9 posts categorized "Legal Business Development"

August 21, 2019

How to deal with difficult clients and situations (Part 2 of 2)

By Gary Richards, LegalBizDev

In Part 1 of this series, we discussed one healthy option for dealing with clients and situations that are extremely demanding and/or require substantial write-offs:  Changing the Situation.  We outlined a script that can be used in discussions with clients and presented a sample of how that script might be used.

In this post, we will discuss options 2 and 3: Accept the Situation and Leave the Situation. Again, all three of these options involve financial risks which could negatively impact the individual lawyer or the entire firm. Therefore, we strongly recommend that the lawyer consult with appropriate colleagues and firm management and obtain their concurrence before taking any action.


Option 2: Accept the Situation

If you decide you need the work and are not in a position to negotiate a change in what your client is doing, or you try to change the situation and fail, then ask whether there are sufficient reasons to accept the situation.  Continuing the example from Part 1 of this blog series, the following reasons to accept the situation may be valid:

  • We have little chance to replace this loan business with more profitable loan business
  • We have little likelihood of getting more profitable non-loan business of this caliber or size
  • We need these partial payments to cover firm overhead
  • We need this low-realization revenue to keep our people busy

If you decide to accept the situation, keep these reasons in mind to help you cope better the next time a challenging situation occurs.


Option 3: Leave the Situation

If it is too costly to accept the situation and all your efforts to change it fail, then it may be appropriate to leave the situation.  In our example, the lawyer could notify the bank client that she will not be able to handle any further loan business from them if the adverse situation happens again. (According to ABA Model Rules of Professional Conduct, Rule 1.16 DECLINING OR TERMINATING REPRESENTATION (b), “A lawyer may withdraw from representing a client if…(6) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client.”)

Using any one of the three healthy options described in this blog series is better than the unhealthy alternative of suffering and complaining.

This blog series was adapted from the fifth edition of the Legal Project Management Quick Reference Guide, a frequently updated online library of LPM tools and templates.

August 07, 2019

How to deal with difficult clients and situations (Part 1 of 2)

By Gary Richards, LegalBizDev

When clients are extremely demanding and/or require substantial write-offs, lawyers face difficult choices, especially in the current competitive marketplace. In many cases, lawyers choose the unhealthy option of simply suffering and complaining. This section outlines three healthier alternatives:

  1. Change the Situation
  2. Accept the Situation
  3. Leave the Situation

Obviously, all three of these choices involve financial risks which could negatively impact not only the individual lawyer, but also the entire firm. Therefore, we strongly recommend that the lawyer consult with appropriate colleagues and firm management and obtain their concurrence before taking any action.


Option 1: Change the Situation

If the situation is simply not acceptable, then the best first step could be to try to change it. The simplest and least controversial approaches are the ones that are strictly internal and do not require discussion with the client, such as applying legal project management to increase efficiency and client satisfaction, or brainstorming with others in your firm regarding steps you or your practice group could take.

If changing the situation requires negotiating with the client to change what they are doing, it is important to recognize that the simple act of talking to a client about how to improve things is not free of risk in the current marketplace, where competing firms are aggressively seeking new clients. Therefore, the way you pursue this option, or even whether you pursue it, depends on your relationship with the client and the business objectives of the firm. There are times when a large client with significant write-offs is far preferable to no client at all.

If you decide to pursue change with the client, you could consider calling in your firm’s managing partner or a practice group leader so that he or she can appeal directly to the client.  Obviously, however, that step must be taken very cautiously if at all, since escalating the problem could backfire.

If you wish to handle this yourself, you could begin from the script below. Even if the client does not agree to help, it will provide you with new information regarding how they value the relationship and your best next steps.

Create a script from this outline:
  • I need your help re: [state the topic]…
  • When [the recent, undesirable event (STATE SPECIFICS)] occurs…
  • The result is [SPECIFICALLY state the undesirable results]
  • And my concern about that is [state your negative situation, feelings, predicament, etc.]…
  • Can you commit to [SPECIFICALLY state the different, better actions you want the listener to take]…?
  • Thanks for agreeing to help me in this way…
  • I look forward to our next deal…
Sample script:

Note: the narrator in this scenario is an outside lawyer in a discussion with her bank client, “Bill,” regarding problems with borrowers applying for loans:

Bill, I need your help to avoid so many fee write-offs with your borrowers. I truly appreciate your business and want to continue working with you, but when a borrower like Anycorp, Inc. agrees upfront to reimburse our [standard/reasonable/ customary] fees and yet ends up requiring a substantial write-off, the result is that I find myself in a difficult position when our work is done. In the last year we had to write off over $50,000:

Blog_Table_AvoidDifficultClients
My concern about that is that I feel like no matter how well I keep you posted, and how good a job I do, I am often not paid in full. That puts me under pressure from my partners, who don’t expect me to work for free.

Can you commit to showing your borrowers my detailed budgets and work assumptions and get them to sign off on each material change in scope before I resume work, a procedure they can agree to in the term sheet?

Thanks, Bill. I really appreciate your strengthening these steps to help manage your borrower’s fee expectations so we can avoid ill will to your bank and protect my efforts. I really look forward to our next deal, when we can begin this new approach for our mutual benefit.

Of course, if Bill does not agree to this or some other mutually satisfactory solution, then you must reevaluate the relationship and whether it is worth the frustration and lost income. For instance, the bank may complain about your work or just show indifference to anything but low fees keeping their borrower happy. In any case, a business decision will be needed.

In Part 2 we will discuss options 2 and 3 (Accept the Situation and Leave the Situation).

This blog series was adapted from the fifth edition of the Legal Project Management Quick Reference Guide, a frequently updated online library of LPM tools and templates.

June 12, 2019

How to Improve Statements of Work

15 questions to ask clients to help define scope
By Gary Richards, LegalBizDev

  1. What outcomes would you consider to be wins/successes for this matter?
  2. Are any other outcomes acceptable?
  3. If, unexpectedly, your objectives for this matter become unattainable, what would you do?
  4. What deadlines matter to you?
  5. How will you know when you are done?
  6. Do you have strict budget limits for this matter?
  7. During work on this matter, who will be the ultimate decision-maker?
  8. Can you envision anything that you or others in your organization could do to help ensure success of this matter?
  9. Do you have any fears or concerns about any special risk in this matter?
  10. Are there any dos or don’ts that you want to point out for us to observe during our legal work?
  11. What are the primary business effects of succeeding with this matter?
  12. Are there other stakeholders in your organization or other business activities or strategies that will be affected by the outcome of this matter?
  13. Do you have any other ongoing legal matters that could affect this matter in any way?
  14. Do you want to make progress reports on this matter to others in your organization? If so, when?
  15. Are there other related business problems you want to solve?

Reproduced with permission from the Legal Project Management Quick Reference Guide, Fourth Edition (© LegalBizDev, 2017).

 

April 03, 2019

LPM steps in the lifecycle of a legal project (Part 1 of 3)

By Fred Kinch, Gary Richards, Jim Hassett, and Tim Batdorf

In this three-part blog series, we summarize the most important LPM issues to consider when planning a new matter. Unless your firm has established formal LPM guidelines, feel free to decide which sections to focus on for each matter and which can be ignored. Note that while some of these may at first sound like more work, they quickly add value to the client. They represent a win-win given that the lawyer can bill most or all of these activities, but at the end of the day the client will pay less because of the increased efficiency.

  • Talk to the client to determine objectives for the matter:
    • What problem does the client want to solve?
    • Are several outcomes acceptable?
    • What deadlines matter to the client?
    • Are there strict budget limits?
    • Who is the ultimate decision maker?
    • How does the client define success?
    • How will you know when you are done?
  • Draft statement of matter objectives and a clear statement of work (scope) and share with client, along with exclusions and assumptions:
    • Avoid listing so many assumptions that the client will consider working with another firm that is easier to do business with
    • Matter objectives should be stated as results/outcomes desired, not steps to be taken to reach the objectives
    • Was the SMART model (Specific, Measureable, Achievable, Relevant, Timed) used for the statement of matter objectives?
  • Develop a matter plan and budget. The level of detail required will depend on the size of the matter and your relationship with the client. Remember that what you consider a rough estimate may be treated as a fixed price by some clients, and act accordingly.
    • For large or important matters, check your matter plan and budget with key team members
    • Should large matters and phases be subdivided into smaller discrete tasks and subtasks?
    • Which tasks are on the critical path? That is, which tasks must be completed before others can start and which must be completed on time to avoid delay of the overall schedule?
    • What deadlines will best align the client’s needs with the firm’s interests?
    • Estimate the hours needed for each task and prepare the budget, preferably with the input of the individual who will do the work
    • Establish and confirm the method that will be used to obtain actual cost information routinely and periodically during the matter
    • Establish milestones and other appropriate methods of measuring matter progress
    • Review any special fee arrangements with firm management
  • Review the following as needed and get the client to sign off before beginning work to gain agreement/alignment:
    • Matter objectives
    • Client expectations
    • Scope
    • Deliverables
    • Schedule
    • Fees
    • Exclusions and assumptions
    • Change order process
    • Engagement letter (with SOW attachment, if appropriate)

Reproduced with permission from the Legal Project Management Quick Reference Guide, Fifth Edition (© LegalBizDev, 2019).

March 20, 2019

Lessons Learned Reviews: A Key to LPM Implementation (Part 3 of 3)

By Jim Hassett, Gary Richards, and Tim Batdorf

The following list of questions was inspired by the ACES (Alliance Counsel Engagement System) Report Card, a system Jeff Carr developed when he was General Counsel at FMC Technologies. ACES was used to calculate performance fees awarded to outside counsel, based on their grades on six key factors:

  • Understands goals
  • Expertise
  • Efficiency
  • Responsiveness
  • Predictive accuracy
  • Effectiveness

If you plan a longer review, some or all of these questions could be adapted to your situation:  

  • Would you ask us again to do this kind of work?
  • How likely is it that you would recommend that a colleague hire us?
  • How well did we understand and meet your legal objectives?
  • How well did we understand your business strategy and help you meet business objectives?
  • Did we provide practical real-world advice and solutions?
  • How would you describe our substantive legal knowledge and expertise?
  • Did we use the best team to meet your needs?
  • Were all deadlines met?
  • Did we handle changes in your needs promptly and effectively?
  • Were team members available when you needed them?
  • Did we proactively take the lead when needed?
  • How well did we communicate?
  • Did we do a good job of explaining risks?
  • Did we keep you informed and avoid surprises?
  • Did we manage fees and expenses well?
  • Were our original budgets and estimates as accurate as possible?
  • Was the total project cost fair and appropriate?
  • How could we do a better job of delivering value?
  • Did our work meet or exceed your expectations?
  • How would you rate our overall performance?

Internal Review Meetings

In addition to your lessons learned discussion with clients, it can also be helpful to have a meeting with your internal team to increase team efficiency and morale. For firms that have a formal knowledge management system in place, meetings like this can be especially helpful in capturing insights and experiences that can be of great value to the firm in the future. Obviously, some of the questions you ask in an internal meeting will be different from those you would ask a client. In the book, Implementing Value Pricing (p. 317), Ron Baker provides a long list of questions for such meetings, including:  

  • What could we do better next time?
  • Did we add value for this customer?
  • Did we have the right team on this engagement?
  • Did this engagement enhance our relationship with this customer?
  • What other needs does this customer have and are we addressing them?
  • Did we learn any new intellectual capital that we could leverage across other customers?
  • Should we communicate the lessons on this engagement to our colleagues and how?

The last two questions can yield important knowledge management results, including exhibit formats, checklists, briefs, innovative arguments, and more. Also, as noted on the web page, Knowledge Management Online:

Effective knowledge management should dramatically reduce costs. Most individuals, teams and organizations are today continually “reinventing the wheel.” This is often because they simply do not know… what is already known, or they do not know where to access the knowledge. Continually reinventing the wheel is… a costly and inefficient activity.… Knowledge management… should also dramatically increase our speed of response as a direct result of better knowledge access and application.

A Final Thought

Given the potential benefits of a lessons learned discussion at the end of every important matter and at critical junctures in large matters, why would anyone ever skip this step?

Because you are already too busy on the next matter? Because you feel awkward about discussions like this?

In the long run, these are terrible answers. As the legal profession becomes ever more competitive, lawyers who fail to find time to understand what clients want and need today may find themselves with a whole lot of free time tomorrow.

Reprinted with permission from “Of Counsel, The Legal Practice and Management Report,” December 2018.

March 06, 2019

Lessons Learned Reviews: A Key to LPM Implementation (Part 2 of 3)

By Jim Hassett, Gary Richards, and Tim Batdorf

In our previous post, we suggested two simple questions you could ask clients as part of a lessons learned review.  If your time is limited, and your clients’ time is too, stop there. But if you want to consider two more questions, read on:

Two More Questions You Could Ask

If you have time to probe deeper, you can also add one or both of these optional questions:

  1. Working together, how can we improve the value you receive in the future on matters like this?
  2. On a scale from 1 to 10, how satisfied are you with our firm?

The third question is optional and focuses on the issue which is most likely to lead to new business: how to increase perceived value. This is a slight rephrasing of a key question suggested in the Association of Corporate Counsel’s “Value Challenge Briefing Package.” Note the phrase “working together,” which stresses the need to align interests and collaborate more closely.

The fourth question is also optional. There are many ways to phrase effective questions about client satisfaction, but the best way is to ask for a numerical rating, because it forces clarity and frankness.

We ask our own clients this question, and to be honest, many shy away from giving a number. The client is always right, so if they don’t want to be pinned down with a number, we go with the flow. The important thing is to begin a genuine conversation about satisfaction, and to encourage clients to talk about the things you really need to hear, rather than more comfortable vague praise.

If clients do give you a number, there’s a good chance it will be lower than you expected. The reason is that most people overrate themselves. Psychologists call this the “Lake Wobegon effect,” named after Garrison Keillor’s fictional community in which “all the women are strong, all the men are good-looking, and all the children are above average.”

The best place to see this effect in the legal community is in a series of surveys published in Inside Counsel magazine (July 2008; archived on LexisNexis) comparing ratings of satisfaction from clients and the law firms who serve them. In one such survey, 43 percent of lawyers thought they were earning an A for their work, but only 17 percent of their clients agreed. So, if you think you deserve an A, you’re probably wrong.

Another way to get at this fundamental issue is to ask, “On a scale from 1 to 10, how likely is it that you would recommend us to a friend or colleague?”

In his business bestseller, The Ultimate Question, Fred Reichheld argues that companies should focus more attention on loyalty by measuring the response to this one simple question. Reichheld and his colleagues at Bain have published several books and many studies which demonstrate that companies with high customer loyalty rates grow revenues twice as fast as their competitors. They have also shown that companies can increase profits by 25% to 100% simply by increasing customer retention by 5%.

Clients who rate the likelihood at 9 or 10 out of 10 are called “promoters” and are responsible for generating sustainable growth. You might think 7 or 8 on this 10-point scale would also be pretty good, but Reichheld has found that these people are motivated more by inertia than by enthusiasm. He calls this middle group “passives” and notes that they will often jump to another company at the first sign of a better deal.

The most serious business risk comes from “detractors,” people who rate the likelihood of referrals at 0 to 6 on that 10-point scale. From a strict financial view, many of these detractors may be profitable in the short term, but Reichheld notes that, “Customers who feel ignored or mistreated find ways to get even. They drive up service costs by reporting numerous problems. They demoralize frontline employees with their complaints and demands” (p. 6).

Eighty percent of negative comments come from this detractor group, and in this age of email and internet ratings, a single complaint can reach hundreds of potential clients in the time it takes to hit the send button. In short, detractors “suck the life out of a firm.” (p. 30)

Reprinted with permission from “Of Counsel, The Legal Practice and Management Report,” December 2018.

 

February 20, 2019

Lessons Learned Reviews: A Key to LPM Implementation (Part 1 of 3)

By Jim Hassett, Gary Richards, and Tim Batdorf

It is widely agreed that many clients are demanding greater value these days through the application of legal project management (LPM). There is, however, still controversy about the best way to apply LPM. When we interviewed managing partners and senior executives at 50 AmLaw 200 firms for the book Client Value and Law Firm Profitability, they ranked client communications as one of the most important elements of LPM. (The only factor that was considered more important was “defining scope.”)

One of the best ways to assure effective communication is to hold a meeting at the end of every significant matter to review what worked, what didn’t, and what could be done better the next time. In large matters, lawyers may also conduct these “lessons learned” reviews after completing each significant milestone or phase.

These discussions are a learning opportunity and a marketing opportunity. Such a discussion can enhance your relationship, help you learn more about what an existing client values most, and enable you to provide more value. If a large matter is at a pivotal point, a mid-course review and redirection could be the difference between success and failure. Could you possibly think of a better way to develop new business?

The lessons learned review could be long or short. You could hold a formal group meeting and send the questions in advance, or you could simply ask your client some of the questions below. If you think of this as marketing, it will be obvious that it is better to have the discussion in person, maybe even over lunch. The phone can be a good second choice, but email is a distant third. You want to get people to open up and speak freely, and that is unlikely to happen via email.

The length and formality of the process should depend on the size and significance of the matter, your relationship with the client, and on how much work they are likely to have for you in the future. This article lists a number of different questions you might ask. In many cases, the first two will be enough.

The Two Most Important Questions

Unless there is a major open issue requiring an immediate joint review, or a client requests a lengthy discussion, we recommend that you assume that clients have little time to spare. This may mean limiting the debrief to two simple questions:

  1. What did you like about the way we handled this matter?
  2. What could we do better?

The first question is a classic “easy to answer” opening. Ask this one first, because it will get people talking freely.

The second question is the one you really care about, since you are likely to learn far more from criticism than from praise. No matter how much clients like your work, they can always like it more. Also, in today’s highly competitive environment, it is in your interest to turn every client into a raving fan.

If the second question opens the door to a laundry list of complaints, do not get defensive. Do not argue, disagree or explain your position. In fact, at most lessons learned meetings you should say very little and listen more than 90 percent of the time. Keep probing for more information. These meetings are designed not to understand reality, but rather to understand the client’s perception of reality. Because when it comes to client satisfaction and new business, perception is everything.

When clients raise problems, you need to reassure them that things will be better in the future. In most cases, however, you should not get into the details at the initial discussion. You need time to think about the best way to solve the problem, and to assure client satisfaction. So be prepared to say something like, “That is an important issue. Let me talk to a few people about the best way of preventing that from happening again, and then I will get back to you.”

Of course, if you do promise to get back to your client with a solution, you must put a high priority on completing follow-up as soon as possible.

Reprinted with permission from “Of Counsel, The Legal Practice and Management Report,” December 2018.

July 25, 2018

Keeping litigation costs down and clients happy

 

By Jonathan Groner

At the recent conference of the Corporate Legal Operations Consortium (CLOC) one panel was titled “When the Red Phone Rings: Managing Litigation to Keep Costs Down and Clients Happy, From Crisis to Completion.”  We recently discussed their conclusions and more in this interview with panelist Jason Osnes, Director of Strategic Finance and Project Management at Dorsey & Whitney LLP.    

 

LegalBizDev: Do you believe that the growing emphasis on legal operations, on the client side, and the focus on Legal Project Management (LPM), on the law firm side, go well together?

Osnes: Definitely. Our clients are looking for efficiency and predictability, and LPM helps to achieve that. At CLOC they say their goals are to be “efficient, innovative and aligned,” and these represent very similar objectives to what we are striving for with LPM. In fact, when we see this quest for efficiency occurring with such frequency on the client side, it helps me internally to legitimize what we are trying to do here with LPM.

LegalBizDev: You presented at CLOC on a panel with an associate from your firm and two people from a client, one lawyer and one legal operations person. In addition to you, the panelists were Ben Kappelman of Dorsey & Whitney; Paul Dieseth, Vice President, Associate General Counsel, U.S. Bank; and Matt Wahlquist, VP, Head of Outside Counsel Management, Pricing, and Analytics, U.S. Bank. Tell us a little about how that discussion went.

Osnes:  We explained how we work together from the initiation of a legal matter to its end. We discussed how our roles overlap and how we all attempt to increase efficiency and predictability in the spirit that CLOC promotes. The process can sometimes begin with the client, who may request a budget for a matter, and then the Dorsey & Whitney attorney will work with the LPM department to develop a litigation plan and scope the matter out in a way that meets the client’s objectives. Sometimes the lawyer at Dorsey & Whitney moves proactively to develop a budget and wants tools for that purpose, both from my department and from the client. The primary takeaway from our presentation was that true client collaboration involves a lot of proactive communication between attorneys and operations, at the firm and the client, throughout the entire matter lifecycle.

LegalBizDev: What effect do you think the rise of legal operations will have on the importance of LPM and on client development?

Osnes: Legal operations and LPM began as functions to facilitate administrative tasks, but both have grown beyond that to play a key role in improving the relationship between law firm and client. I believe that the demand on the part of clients for law firms with a real LPM capacity will only increase, and that means LPM can become a differentiator for law firms. I’m talking about firms that really do LPM, not those that just check the box that says they do it.

LegalBizDev: Many things can occur in litigation that are not predictable from the outset. Can clients and law firms, each armed with their new management tools, work together to reduce uncertainty?

Osnes: Yes. Just because something is unpredictable, that doesn’t mean you have to throw up your hands. If you as a law firm attorney talk to the client as early as possible, you can develop a solid baseline to manage a case, which ensures everyone is on the same page from the beginning. You may only be able to budget from the outset through a certain phase, rather than all the way through a possible trial, but it’s important to just develop, far in advance, a set of expectations that both sides will be comfortable with. Then, you need to be disciplined in tracking and communicating changes from that baseline when they inevitably occur.

The key is to explain this to the client from the outset. Another key is to remember that pricing and budgeting are something that you do with a client and not to a client.

LegalBizDev: How might this work in practice as a legal matter proceeds?

Osnes: If both the law firm and the client are working with a budget and using it as a management tool, they can almost instantly talk about new cost issues as they come up. They can ask: How will this development, say the need for the law firm to do a task that was originally out of scope, affect the budget? Attorneys on both sides now know this is out of scope or wasn’t contemplated in the budget and can talk readily about how this unexpected event can be handled in terms of the existing budget, or whether changes need to be made.

LegalBizDev: What role do outside litigation vendors play in this process?

Osnes: Some clients have preferred vendors that they use for e-discovery and other important litigation tasks. That is often part of their commitment to improving efficiency through “legal ops.” In our planning and budgeting process, we need to be aware of those. At the conclusion of a matter, when we and the client are evaluating what worked well and what didn’t, we need to look at the work of those vendors as part of the evaluation. Also, we at Dorsey & Whitney have our own in-house e-discovery and document review service called LegalMineTM, and if that team is part of the litigation, we and the client need to evaluate its performance after the case is over, as well.

LegalBizDev: Has anything changed in the way in which your pricing and LPM group presents itself internally to the firm’s attorneys?

Osnes: In the past, we have always described ourselves as a resource for our internal clients, Dorsey & Whitney lawyers. Now that the firm’s clients are asking for so much more, we also emphasize how our LPM team can improve client service, help lawyers meet each client’s expectations, and keep client relationships healthy and strong.

 

July 12, 2018

Leading study confirms that ongoing LPM training and support significantly improves performance

By Tim Batdorf and Jim Hassett

If you work at a law firm and care about its future, you must find the time to download Altman Weil’s free report of findings from its 2018 Law Firms in Transition survey.

For the last ten years, this survey “has tracked a continual shift in awareness, acceptance – and some persistent resistance to – legal market change” (p. i). This year’s report by Thomas S. Clay and Eric A. Seeger provides the best available data on law firm efficiency, profitability, pricing, staffing, productivity, and much more. 

To collect the data, Altman Weil sent questionnaires to 801 managing partners and chairs at US firms with 50 lawyers or more.  In other professions, questionnaire surveys like this typically “average [a] 10-15% response rate.”  One might assume that the response rate for a survey sent to law firm managing partners and chairs would be much lower, since they are often too busy to respond to anything that is not on fire.  But Altman Weil received an astonishing 49.7% response rate (398 firms).

The resulting report summarizes the experience and opinions of managing partners and chairs from nearly half of the 500 largest firms in the United States.  It provides information about what law firms have tried, what’s worked, and what hasn’t.  There is simply no better source for this type of up-to-the-minute insight into a rapidly changing profession. 

The findings that caught our eyes first, not surprisingly, were the ones most closely related to our interest in legal project management (LPM), starting with the fact that “Nearly unanimously, law firm leaders see a need to focus on improved practice efficiency” (p. xii).

So, what are law firms doing to meet this need?  Not nearly enough.

One survey question asked, “How serious are law firms about changing their legal service delivery model to provide greater value to clients?” on a scale from 0 (not at all serious) to 10 (doing all they can).  Less than half of firms (43%) gave themselves a rating of 6 or higher, and only 2.6% answered 9 or 10

But wait, it gets even worse.  In its most recent 2017 Chief Legal Officers survey,  Altman Weil asked the exact same question of clients.  Only 9% of clients (vs 43% of firms) rated this commitment at 6 or higher, and not one single client gave law firms a 9 or a 10.  Obviously, a huge discrepancy exists in how law firms perceive themselves vs how clients perceive law firms. Viewing these results optimistically, law firms that are committed to changing their legal service delivery model could have a significant business opportunity. 

From our perspective, the single most important graph in the 2018 Law Firms in Transition report (p. 55) is reproduced below:LFiT_EfficiencyTactics_2018B“Rewarding efficiency and profitability in compensation decisions” was the most effective tactic for improving performance, as almost anyone could have predicted.  You get what you pay for. 

Much to our surprise, however, more than half of law firms say they are already using this tactic.  Of course, the other law firms may not want to engage in the difficult process of re-evaluating compensation policies, particularly when they know how difficult those conversations can be.  And if this is the only tactic a law firm takes, it could derail significant progress for several months, if not years.  Unfortunately, in today’s market, time may not be a luxury that law firms can afford.

In addition, law firms have historically had trouble measuring and rewarding profitability.  A few years ago, when we interviewed AmLaw 200 managing partners and senior executives for our book Client Value and Law Firm Profitability, we reported that many firms are struggling with measurement, like the participant who admitted:

We don’t calculate profitability by formula.  It’s really seat of the pants. (p. 52)

As more and more firms improve the ways they measure and reward profitability, we predict that the impact of compensation on performance will increase far beyond the 47% figure in the graph above.  But again, this type of approach will likely take a few more years to fully materialize in many firms and is definitely not a “magic bullet” solution for any firm.

So, what exactly should law firms be doing now to help lawyers increase efficiency?  They should engage in “ongoing project management training and support,” because:

  • It is the highest-rated tactic for obtaining significant improvement in performance (other than changing compensation policies, as discussed above),
  • It is grossly underutilized with only one-third of law firms actually using this tactic, and
  • It is the easiest and most cost-effective way to significantly improve performance, especially when compared to other less effective tactics like systematically reengineering work processes or using technology tools to replace human resources.

Whatever tactics law firms decide to pursue, Altman Weil’s report (p. viii) concludes that law firm leaders must “pick up the pace:”

The challenge for leaders is to enlist a small cohort to start the innovation process with urgency and pace and begin to educate and bring others into the fold as rapidly as possible.  Leaders should focus daily on supporting the continued efforts of early adopters by providing encouragement, resources, time, and staff support.

We couldn’t agree more. 

For details of exactly how several leading firms have engaged this process, and the successes they have achieved to date, see the case studies section of our web page.

Full disclosure:  Altman Weil is a strategic partner of LegalBizDev, but not a single word of this post would be different if they weren’t.