques.

In one sense, almost all of the LPM work we’ve done over the last several years is more closely based on an Agile mindset than a traditional LPM approach. Instead of urging lawyers to develop a complete, end-to-end plan for an ongoing matter, we urge them to “look for low hanging fruit,” try out promising techniques as quickly as possible, to build on what works and discard what doesn’t. This approach is also the defining element of both our individual coaching and our “just in time” training workshops, which focus on providing just enough training to benefit individual lawyers quickly.

The Agile approach runs counter to the “committee decision process” at many law firms, which would prefer to have a five-year strategic plan in place before taking the first step. This type of overthinking has doomed many LPM programs to death by old age before the committee made its first recommendation.

Seyfarth Shaw, which has been working on legal project management longer than any other firm, initially found that in many cases the traditional approach was not “well received or effective” with lawyers. In the article “Agile: A Non-traditional Approach to Legal Project Management”, Kim Craig, SeyfarthLean’s global director of legal process improvement, and Jenny Lee, a senior project manager with Seyfarth, explained that:

Traditional project management focuses on robust, comprehensive, mandatory project documentation with lengthy project charters, detailed project plans, complex status reports and rigorous, formal change control logs… [But] the world of legal service delivery is fast-paced and unpredictable. In legal matters, we cannot possibly know everything that will be involved with litigation at the outset. Developing an overall strategy is generally common practice, but detailed, cradle-to-grave planning is impossible.

Their solution was to incorporate Agile concepts and techniques into their work. Once Seyfarth embraced Agile, it led to many changes in procedures, explained Heather Eskra, a senior project manager at the firm, in an interview. Seyfarth began to improvise more. The typical two- to three-page static project plan—which in many cases had been ignored by lawyers—was replaced by dynamic bulleted must-read emails sent out as needed. Clients were involved earlier and more often in meetings that in pre-Agile days would have been purely internal. This investment of time actually sped up the process by unveiling misunderstandings or changes in direction much sooner than in the past.

Seyfarth even began collaborating with opposing counsel in an effort to speed up a deal, for example by letting the other firm use some of its software, sharing task lists, and housing both sides’ documents on a single platform. This sped up the process on both sides because the other firm did not want to be seen as falling behind. The process also affected the outcome, in the sense that it could help both sides reach “yes” more easily.

Seyfarth lawyers and staff frequently hold joint “lessons learned” debriefing meetings after a matter closes—indeed, sometimes after every phase in large matters, adjusting approaches and tactics based on what worked and what didn’t in the prior phase. Some lawyers who once complained about the debriefings are now pushing to have them earlier, Eskra says.

These days, Seyfarth transactions that are complex, fast-moving, and/or likely to change often take the Agile approach. The program has proven to be a significant step forward in the firm’s pioneering, decade-long focus on improving client service.

Thus, Agile is becoming an increasingly effective approach to LPM, both as a general mindset and in terms of specific techniques, some of which will appear in the fourth edition of our Legal Project Management Quick Reference Guide.

March 16, 2016

Legal project management: What works best? (Part 2 of 3)

An edited version of this series appeared in the February 2016 issue of Managing Partner magazine with the title  “LPM: An evolving process” and can be downloaded from our web page.

 

2. Develop internal champions with quick wins

There is a large body of research on tactics that promote behavior change in large organizations. In the book, Leading Change (p. 123), John Kotter, professor emeritus at the Harvard Business School, argues that one of the most effective tactics is to create short-term wins which “provide evidence that sacrifices are worth it, reward change agents with a pat on the back, help fine-tune vision and strategies, undermine cynics and self-serving resisters, and build momentum.”

This approach is the key to behavior change in law firms.  As ALM Legal Intelligence noted in its 2012 survey “Legal Project Management: Much Promise, Many Hurdles” (p. 17): “The quicker there are demonstrable positive benefits, the faster other partners will take notice.” 

The most effective programs we’ve seen were built around one-to-one LPM coaching  for influential partners to enable them to directly experience its benefits. When they do, many become internal champions who lead efforts to adapt LPM to the particular needs of their firms, practice groups, and clients.

Bilzin Sumberg, a Miami firm with over 100 lawyers, was one of the first to put this approach into practice with a significant proportion of the firm. In a case study describing their approach, I’ve argued that no other firm on the planet has gotten such a large percentage of the partnership actively involved so quickly in using LPM.

In March 2012, Bilzin Sumberg formally kicked off its LPM initiative at a partner retreat. A few months before, three influential partners had begun one-to-one LPM coaching to enable them to increase efficiency and client satisfaction. At the retreat, they discussed exactly what they did and how it had worked. All three reported numerous examples of increased client satisfaction, including one case in which LPM had immediately led to a substantial amount of new business. Not surprisingly, the testimony of these respected colleagues was far more persuasive than the words of any outside consultant ever could be.

As a result of this discussion, a number of other partners became interested in seeing if LPM could help them increase client satisfaction, new business, and realization. All 51 Bilzin partners were offered the option to complete the same coaching program that the three panelists had received. By May 2013, a total of 26 partners had volunteered for and completed the program, representing just over half of the firm’s partnership.

At that point, belief in LPM had reached critical mass and developed enough momentum that no more coaching was needed. The partners themselves and Bilzin’s internal staff took ownership of moving the effort forward and sustaining progress. The first quick wins had led to more wins, and an LPM committee was formed to assure that LPM continued to change the firm’s culture.

According to Paul Vandermeer, the firm’s chief knowledge officer and a member of the LPM committee, “The more successes we have gotten, the more converts we obtained and the more that LPM has permanently changed the way we do business.” To cite just one small example, the firm has begun requiring lawyers to systematically track work that falls outside the scope defined by each engagement letter. This idea came not from any outside consultant, but from within the firm itself.

This basic model – start by coaching a few lawyers one-to-one and then have them publicize their success – has been used in many other firms. In our experience, it works best when there is strong management support and a continuing commitment, and is clearly the most effective way for any firm to get started.

3. Assign staff to support lawyers

It is impossible to keep a project on time and within budget if the relationship partner cannot obtain timely information about how much has been spent and what has been accomplished. Therefore, after key partners have made a commitment to LPM, the next obvious step is to assign staff to provide lawyers with financial information and perform tasks that help partners to manage more effectively.

As the chair of one AmLaw 100 firm that has committed to LPM put it in our research on Client Value and Law Firm Profitability (p. 195):

We are starting to hire different people to manage the non-legal aspects of the practice, not the relationships. Lawyers are notoriously bad managers. You could be a fabulous trial lawyer, but you might not be able to get your hours in on time, or bill on time.

In our experience, it is often more effective to promote from within for this role than it is to hire outsiders, which is why we used the word “assign” above. To be effective in the support role, one must be detail-oriented, willing to learn, and familiar with the individuals and the culture of the firm. This last factor – inside knowledge – is critical to success and can take time for an outsider to develop.

The larger the matter or the firm, the more sense it makes to delegate management of the budget and schedule to staff. However, some key aspects of LPM cannot be delegated.

In our survey, we asked AmLaw 200 leaders to rank the urgency and importance of eight key issues in LPM. The top two were defining scope at the outset of a matter and communicating with the client as it proceeds. Neither can be delegated to project management staff.

Too many firms act as if hiring an LPM director and/or a pricing director will solve all their problems. This is clearly part of the solution for many firms, but it only works if partners are committed to changing their approach.  (For more information, see our white paper The evolving role of LPM Directors.)

February 24, 2016

The evolving role of directors of legal project management (Part 3 of 3)

By Jim Hassett and Jonathan Groner

In addition to pricing, several of those interviewed stressed process improvement, as in these examples:

I spend most of my time working with practice group leaders and individual partners to identify problems and opportunities for increased efficiency for the firm.

My major goal is to educate the lawyers on process improvement solutions, to make their jobs easier.

My chief goal is to help attorneys constantly plan their matters well and to think of new ways to do the firm’s work. This is particularly useful in IP, because patent and trademark prosecutions often involve the same steps repeated in the same way, so careful attention to each step can save time and effort.

Our major achievement has been to teach lawyers how to deliver legal work in the most efficient way through process maps which show the most efficient paths to achieve a variety of legal goals. For clients, the results are reduced costs, greater predictability and transparency, more efficiency, better use of technology, and better legal and business outcomes.

Several people we interviewed also mentioned their role in helping lawyers to think more clearly about profitability:

My group has helped introduce the concept of profitability of a particular engagement into the law firm’s thinking. Profitability is not the amount that is billed; it is, broadly speaking, what remains after paying associates and everyone else who is involved in the matter.

A few mentioned improving communication. One said that:

The major advantage of LPM is to improve communications between the firm and its clients so that the client can understand what is going on at all times. We also use end-of-case reviews to evaluate what we did right in a case and what could be improved.…Through the appropriate use of LPM, I believe our firm can improve its realization by two percent annually on a consistent basis.

Several talked about working directly with clients, as in these examples:

My work is heavily client-driven, since the firm’s clients are much farther along in their understanding of value and efficiency than some of the partners are. My role is to be a liaison between the firm’s clients and its partners…. The firm’s partners let me work directly with clients and understand what makes them tick. My job is to work with each client and to find out exactly what they’re looking for from us. Do we want to partner with our clients to utilize new technology and to take advantage of innovation? Do we want to propose arrangements based on reduced rates and still remain profitable?

For the next year, my priority is to increase my visibility in client meetings—attending them more often and serving as more of a support system for the partners.

Whether it’s the result of differences in firm culture or in the way that LPM director roles have been defined by management, there are differences in the degree of lawyer acceptance. On the positive side, one respondent reported:

While there are pockets of resistance, they are not vocal or persuasive.

More commonly, there was greater resistance to LPM:

In my director role, I need to have a thick skin vis-à-vis the attorneys. You are talking about people who have worked the same way for years. You can’t force people to change.

My most important challenge is building relationships with the partners and developing their trust.

The biggest barrier to success is the need to instill a sense of urgency among the attorneys. 

My major obstacle, in addition to technology, is dealing with a subset of partners who want to do things the way they have always done them.

I have a real question whether most lawyers have the resiliency to make changes in the way they practice law.

Another common theme was that the resources available for LPM are too limited. Indeed several directors described lack of time as their single biggest problem:

The biggest obstacle to achieving my objectives is the number of hours in a day.

Everyone is too busy. I just wish I had more time to show everyone the framework that’s in place. 

We know that our clients all over the world are interested in budgeting. We need to have the resources available in our department to answer all these client questions. 

The question is, how do we staff everything when we have so few people to achieve all our goals?

This high demand is a good thing in that it proves that LPM directors are making progress in showing attorneys the benefit of LPM. But it also implies that going forward the biggest questions for firm management will be how much to invest in LPM and which activities produce cost-effective changes most quickly.

Our 15 interviews revealed 15 approaches to these tactics, some of the differences subtle and others quite significant.

To those views we would add a 16th opinion about what works best, based on our experience working with a number of firms. Our general approach is summarized in our article “LPM: An evolving process” in the February issue of Managing Partner magazine. As we wrote there:

Too many firms act as if hiring an LPM director and/or a pricing director will solve all their problems. This is clearly part of the solution for many firms, but it only works if partners are committed to changing their approach.

LPM and pricing directors are hungry for information about what works and what doesn’t.  A number of thought leaders have banded together to form the True Value Partnering Institute , described on its web page as “an invitation-only virtual Think Tank… [which organizes] Cohorts which meet several times via one-hour conference calls and can also participate in specialty topic Sub-Groups to collectively explore topics of interest.”  For example, their “Legal Project Management Leaders” Cohort has a sub-group devoted to “Defining the Role and Measuring the Value of a Legal Project Management Director.”

As a result of our interviews, we recently expanded our LPM Acceleration Program to include a wider variety of services to support in-house LPM directors, as well as access to the proprietary scripts and guidelines we have developed over the last several years.

Whether a firm accepts our recommendations or those of others, the most important conclusion from this research is that firm management must play an active role in defining the best way to implement LPM. Fundamental questions regarding the firm’s business approach to profitability and client satisfaction are simply too important to be delegated.

As we reviewed all of our findings, the good news was that these 15 firms and many others are devoting significant resources to meeting client demands for greater efficiency, and that all of them are making progress.

But there is still a great deal of work to be done and LPM directors currently disagree about the best approach to using limited resources. The challenge is to find the tactics that will produce the greatest benefits for each firm, in the most cost effective way possible.

All this at a time when the pace of change needs to increase. In our survey of Client Value and Law Firm Profitability, when we asked AmLaw 200 leaders, “Will firms have a competitive advantage if they change more quickly?” 85% said yes, they would.

At the end of the day, the burden is on the partners who own each firm and on the firm’s management committee to review all the conflicting opinions about LPM tactics and make the best decisions they can in an uncertain environment.

The stakes are high. As one senior executive in our AmLaw 200 survey (p. 11) put it:

I think the market’s going to shake itself out. [And] I think [firms] that can’t do this will fail.

 

A white paper which summarizes this entire series, and describes our LPM Acceleration Program can be downloaded from our web page.

February 17, 2016

The evolving role of directors of legal project management (Part 2 of 3)

By Jim Hassett and Jonathan Groner

On the most fundamental level, the 15 people we interviewed had different definitions of what an LPM director is responsible for. This is not surprising given widespread disagreements about the very definition of LPM.

This lack of consensus can be seen in the name of the most influential professional conference in this area, the Legal Marketing Association’s (LMA) P3 conference. When the first P3 conference was held in October 2013, the LMA website listed the 3 Ps as pricing, practice innovation, and project management. The second P was later changed from practice innovation to process improvement.

No one has asked us our opinion about the name of the conference, but if they did we’d say that the best title would be the simpler term “legal project management,” since both pricing and process improvement should be considered subtopics under LPM. (For more on our view of LPM’s broad definition, see Chapters 2 and 3 in my book LPM, Pricing, and AFAs.)

This disagreement can also be seen in the titles of the people we interviewed—eleven included the word pricing and two included the phrase process improvement. This difference is more than just semantics. It reflects the fact that law firm management has hired people with different goals in mind, and as a result their efforts have focused on different tactics.

When we asked people to define their job, here are some of the answers we got:

My role has evolved from training, in which I worked to acclimate lawyers to the idea of LPM, to an operational role putting LPM into practice.

In my earlier days here, my time was focused on building an awareness of project management at the firm through education and training. Now we are moving to become a group that acts as an internal consultant to the attorneys.

My first assignment was to diagnose and evaluate what the firm was doing well and not so well in LPM. Now my two main roles are counseling partners on budget and management for prospective and ongoing matters, and looking at process improvement.

My role is 50/50 pricing and LPM, and I supervise people in both areas.

Fifty percent of my job is creating fee estimates for each project based on a questionnaire that I give to all people who are billing on the matter. The other 50 percent is more like “billing hygiene,” in which I make sure that the firm’s billing protocols are being followed and that bills are being sent on time and in the right format.

I have three roles: helping lawyers create budgets and partnering with them on pitches; managing existing matters as part of a client team in an ongoing case; and developing firmwide awareness of the firm’s LPM program.

The theme most often reflected in both job titles and job descriptions was pricing.

In 2012, we wrote an article for Bloomberg Law Reports entitled “The Rise of the Pricing Director.”  At that time, despite extensive networking, we were able to find only a handful of people who held the title of pricing director in a law firm or performed that function. Law firms generally move a little slower than glaciers, but the growth in pricing directors has been meteoric. According to a 2014 survey by ALM Legal Intelligence, just two years after our article, “Seventy-six percent of big firms now employ some sort of pricing officer. And these positions are in the midst of a remarkable growth spurt.”

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

In the current highly competitive environment, many law firms are struggling with two key issues:

  1. Pricing: How do we bid high enough to make an acceptable profit, but low enough to get new work?
  2. Managing: After we win work at a particular price, how do we manage the work to make a profit?

In our interviews with 15 LPM directors, we found far more attention devoted to pricing before the fact than to managing after the fact. For example, one respondent described the main LPM responsibility as:

Working directly with attorneys on pricing proposals. When I started, many partners were skeptical about LPM and alternative pricing strategies, but now I get half a dozen phone calls a week from attorneys who want my help. Some are from the attorneys whom you’d least expect to be interested.

Said others:

I spend a good deal of my time advising lawyers about fee arrangements and about what to do in response to client requests. We work closely with the marketing department, especially when it comes to RFP responses.

One of our major initiatives is to incorporate budgeting into the RFP stage of every matter so that the budget can be incorporated into the proposed pricing. This would make RFP responses better and more efficient and would lead to an immediate return on investment.

Partners are under constant pressure from their clients to do more detailed budgeting and more creative pricing to meet client needs. We need to keep up the level of creativity and sophistication in our pricing.

A much smaller number of the people we interviewed mentioned internal management, as in these examples:

Our focus to date has been on pricing and AFAs, but I expect to focus on other aspects of LPM very soon.

My goals for the next year are to improve monitoring of ongoing matters, to ensure that every aspect of a case can be tracked efficiently, and to ensure that the partners have the tools and capabilities to have conversations with their clients about management and risk trade-offs in their cases.

While both better pricing and internal management will improve financial results, in our opinion more emphasis on improving the management of existing matters would lead to a faster financial return.

In an influential book entitled “Growth is Dead,” Bruce MacEwen has written about:

“Suicide pricing” in response to RFPs. These are bids—from name-brand firms, mind you—that are so breathtakingly low one wonders how they could possibly make any money. The short answer is they can’t.

Why do firms bid so low? Because they have too many lawyers and not enough work.

In the most recent Law Firms in Transition Survey, Altman Weil asked, “Are each of the following lawyer classes in your firm sufficiently busy?” The answer was no for a majority of partners (53% of equity partners and 59% of non-equity partners).

The result is lower prices. As one AmLaw 200 managing partner put it in our research on Client Value and Law Firm Profitability:

Sometimes we know a matter is not going to be profitable, but we take it anyway because we’ve got overcapacity that we’re not going to be able to get rid of quickly. It’s not profitable, but it’s more profitable than zero.

In this era of dog-eat-dog competition, firms sometimes have little control over pricing. But once the price is set they CAN control how the work is done. So why do so many firms concentrate on pricing before internal management? Starting with pricing is a practical way to get attorneys to begin to utilize and appreciate LPM.  Accurate pricing starts with better communication in both directions:  law firms must better understand client goals and client must better understand the cost of developing and implementing various legal strategies.  Risk assessment, efficient use of internal and external resources and much more are all part of the process.

But it’s a whole lot easier to get lawyers to agree to a budget than it is to get them to live within it, so LPM directors also need to help lawyers change their behavior, which is a major challenge.

Next week, in the third and final part of this series, we will discuss other tasks performed by LPM directors and the implications for firm management.