22 posts categorized "Tips for Lawyers"

March 25, 2020

The Top Four Facts Law Firm Leaders Need to Know About LPM (Part 2 of 2)

Fact 2: Experts disagree about the best way to define LPM (cont. from Part 1)

In defining LPM, we believe that lawyers must take a systematic approach that is closely related to the Agile approach to project management.  Stated simply, we encourage lawyers to use an iterative process that focuses on key LPM issues, one at a time, in their order of importance.

In an article entitled “Agile: A Non-traditional Approach to Legal Project Management,” Kim Craig, then SeyfarthLean’s global director of legal process improvement, and Jenny Lee, a senior project manager with Seyfarth, explained why Agile is particularly relevant to the legal profession:

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.[1]

Agile contrasts with the more traditional approach to project management which holds that every project should start with a well-defined plan.  Only after that is completed and approved do you begin working your way to the end, one sequential step at a time.  

The traditional approach is also known as the “waterfall” approach because progress is seen as flowing steadily from the top to the bottom (as in a waterfall).  It typically sees projects in terms of five key phases or steps such as:

  • Analysis
  • Design
  • Implementation
  • Testing
  • Evaluation

In some cases, firms have hired LPM Directors based on their “waterfall” project management experience in construction, government contracting, and other areas where traditional techniques are used and Agile techniques are not.  This has led to many stories of LPM Directors who could not or would not adapt to a legal environment, and who ended up working with the very small group of partners that were interested in project charters and Gantt charts.

So, if anyone tells you that LPM is defined by five steps such as analysis, design, implementation, testing and evaluation, beware.  They are describing the traditional waterfall approach, not the Agile approach which applies better to lawyers. As the old cliché says, “you won’t get a second chance to make a first impression,” and attempts to apply the traditional waterfall approach have set back the cause of LPM at many firms.

Fact 3:  LPM success requires long-term managerial support

In our work with hundreds of law firms, we’ve seen the importance of follow-up over and over again.  In every single case where we have seen a firm make significant LPM progress, it was led by influential partners or members of the executive committee who were strong believers in LPM.  In a few cases, we’ve seen LPM programs make an enormous amount of progress when they were led by a powerful internal champion, and then slow to a crawl when that decision-maker left the firm.

Many firms have individual lawyers or practice groups that are quite advanced in LPM, but in our opinion not a single law firm in the world can yet say that LPM has truly taken hold across the entire firm. LPM aims to change habits that have been reinforced over decades, and to help firms constantly adjust to evolving client demands.  Having long-term managerial support is critical to success.

Fact 4: Law Firm Partners Don’t Know What to Do Differently

According to Altman Weil’s 2019 Law Firms in Transition Survey (LFiT, p. 44), most law firm partners (60%) don’t know what to do differently, and that’s why law firms aren’t doing more to change the way they deliver legal services. That might also explain why most law firm partners (69%) resist most change efforts (LFiT, p. 44).

If you’re a law firm leader who wants to make positive changes at your firm, you absolutely must be able to demonstrate how things can be done differently, and with positive results. At LegalBizDev, we have been successfully coaching lawyers in LPM over the past decade. In this way, we help law firm partners become internal LPM champions who advocate for LPM by sharing their success stories with other lawyers at the firm.

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


[1]   Kim Craig's article originally appeared in the International Legal Technology Association’s (ILTA’s) December 2013 white paper titled, “Business and Financial Management: Wrangling the Wild Ride.”

March 11, 2020

The Top Four Facts Law Firm Leaders Need to Know About LPM (Part 1 of 2)

Law firm leaders who are interested in legal project management (LPM), but too busy to dig into the details, should focus on the four critical facts presented in this 2-part blog series.

Fact 1:  Clients want LPM

Any law firm that has responded to an RFP in the last few years knows that client requests for LPM are growing rapidly.

Similarly, survey after survey has shown that legal clients are seeking greater efficiency from firms.  For example, in its 2019 Chief Legal Officers (CLO) Survey (p. 49), Altman Weil provided 238 CLOs with a list of ten possible service improvements, and asked “please select … [the improvements] that you would most like to see from your outside counsel.”  The top three things clients want were all closely related to LPM:

  1. Greater cost reduction (58%)
  2. Improved budget forecasting (40%)
  3. Non-hourly based pricing structures (33%)

Even when clients fail to ask for LPM by name, the results that clients are looking for definitely fall under the term, including minimizing surprises.

If you believe that your clients are different and that they care only about legal quality and not about cost, consider yourself very lucky. But note that if you are wrong, you are at risk of losing these clients to competitors who focus on improving service with LPM.

Fact 2:  Experts disagree about the best way to define LPM

There is widespread agreement that clients want LPM and that it can pay off for firms by protecting business and increasing realization and profitability. But experts still disagree about exactly how LPM should be defined. These arguments have slowed LPM’s progress, as seen in this quote from an AmLaw 200 firm leader from one of our past surveys (p. 89):

We were just at a board meeting last week where we were talking about whether we should do formalized project management training. My answer to that is obviously yes, we absolutely should. But first we need to agree on what legal project management is.

For years, we have argued for a broad definition that embraces a very wide range of management techniques, including pricing, communication, process improvement, and much more:  LPM increases client satisfaction and firm profitability by applying proven techniques to improve the management of legal matters.

By our definition, any lawyer who has ever planned a budget or managed a team has served as a legal project manager. But what was “good project management” for lawyers a few years ago is no longer good enough. Clients are now choosing law firms based on their ability to apply a more systematic and disciplined approach that delivers more value more quickly.

Our systematic approach to LPM revolves around improvements in eight key areas:

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

The key to success in delivering more value more quickly is to find the “low-hanging fruit”:  The management tactics that are most likely to help each individual to increase value and/or profitability.

As Barbara Boake and Rick Kathuria summarized in their book Project Management for Lawyers (p. 14):  “project management is a tool box—choose only what you need to most effectively manage [each] project.”

In part 2 of this blog series, we will discuss how our approach to LPM is similar to the Agile approach to project management, and how LPM success requires long-term managerial support.

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

February 26, 2020

Online LPM Library of Tools and Templates: Frequently Asked Questions (Part 2 of 2)

In part 1 of this blog series, we explained how our online library of LPM tools helps law firms implement a robust internal LPM coaching program, and we also listed several benefits firms have experienced when using this resource.  In Part 2, we describe what your firm can expect if it licenses our online LPM library.

What specifically does the license include?

We will help you develop a well-defined program that fits your firm’s culture and resources. This will increase buy-in by helping to ensure that lawyers use the tools to increase efficiency, client satisfaction, and profitability at your firm.  Specifically, each license includes:

  • Unlimited, non-exclusive rights to reproduce and adapt all of the content within your firm and with your clients for one year (renewed annually)
  • Separate files for each tool (in both Word and PDF format) so you can easily deliver just the information a particular lawyer needs in your preferred format, and so you can customize existing templates to meet your firm’s needs
  • New tools and templates that are released to license holders every June and December
  • Consultation with the authors of these tools to maximize the value to your firm, ensure quick wins, and establish a foundation for future success
  • Sample emails for use by the managing partner or another senior partner announcing the availability of these tools and their benefits to the firm and to individual lawyers
  • Twelve “LPM tips of the month” each year, for publication on your intranet, internal newsletters, or email to remind lawyers of the value of this resource
  • A proven method for hosting and facilitating a lawyer panel discussion to help promote the use of the online LPM resource among firm lawyers
  • A suggested menu structure that can be adapted to your intranet

Tell me more about the consultation that’s included with the license.

Each license includes four hours of consulting support, plus materials to help build a stronger culture of LPM within your firm, including:

  • Specific tasks, objectives, and timelines for using these LPM tools and templates
  • Systems to provide exactly the information lawyers need, precisely when they need it
  • A list of the top ten tools that have proven most useful in implementing LPM, and the top ten tools that are most effective in introducing LPM concepts
  • Guidelines for prioritizing which lawyers to focus on first when introducing LPM tools
  • Suggestions for working with LPM champions, practice group leaders, and LPM Directors
  • Tips for designing an internal program to publicize successes, including sample “LPM Tips of the Month”
  • Guidance on how to save time developing firm-specific processes and procedures by customizing our templates
  • Suggestions on how to customize our tools for in-firm presentations and training

What are the contents of the online LPM library?

A complete list of the current LPM tools and templates can be found on our website

All files are delivered in both Word and PDF format so that they can be made available on your firm’s intranet, and, when necessary, customized to fit your firm’s or practice group’s needs. 

New tools and templates are added every June and December so that lawyers can easily keep up with developments in this rapidly changing field.

How much does it cost to license the resource?

The answer to this question depends upon the number of lawyers at your firm.  If you want a customized quote, please contact us at info@legalbizdev.com. 

What we can tell you is that this online LPM library can offer a rapid return on investment. As soon as one lawyer who is responsible for a large engagement adopts an LPM best practice, the return on investment can quickly exceed the license cost by, for example:

  • Increasing the accuracy of an initial fee estimate and the likelihood of payment in full by using the template “15 questions to ask clients to help define scope”
  • Renegotiating a fixed fee by using the template “Prepare and negotiate for approval of a scope change”
  • Using any of the more than 170 tools and templates in the online library to increase client satisfaction and/or firm profitability

What else can you tell me about this resource?

Four previous editions of these tools have been tested and refined in firms around the world that encompass over 100,000 lawyers.  Additional details can be found on our website, including:

  • The names of more than 35 contributing authors from both large and small firms, including Baker McKenzie, Morgan Lewis, WilmerHale, Pepper Hamilton, and Bilzin Sumberg
  • The names of 25 LPM experts who currently serve on our Board of Advisors, including representatives from Norton Rose Fulbright, Lathrop Gage, Baker Botts, Winston & Strawn, and K&L Gates
  • Testimonials from 22 additional LPM experts at firms such as Perkins Coie, Jackson Lewis, Ballard Spahr, Orrick, and Saul Ewing

January 01, 2020

Legal Project Management: 2019 Year-In-Review (Part 2 of 2)

According to law firm leaders, efficiency is here to stay.  86% say that a focus on practice efficiency is a permanent change in the legal marketplace.  Efficiency ranked number one among 18 different trends (p. 1, LFiT).  

So, what tactics do law firms use to increase efficiency?  It appears that the most effective tactic is rewarding efficiency and profitability in compensation decisions.  A solid majority (62%) report that they experienced a significant improvement in firm performance when using this tactic (p. 23, LFiT).  This is also consistent with common sense.  If you pay someone to do something, they’re more likely to do it.

But digging deeper into the details presents a more nuanced story.  When asked about several different efficiency tactics, a large percentage of law firm leaders said it was “too soon to tell” (p. 22, LFiT) which means they didn't have sufficient information to respond in a meaningful way.

If we eliminate those respondents who said it was “too soon to tell,” and if we focus exclusively on those who have sufficient experience to provide a knowledgeable response, we find that:

  • The LPM tactic of systematically reengineering work processes is highly effective, with 91% saying it resulted in a significant improvement in firm performance.
  • This is closely followed by the tactic of rewarding efficiency and profitability in compensation decisions, at 89%.
  • Providing ongoing project management training and support is also highly effective, with 86% of law firm leaders saying it resulted in a significant improvement in firm performance.
  • Other tactics such as: (i) using technology tools to replace human resources, (ii) using non-law firm vendors, and (iii) implementing a formal knowledge management program were also found to be effective at rates of 81%, 80%, and 76%, respectively.

In essence, what this data tells us is that each one of these efficiency tactics works the vast majority of the time.

But despite these successes, very few law firms are serious about changing the way they deliver legal services.  Based upon responses from law firm leaders, only a small handful of firms (less than 2%) are doing everything they can to change the way they deliver legal services.  Roughly one-third of law firms (34%) are moderately serious about changing their behavior, and nearly two-thirds of law firms (64%) show little to no interest in changing how they deliver legal services (p. 42, LFiT). 

Why are so many firms so slow to change?  First and foremost, partners don’t want to change.  69% of law firm leaders say that partners resist change efforts.  Even when partners are willing to change, a solid majority (60%) say that partners are unaware of what they might do differently (p. 44, LFiT).  And when a law firm attempts to implement LPM, it takes time to determine whether the program is working.  A slim majority of law firm leaders (53%) said it is “too soon to tell” whether their ongoing project management training and support programs have resulted in a significant improvement in firm performance (p. 22, LFiT).  Despite these challenges, most law firm leaders (54%) say that the urgency to change has increased over the past two years (p. 43, LFiT).

*****

At LegalBizDev, we believe that if a law firm aggressively seeks to implement an LPM program and works to change lawyer behavior, it can make great strides towards resolving the challenges described in this blog series.  For example, understanding what the client wants and communicating value to the client improves client service.  Being a leader in LPM serves as a differentiator.  Actively managing legal matters using a variety of LPM tactics helps ensure that financial data is used correctly and that AFAs are profitable.  LPM coaching helps lawyers overcome resistance to change and understand what they can do differently to become more efficient and profitable.

Even without considering any of the data presented here, it is crystal clear to most law firm leaders that clients want lower costs and greater efficiency.  Our experience is that LPM helps law firms provide these benefits to clients, and this is supported by independent survey data.  The firms that provide these benefits effectively are the ones that are most likely to be profitable in coming years.

LegalBizDev is currently offering complimentary “LPM trends” webinars to LPM decision-makers to discuss this information in more detail, including new data as it is released in 2020.  If you’re interested in a complimentary 30-minute webinar, email us at info@legalbizdev.com or call 800-49-TRAIN today.

December 18, 2019

Legal Project Management: The Year-In-Review (Part 1 of 2)

In 2019, three major papers were published summarizing data collected from over 500 law firms and 250 law departments: 

  1. Altman Weil’s Law Firms in Transition survey (“LFiT”)
  2. Altman Weil’s Chief Legal Officer survey (“CLO”)
  3. The CITI Client Advisory report (“CITI”)

Based upon these reports, and also upon the multiple webinars, interviews, and informal discussions that we held with LPM decision-makers in 2019, we believe that law firm leaders should concentrate on five key issues to improve profitability, as discussed below.  One of our major takeaways from 2019 is that, if a law firm aggressively seeks to implement an LPM program and works to change lawyer behavior, it can make great strides towards resolving the challenges described in this blog series.

(1) For non-hourly alternative fee arrangements (AFAs), increase efficiency to reduce costs

It’s difficult to obtain unanimous agreement on anything, particularly among law firm leaders.  But not a single leader predicted that there would be a decline in the use of AFAs in 2020 (p. 8, CITI).  A huge majority (87%) predicted that the use of AFAs will increase in 2020, while 13% said that the use of AFAs will remain about the same (p. 8, CITI). 

From the client perspective, CLOs consistently report that one of the best management techniques for improving outside counsel performance is to negotiate fixed, capped, or alternative fees.  Over 75% of CLOs say that the use of AFAs significantly improves outside counsel performance (p. 47, CLO).  This too suggests that the use of AFAs will increase in 2020.

But any firm that has ever offered a fixed fee knows how easy it is to lose money on them.  The key to maintaining financial performance is to increase efficiency, so that the work can be completed at or below what it would have cost at standard hourly rates.  And this in turn will require significant improvements in LPM at most firms.

(2) To reduce discounting, law firms must accelerate the use of LPM

We were floored when we read the statistics on the percentage of legal fees that are derived from discounted hourly rates.  “Nearly one in five law firms (18%) receive 50% or more of their legal fees from discounted hourly rates” (p. 27, LFiT) [emphasis added].

Altogether, just over 75% of law firms receive a substantial portion (11% or more) of their legal fees from discounted hourly rates.  A paltry 2% of firms receive the full amount that their lawyers charge.  Amazingly, 3% of law firms do not collect this data and have no idea what percentage of their legal fees are derived from discounted hourly rates (p. 27, LFiT). 

Large firms offer more discounting than smaller firms.  The median for firms with 250 lawyers or more is that 41% to 50% of legal fees are derived from discounted hourly rates, while the median for firms under 250 lawyers is 11% to 20% (p. 27, LFiT). 

These results are validated by CLOs.  The number one strategy for controlling law department costs (at 57%) is to receive reductions on hourly rates from outside counsel (p. 26, CLO).

If law firms want to reduce discounting, their lawyers must embrace LPM.  The more efficient a lawyer or legal team becomes, the more valuable their time becomes (when compared to lawyers at other firms), which reduces discounting.  Moreover, the LPM tactic of properly delegating work ensures that the right person is handling the work, which again establishes efficiency and reduces discounting.  And even when clients are simply unwilling to pay standard hourly rates, LPM allows firms to increase profitability by embracing fixed fee work and using LPM tactics to ensure that matters are managed profitably. 

(3) Use LPM to better utilize financial data and increase profitability

Survey results confirm that most law firms are investing time and money obtaining better financial data.  For example, 52% of law firms have invested money to develop data on the cost of services sold, though only about one-third of those firms report any clear corresponding improvement in performance (p. iv, LFiT).  The data shows that merely gathering data does not necessarily translate into improved performance.  Instead, as Altman Weil notes: “Real achievements can and must be made in using cost data and project management techniques to improve matter profitability.” (p. iv, LFiT) [emphasis added]. 

One project management technique that could improve matter profitability is to use collected profitability data in conjunction with the firm’s LPM efforts.  For example, only 55% of law firms that collect profitability data currently use that data to manage their practice groups (p. v, LFiT).  If profitability data is readily available, the natural next step is to use that data to actively manage practice groups in conjunction with LPM efforts.    

(4) To increase new business, law firms must differentiate themselves

Anyone with a marketing background can attest to the importance of differentiation in the marketplace when selling goods and services.  Differentiation is what allows one law firm to stand out from another. But nearly half of law firm leaders cannot point to a single compelling differentiator that significantly elevates their firm above others (p. iii, LFiT).  

Using the old standby “our lawyers are better than theirs” doesn’t cut it anymore.  True differentiation allows one law firm to contrast its services with competing services and emphasize the unique aspects that make its services superior. As Altman Weil writes: “Establishing a credible means of differentiation should be a key area of attention for all firms and each group within a firm” (p. iii, LFiT).  Using the LPM tactic of client communication (e.g., conducting “lessons learned” reviews with clients) may be a good place to start if a law firm wants to identify the ways in which it separates itself from other firms.

(5) Be realistic about how clients perceive the quality of your firm’s services

When it comes to the delivery of client service, perception often does not match reality.  Firms tend to overestimate the quality of their services.

53% of law firm leaders say that their firms are significantly ahead of the competition in terms of delivering client service (p. iii, LFiT).  In summarizing this data, Altman Weil notes: “It is mathematically impossible and logically inconsistent for most firms to lead the pack on these or any other factors.  If everyone’s ahead, there’s no pack to lead” (p. iii, LFiT).

Of course, overestimating the quality of client service likely means that many firms do not take appropriate action to improve the delivery of client service when, in fact, they should.  The tendency for law firm leaders to inaccurately assess client service is highly significant because unsatisfactory client service has consistently been one of the top reasons that clients shift a large portfolio of work ($50,000 or more) from one law firm to another (p. 50, CLO).

*****

In Part 2, we will examine the tactics that law firms use to become more efficient and why the LPM change process has been so slow at some firms.

November 06, 2019

Prepare and Negotiate for Approval of a Scope Change (Part 3 of 3)

By Gary Richards, LegalBizDev

In the first two parts of this blog series, we discussed the best ways to prepare for scope change discussions with a client and how to engage in those discussions.  In the third and final part of this series, we explore how to ensure these discussions are successful.  This blog article is largely based on the third recommendation from Fisher, Ury, and Patton’s book, Getting to Yes: Negotiating Agreement Without Giving In.

Work from their interests, not their positions

Before entering the discussion or meeting with your client contact, try to answer the questions below to get at their true interests that may be driving their position of resistance. Also, prepare to tactfully ask these questions during your discussion if they seem to be resisting your proposed new approach:

Other than the client’s desire to minimize spending, what are their concerns about addressing increased fees and making scope changes during the course of an active matter?  How can I address those concerns?

Consider the difference between “positions” and “interests” in order to understand why focusing on your contact’s interests will usually be more productive than focusing just on their positions. Here is the difference in this situation, if your contact keeps the same position as in the past.

Their position: A “position” is what they want, as in the scenario presented in part 1 of this blog series:

“Don’t worry about it… you may find some savings in the remaining work… we’ll just settle up on all those scope change adjustments when you are done with the complete matter.”

Consider their position as the tip of the iceberg. You need to get beneath the surface to learn what is driving their position/want.

Their interest: An “interest” is the “why” underneath that motivates them to hold their position. Several possible reasons why are given as examples, below, which you could try to address as shown after each reason:

  1. They feel that they have the upper hand if they wait to discuss fees for scope changes after you have already incurred the time to perform the extra work because they have the power to just say “yes” or “no” to any or all of the additional fees you incurred. In the past, you have given in, so that is what they have been taught as the likely outcome.

Could be addressed this way: Describe very clearly what their approach has cost your firm in write-offs, and appeal to their fairness. If the standard of fairness does not appeal to them, you may want to reassess the desirability of keeping this client.

  1. They don’t want to be nickel and dimed with several smallish fee increases.

Could be addressed this way: That is an understandable interest. Suggest agreeing to a threshold dollar amount of scope change fees that must be reached before you come to them with a request for approval. For example, a $5,000 threshold could mean that you would aggregate four instances requiring scope increase fees of $800, $1,200, $2,400, and $800 into one discussion of $5,200. This avoids the nickel and dime perception and allows discussion of all fee changes more closely to when they are identified rather than waiting to the end of the entire matter.

  1. They have committed to this year’s legal spend to their management and must stick with it.

Could be addressed this way: You could ask, “Could I track any scope increases and submit them to you next calendar quarter?”

By knowing the client contact’s interests, you increase the likelihood of coming up with an approach that addresses their interests and satisfies yours as well. One of the best ways to learn your client contact’s actual interests is to ask the following two questions:

If you were to say “yes” and agree to address increased fees for scope changes as they are identified, what would your concerns be beyond your desire to minimize spending? How could I address those concerns?

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

October 23, 2019

Prepare and Negotiate for Approval of a Scope Change (Part 2 of 3)

By Gary Richards, LegalBizDev

In part 1 of this series, we discussed how to prepare for discussions with clients to obtain approval of additional fees due to a scope change: Know your Best Alternative to a Negotiated Agreement (BATNA).  In part 2 of this series, we explore how to engage in the actual negotiation discussions.  This blog article is largely based on the second recommendation from Fisher, Ury, and Patton’s book, Getting to Yes: Negotiating Agreement Without Giving In.

Use objective, external criteria

Assuming your client contact agrees to discuss/negotiate with you, the following question can help you prepare to be persuasive:

What documents or events could I refer to that my contact would find authoritative and could help make my case and de-polarize our discussion?

The idea here is to introduce some external criteria separate from your assertions and your client contact’s assertions. In other words, it takes the “me-vs-you” element down a notch.

Some possibilities are:

  • Refer to the engagement letter/statement of work language that covers what has been agreed to regarding the process for encountering increased scope of work. If the engagement letter has such language, then referring to it in this circumstance can be seen as a reminder of what was earlier agreed to, and therefore your contact is put in the position of honoring a prior agreement rather than making a new concession.
  • Refer to relevant precedent. If there has ever in the past been a matter for which they agreed to scope change fee increases as they occurred during the work on their matter, remind them of this, in specifics. Again, you are asking them to honor precedent instead of making a new concession.
  • Refer to their written statement of objectives for the matter, if one exists. Describe your rationale for the importance/necessity of the out-of-scope work in reaching the client’s objective, and/or how much more difficult it would be to reach the client’s objective without it. Again, this use of external criteria invites the client to see it in terms of reaching their objective, rather than just protecting your fee.
  • Invoke the external standard of fairness by asking “How is that fair?” Be prepared to explain why you think your approach is fairer for all, such as, “You would get the chance to approve or deny the work before it incurs the time, and you can more effectively evaluate the value of the increased work as the need for it arises than you can at the end of the engagement.”
  • Refer to industry standards, regulations, or laws if the matter has issues where compliance with them is relevant.

In part 3, the final part of this blog series, we will discuss how working from the client’s interests, not their positions, can help scope change negotiations succeed.

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

October 09, 2019

Prepare and Negotiate for Approval of a Scope Change (Part 1 of 3)

By Gary Richards, LegalBizDev

The most challenging type of scope change involves increasing the fee from the original estimate. Increasing the fee requires a possibly difficult conversation with the client and raises the question of how best to approach the client to obtain their approval of this additional work and fees. Consider this scenario:

  1. You know it is best practice to contact the client as soon as you detect a material scope change that will increase their fee.
  2. But your client resists agreeing to scope changes that you request as they occur, saying things like:

“Don’t worry about it… you may find some savings in the remaining work… we’ll just settle up on all those scope change adjustments when you are done with the complete matter.”

  1. But when you reached the end of the last three matters for this client, having taken the “we’ll just settle up when you are done” approach, there were serious disagreements about the fees that were over and above your original estimate.
  2. You ended up writing off a few thousand dollars each time. This is affecting your realization on their work and dampens your enthusiasm for doing more work for this client, even though they bring you a lot of business.
  3. Accordingly, you have decided to ask your client contact to agree to deal with scope changes and resulting fee increases as they occur for future matters and not to postpone the discussion until final billing.

Three very helpful ways to prepare for such discussions are recommended in Fisher, Ury, and Patton’s book, Getting to Yes: Negotiating Agreement Without Giving In. The first of these is:

 

Know your Best Alternative To a Negotiated Agreement (BATNA)

Start your preparation by addressing this question:

What could I do if they either don’t agree or they refuse to discuss my suggested new approach for handling scope increases as they occur?

To answer that question, try to list every step you could take to meet your/the firm’s needs without their agreement. Such a list would contain a range of steps from “very desirable” to “very undesirable.” That way, you can select the most desirable one on the list to become your BATNA. For example, you might come up with a list of steps that you could take like those below and then analyze each for its relative desirability based on how the business decision question is answered.

  1. Have our managing partner negotiate with my client contact’s boss.

Desirability: Could work, but to accomplish effectively, I would have to inform my client contact in advance to avoid a surprise, including explaining my reasons for doing so. That client contact’s reaction is hard to predict, but I think that my contact may have the final say as to where that client’s legal business goes.

Business decision questions: Can we risk the tension in the client relationship this would cause if they agree? Could we afford to lose this client?

  1. Decide to continue without a change, accepting the write-offs as usual if they occur.

Desirability: This would be the easiest step to take because it would require taking no risk in the client relationship beyond what occurs at the end of our work on the matter if they again resist the additional fees associated with legitimate scope changes. We would remain at risk for those associated write-offs.

Business decision question: Is a good client relationship here worth the possible continued write-offs?

  1. Suggest to my client contact that we can accept no further similar work from them unless we can agree to this new approach.

Desirability: This is the hardest step, since even if they react by agreeing to adjust fee expectations from scope creep[1] as it occurs in order to maintain access to our legal services, an ultimatum like this would assuredly create stress in our relationship. But we could probably manage the stress given the increase in realization we would experience by avoiding the write-offs. However, they could instead say, “OK, goodbye.”

Business decision question: Could we afford to lose this client in order to avoid future write-offs?

  1. For their next new matter, cut corners on our thoroughness.

Desirability: Very undesirable. Unethical. Could lead to malpractice issues.

  1. For their next new matter, add a 15% contingency in anticipation of changes in scope so that we don’t have to go back to them for approval of the associated fee increase.

Desirability: Could work nicely, unless they insisted on seeing the task list we used to set the budget. Not likely, since they never have asked for that before. Plus, if we had no scope changes that equaled or exceeded that 15%, we could charge them less than they expected, which is good for client relationships.

Business decision question: Can we easily defend this practice to the client and ourselves?

  1. Urge the responsible partner in another practice area to augment their fees on the work they are doing for the same client so that for the two matters, we don’t have to write off anything.

Desirability: Possible “padding?” Very undesirable. Unethical. Could lead to malpractice issues.

Based on your analysis and your internal discussions of the business decision questions with your management/higher level partners, you would select one of the six steps before you try to negotiate the desired change with your client contact.

Deciding this way what your BATNA is before trying to negotiate with your client contact means you enter the discussion knowing exactly what you will do if they won’t discuss or agree to your new preferred approach. Having the firm’s approval for your BATNA gives you confidence not to spend more time than it is worth on tough negotiations.

In part 2 of this blog series, we will discuss how using objective external criteria can be persuasive in any scope change discussions and negotiations.

[1] For a good overview of scope creep in projects, see Toptal, LLC,"How to Prevent and Manage Scope Creep" https://www.toptal.com/how-to-prevent-and-manage-scope-creep

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

 

September 25, 2019

LMSS: New standards for analyzing legal matters

By Gary Richards, Jim Hassett and Tim Batdorf

Whenever you buy any product in a store these days – whether it’s a new computer, a book, or a box of frozen enchiladas – a scanner will be used to quickly read the 12-digit universal product code/ bar code on the package.  This allows an enormous amount of information to be instantly processed so that you pay the right price, and the store can track its inventory and analyze its sales. 

A new effort is now underway to bring this same sort of efficiency and standardization to legal matters.  Of course, no one expects complex legal matters to be reduced to 12 digits.  But a system to standardize coding for a database of experience would have enormous benefits to law firms.  It would help them analyze new matters and more quickly answer such questions as:

  • Should we bid on this type of work?
  • Which of our attorneys have the expertise we need on this matter?
  • How much will this work cost us?
  • Could we offer an alternative fee arrangement?

A standard system would also offer enormous advantages to clients, such as helping them assign and track the legal work being done by both in-house staff and outside firms.

Standards are being developed by the SALI (Standards Advancement for the Legal Industry) Alliance, which was formed in 2017.  As described on its home page:

SALI is a not-for-profit organization comprised of legal industry professionals from legal operations, law firms and solution providers with the goal of developing open, practical industry standards for efficient and innovative legal services.

Of course, it is much harder to come up with a system for coding legal matters than for classifying frozen enchiladas.  But in the last few months, SALI took two very large steps forward.  In June, they released LMSS 1.0 rev 2 (Legal Matter Specification Standard) codes.  The complete code set can be downloaded for free from their webpage.  In August, Microsoft signed on as the first official user.  As noted in a press release announcement:

At Microsoft, implementing a portion of SALI’s standard taxonomy for legal matters is seen as a way to help the tech giant better categorize its legal work… [according to] Rebecca Benavides, the company’s director of legal business. 

The press release went on to explain that one of the benefits of LMSS will be in helping Microsoft to analyze past and future matters.  This in turn will help the company to reach its goal of using “alternative fee agreements with 90 percent of its law firm engagement.”

To get a quick sense of the main elements of the codes, see the slide below which was copied from a six-minute video introduction to this new system. 

SALI Article_Image

LMSS currently includes over 5,000 codes/tags organized into 13 categories. The six Core Code categories are:

  • Area of Law
  • Industry
  • Legal Entity
  • Location
  • Player Role
  • Process

As an example, the “Area of Law” section has 118 codes, including codes for cybercrime, health law, election law, workers compensation, and many others.

In addition to the six categories above, there are seven “non-core” code areas including Court, Currency, and Government Body.

Some of the larger code sets are adaptations of already existing codes. For example, the SALI Location set contains 3,771 codes adapted from the International Organization for Standardization (ISO) and defines codes for principal subdivisions (e.g., provinces or states) of all countries coded in ISO 3166-1.

LMSS includes a lot more than just these codes, such as APIs (Application Programming Interfaces) for database programmers that include routines, protocols, and tools for building software applications more efficiently.

How are these LMSS codes related to UTBMS – the Uniform Task-Based Management System – currently used at many firms? 

UTBMS task codes were first developed in the 1990s for use in e-billing.  For example, in UTBMS, all of the work lawyers perform in a litigation matter would be coded in five major phases:

  • Case Assessment (L100)
  • Pre-Trial Pleadings and Motions (L200)
  • Discovery (L300)
  • Trial Preparation and Trial (L400)
  • Appeal (L500)

Each phase is further broken down into a set of tasks, such as L110 Fact investigation, L120 Analysis, L130 Experts, and so on.  (For an overview of how the UTBMS system works and the way firms are currently using it, see our Legal Project Management Quick Reference Guide, p. 164.)

The UTBMS codes track the actual tasks that attorneys are doing in the execution of the matter. In contrast, the LMSS codes are designed to describe the matter at a higher level:  What is the kind of case? What is the jurisdiction? Who are the players involved? In time, it is a goal of SALI to merge the LMSS categories with the descriptions of deliverables within each type of work.  

LMSS can help law firm staff and programmers to substantially increase efficiency by analyzing the data they already have for:

  • Pricing and staffing new matters
  • Client relationship management (CRM)
  • Knowledge management, and
  • Document management

The good news for the vast majority of lawyers is that although this system will help you meet client needs more efficiently, you don’t need to know the underlying details.  The fine points are aimed primarily at back office staff, including IT professionals and the pricing and marketing departments. 

At this point, the vast majority of lawyers only need to know what LMSS does, and how – or whether – your clients and firm should use it. 

 

September 10, 2019

Key questions project managers should ask

By Jim Hassett, LegalBizDev and Natasha Chetty, Bellwether Strategies

Effective project management starts by asking the right questions. While there are hundreds of questions managers can ask, this list summarizes the most critical ones. It is organized in terms of the eight key issues discussed throughout the LPM tools and templates that we have published.

Set objectives and define scope

  • What business problem does the client want to solve?
  • How does this affect the client’s organizational goals and reputation?
  • 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?

Identify and schedule activities

  • How can large matters be subdivided into smaller discrete tasks?
  • Which tasks are on the critical path? That is, which tasks must be completed before others can start?
  • What deadlines will best align the client’s needs with the firm’s interests?
  • What external and internal scheduling constraints do we need to be aware of?

Assign tasks and manage the team

  • Who will be responsible for each task?
  • How long do they think the tasks will take?
  • What help, resources, or support will they need to finish on time, within budget?

Plan and manage the budget

  • How much should be budgeted to complete each milestone in the project?
  • How much was actually spent?
  • If at any point actual spending exceeds the planned budget, what can be done to get back on track?
  • Can savings on one activity be applied to compensate for overspending on another, within the overall budget total(s)?
  • Who are the relevant contacts regarding budget at the client’s organization and what are their needs or priorities?

Assess risks to the budget and schedule

  • What could possibly go wrong that would increase the cost, delay the project, or decrease client satisfaction?
  • How likely is this to happen?
  • How serious would the impact be if it did happen?
  • Which risks should I plan for in advance?

Manage quality

  • Does the client have any concerns about the quality of the work?
  • How should I monitor the quality of work performed by other team members?

Manage client communication and expectations

  • Who is responsible for communicating with the client decision maker?
  • What does the decision maker care most about?
  • Does the decision maker prefer formal reports, informal email, regular phone calls, face-to-face meetings, or another type of communication?
  • Should brief standard reports be submitted every week or month?
  • Which stakeholders does the decision maker need to communicate with in general or on this matter?

Negotiate changes of scope

  • How should I track changes to the work required and their implications for schedule and budget?
  • What criteria should I use to decide when a change in requirements should lead to a client negotiation for additional funding?


Adapted from the
Fifth Edition of the Legal Project Management Quick Reference Guide, a frequently updated online library of LPM tools and templates