14 posts categorized "Legal Business Trends"

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

July 24, 2019

How to Improve the Management of Legal Teams (Part 3 of 3)

By Jim Hassett and Tim Batdorf

In this final part of our series, we discuss rules #7 through #10 and conclude the discussion of Paul Dinsmore’s “Ten Rules of Team Building” from the AMA Handbook of Project Management (p. 411).

Rule #7: Get the team in shape

Effective leaders do not do all the work; they delegate. They don’t micromanage, and they don’t try to do it all themselves or have others perform tasks exactly as they would.

They apply active listening and communicate regularly with team members. They also focus on unifying the team to work towards shared goals, and they don’t allow egos to get in the way of teamwork. This means learning to deal with conflict more effectively, whether it is between two members or between the leader and someone else. It all comes back to listening.

In some cases, it may be useful to formally coach junior team members at the outset. Ask them where they feel they need training. Compare the skills your team has with the skills they need to become more efficient.

If the learning curve looks steep and the team is working on large matters, you might even consider formal training programs. In large firms, the professional development department can provide quick guidance on what is available and what has worked for other lawyers in the past.

Rule #8: Motivate the players

Rule #1 was to identify what drives your team: the inherent intellectual challenge of legal matters, the relationships and collaboration, competitiveness, or the simple need to pile up billable hours.

Of course, the answer is likely to be all of the above and more, and in different proportions for different people. On large matters, your job as a leader is to develop a sense of what motivates each key individual and then to incorporate these motivators into your feedback and interactions with team members.

Make sure key team members understand the deliverables in the SOW, and then give them ownership of the process. Let them tell you how to meet your goals, on time and within budget.

Motivating some team members may be as simple as recognizing and praising their accomplishments.

If you expect the best from your team, you are more likely to get it.

Rule #9: Develop plans

Lawyers are good at convincing clients to invest time and money in planning. Clients are told to plan their taxes, plan their estates, and plan the best way to structure their contracts.

But when a new matter begins, many lawyers would rather jump right in than step back and plan their approach. Jumping right in can be a great way to be inefficient, and the traditional billable hour model rewards inefficiency.

However, as one consultant put it, “Being too busy to plan is a lot like running alongside your bicycle because you are too busy to get on.” Now that clients are pressuring legal counsel to become more efficient, there is a new emphasis on developing a plan before beginning a matter.

Planning starts with a solid SOW so that it is clear that the client and the lawyer agree on what is to be done. Then the lawyer in charge can map out the necessary tasks and assign them to different team members, using the Matter planning template in this Guide or other tools.

Better yet, don’t just create a plan by yourself. Get your team so involved in the project and decision making that they say, “This is our plan.”

Rule #10: Control, evaluate, and improve

When many people start managing projects, the biggest mistake they make is to trust their staff too much. “I hired extremely talented people,” they reason, “so they will figure things out.”

Most learn the hard way that effective managers control the work process, evaluate the results, and use the results to improve performance. This can be valuable even if a project is so small that you are working alone. But when you work on projects with large teams, “control, evaluate, and improve” is absolutely vital.

If you want to rely on software for this, our opinion is that the best software solution is the one you already own and know how to use. Whether your team uses Outlook or something else, it’s worth learning about the features that can help you manage your team, including email groups, meeting invitations and scheduling, and creating and tracking team “To Do” lists.

Tracking the budget is especially important these days, and we often hear about how law firm accounting systems are becoming more sophisticated in their ability to support periodic work-in-progress updates. How often do you need these updates? The answer varies from one matter to another. Many firms seem to be headed toward real-time reporting and requiring lawyers to update their time records daily.

Finally, at the end of each important matter, it is vital to conduct some sort of “lessons learned” review. Poll your team members on what they thought worked well and what they thought needed improvement. However, ultimately, there is only one results assessment that counts, and that comes from the client. So you need to make sure that you have an accurate reading from the client as close to the end of the matter as possible.

In the good old days when clients rarely complained about the efficiency of legal teams and hourly rates went up every year, it was not necessary to think about better ways to manage legal teams. Now it is.

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.

July 10, 2019

How to Improve the Management of Legal Teams (Part 2 of 3)

By Jim Hassett and Tim Batdorf

In this part of our series, we cover rules #3 through #6 of Paul Dinsmore’s “Ten Rules of Team Building" from the AMA Handbook of Project Management (p. 411).

Rule #3: Understand the game

Rule #3 is a hard one for lawyers, because the game is changing and no one is quite sure what the new rules are. In this time of transition, legal team leaders must define the rules of the game for each engagement and make them crystal clear to team members. The rules may vary from one matter to another, even when team membership remains the same. Associates working on a fixed price project must understand that the highest quality must be delivered within a limited number of hours. Where possible, they must also be shown how they will personally benefit from this behavior.

(If your compensation system rewards putting in more hours, and this matter requires putting in fewer hours, you’ve got a problem. In the short-term, management can address this by adjusting hours on matters managed for efficiency. However, longer-term adjustments to the compensation system may be called for, and changing compensation is never easy.)

In any case, efficient management begins with your personal understanding of the goals of each matter and the players involved; this starts with getting the statement of work right. Then you have to think through the implications of the SOW for each member of your team. And it wouldn’t hurt to talk to them about it.

The simple fact is that people work better when they understand the goals of a project.

Rule #4: Evaluate the competition

Evaluating the competition is second nature for litigators. If opposing counsel have a reputation for scorched earth tactics, then litigators will be prepared to react accordingly. But if the other side seems motivated to settle, litigation strategy will be quite different.

But some lawyers who are very good at evaluating the competition are very bad at communicating this knowledge to the rest of the team. Providing legal services efficiently is a team sport, and everyone must be on the same page.

Understanding the competition is also important when a legal team bids for new work. According to the 2019 Law Firms in Transition survey, 93% of lawyers predict price competition will continue to increase in the future. This will lead to some hard decisions about what work is worth bidding on and what work is not. And it all begins with understanding your competition.

Rule #5: Pick your players and adjust your team

In many law firms, assembling a team for a large matter can be an interesting exercise these days, especially if the firm is filled with lawyers who do not have enough billable work to meet their quotas.

In their hearts, lawyers often know which partners and associates are most likely to perform a particular task efficiently, and which ones will take their time. As the pressure to control costs increases, the competition to get efficient people on each team is going up. In the long run, this should lead to larger numbers of more efficient lawyers, but in the short run it can lead to some awkward situations and difficult choices.

In this environment, it has become increasingly important that team leaders pick the best available person for each role, without playing favorites. Trust has also become more critical. Team members must believe that working together efficiently is in their own best interest.

On large teams, it also helps to have a cheerleader or two. They can help counteract the effects of the lawyers who are experts at seeing the glass as half empty and at explaining why every task will take a very long time.

Rule #6: Identify and develop inner group leaders

Great leaders constantly think about training and developing their replacements. Who can cover for you if you’re absent? Who can help you motivate and lead the rest of the team? Who will the client trust?

Share your knowledge and spread it around to raise others up to your level. Remember, your goal is to make yourself obsolete.

As Dinsmore put it in his AMA Handbook of Project Management (Fourth Edition, p. 411), “Delegating, mentoring and coaching must become part of your daily habit.”

We will discuss Dinsmore's rules of team building #7 through #10 and conclude this series in our next blog post.

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.

May 29, 2019

Toby Brown on LPM and Perkins Coie’s Client Advantage™  (Part 2 of 2)

By Jim Hassett and Tim Batdorf


LegalBizDev:  Previously, you mentioned that the LPM team does work in three major areas: at the client level, the matter level, and coaching.  Let’s start with the client level.

Brown:  This type of support is generally offered to our largest clients.  For example, we have a large fixed price fee to handle over 500 legal matters for one long-term client.  Our group regularly reviews the actual legal work we’ve performed and compares it to the fixed fee we negotiated in advance.  Because we have a long-standing relationship built on mutual trust with this client, we can adjust the terms if there is a change in scope that will impact the fee. 

While LPM support typically includes this type of budget development and monitoring, the LPM team also works closely with key partners to identify and address the challenges each client cares most about. Each client is different. For example, one of our clients is currently focused on developing metrics to better manage the work and measure the results.  Another is refining our intake portal for new matters.  In that case, an LPM specialist works at the client’s office 1-3 days per week. 

LegalBizDev:  What type of feedback have you gotten from clients?

Brown: Clients absolutely love it.  Most of our large clients are very excited about this type of support, and are open to experimentation at the cutting edge of LPM services.  We have already gotten additional work as a result of LPM support, which is of course the ultimate proof that it is working.  For clients who are not interested, at this point the LPM team simply doesn’t work with them.

LegalBizDev:  What about matter level LPM support?

Brown:  This often starts with creating and monitoring budgets for lawyers that request our support.  But again, it can take other forms, depending on client needs. Given our limited LPM resources, this is generally limited to large matters.

LegalBizDev:  And coaching? 

Brown:  We have offered LPM training and coaching to entire legal teams, paralegals, and practice groups.  We also sometimes offer special individual coaching.  As our team grows, we expect to have more time for this kind of support.

LegalBizDev:  It sounds like your LPM initiatives are very much involved in business development.

Brown:  Yes.  To cite just one example, LPM Director Janelle Belling recently offered a presentation to the law department of one current client on ways to better define the scope of new legal matters.  We charged nothing for this presentation, but it has already increased the satisfaction of this client, and the precision of their statements of work with us.

Of course, LPM initiatives are aimed at increasing new business at many firms.  But our Client Advantage™ approach takes this to the next level.  And as a result of our track record of success, Perkins Coie partners are inviting Client Advantage™ team members to sales pitches more and more often.  Just yesterday, Janelle and I were included on the team that met with a very large potential new client, because the value we could add differentiates the firm from our competitors.

LegalBizDev:  When project managers work on a legal matter, do you directly bill the time they put in?

Brown:  Not very often, however it all depends on what each client wants and needs.  In the case of the large fixed fee I mentioned above, project management time is included in the total budget calculations for review purposes.  Some clients initially resist the idea of paying for non-lawyers, but their resistance declines when they see how project managers can manage to the bottom line cost.

LegalBizDev:  Where do you see LPM going in the next few years?

Brown:  You have to remember that law firms change very, very slowly.  By law firm standards, LPM is still a new field.  A decade ago, while many lawyers were focused on efficiency, almost none used the term LPM, or had formal processes in place to assure efficiency.

There is still an element of the “wild west” in the way LPM definitions and tactics vary from firm to firm.  But clients are forcing firms to accept efficiency, and I predict that in the coming years you will see more and more firms taking an integrated approach like ours to providing value. 

 

May 15, 2019

Toby Brown on LPM and Perkins Coie’s Client Advantage™  (Part 1 of 2)

By Jim Hassett and Tim Batdorf


Toby Brown is the Chief Practice Management Officer at Perkins Coie, a firm with more than 1,000 lawyers in offices across the United States and in Beijing, Shanghai and Taipei.  Toby has long been recognized as one of the leaders of the LPM movement, and is the founder of the leading annual conference on LPM, pricing and process improvement (the P3 Conference).

LegalBizDev:  When Law.com published an article last year about your approach to practice management, the headline was “The Law Firm Disrupted.”  Could you explain what they meant?

Brown:  The Law.com article focused on our Client Advantage™ program, describing it as a possible “template for future relationships between Big Law and corporate clients.”  It quoted several of our clients, including Lisa Konie, the Senior Director of Legal Operations at Adobe Systems Inc., who described the way we “truly worked together as if [we] were an extension of their legal team.”  Our web page includes an overview of the Client Advantage™ program which describes how it helps “clients drive efficiency, address a broad range of business challenges, and stay a step ahead of trends in legal services.” 

LegalBizDev:  For obvious reasons, my favorite example of the way Perkins Coie “stays a step ahead of trends” is the way you plan to offer key clients the license you recently purchased from us for the online fifth edition of our Legal Project Management Quick Reference Guide.  How do you expect this to work?

Brown:  Of course the primary benefit of the license will be internal.  We believe it will save our LPM staff time, and increase their impact, by providing us with an electronic library of over 150 LPM templates.  The LPM team can provide lawyers with exactly the information they need to increase efficiency, exactly when they need it.  For example, if a particular lawyer was having trouble writing a letter of engagement, LPM staff could email that lawyer a copy of the tool entitled “15 questions to ask clients to help define scope.” Or if another lawyer needed to delegate more effectively, he or she could be sent a template entitled “The delegation checklist.”  New tools and templates are added to the electronic library twice a year so that lawyers can easily keep up with developments in this rapidly changing field.

In terms of our Client Advantage™ program, one way we will “stay a step ahead of trends,” is by offering these templates to key clients, at no charge.  Law departments that want to improve their own use of LPM can benefit greatly from these tools.

This type of support and knowledge sharing has long been a key component of the Client Advantage™ program.  For example, when one large client was interested in improving their document management systems recently, we provided access to Perkins Coie employees who had been involved in installing our own document management systems.  They passed along all the valuable lessons they had learned in this process.  And again, there was no charge for this service.

LegalBizDev:  This sounds like the holy grail of law firm marketing, a truly unique selling proposition.

Brown:  I agree.  Business development professionals frequently talk about the need for “marketing differentiators” to set their firms apart.  But the classic problem in legal marketing is that there are too many good lawyers in the world.  And in too many cases, the only “unique selling proposition” the marketing department can come up with can be reduced to “our lawyers are better than your lawyers.”  In contrast, the Client Advantage™ program provides concrete deliverables that few if any of our competitors are offering.

LegalBizDev:  When I first read about your program, one of the things that struck me was that the team members listed on your web page range across a number of different departments that we don’t normally see working together with clients.

Brown:  That’s right.  Some of our members are obvious, from such departments as LPM,  pricing, business development and marketing.  But the team also includes members from other departments that are less obvious, including knowledge management, IT, training and development, billing and finance, diversity, pro bono, and recruiting.  Because of the importance of this program, our COO Steve Hedberg is also a key member of this group. 

LegalBizDev:  That’s quite a diverse group.  Could you give me an example of how it might work with one of the “less obvious” departments?

Brown:  One of the first things people often notice about our list is the inclusion of recruitment.  At most firms, laterals are recruited opportunistically, whenever rainmakers from other firms become available.  However, their success varies, in part because they may or may not focus in the areas that our current and future clients care most about.

Our Client Advantage™ group has helped tighten the process of talent acquisition so that it has focused on recruiting lawyers’ whose expertise will be most helpful to our clients, and whose books of business fit best with the firm’s strategic plan.  This has paid off in a big way.  In the last few years, we have substantially increased the revenue from lateral acquisitions.

LegalBizDev:  Could you tell me a little about how your LPM group is organized and what it focuses on?

Brown:  Our team is led by LPM Director Janelle Belling. We currently have four people exclusively devoted to LPM, are in the process of hiring two more, and often get help from pricing, finance and other groups.  Most of the work they perform is at the client level, managing large portfolios of work.  As time permits, the LPM team also provides assistance in two other areas:  at the matter level, and coaching to groups or individuals.

Detailed examples of tasks at the client level, matter level, and coaching will appear in Part 2 of this post.

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.

 

August 08, 2018

AFA pricing best practices

By Jonathan Groner

At the recent conference of the Corporate Legal Operations Consortium (CLOC), Matthew Beekhuizen, chief pricing officer of Greenberg Traurig, was a member of a panel titled “How to Build an AFA Program: Best Practices in Design, Implementation, and Management.”  Beekhuizen recently discussed the panel and various aspects of pricing and alternative fee arrangements with us in the following interview.

LegalBizDev: Based on your personal experience, what approach do you take in dealing with pricing issues?

Beekhuizen: Earlier in my career, I worked in commercial banking, and I became accustomed to analyzing financial statements and profit and loss statements, particularly for the purpose of assessing the amount of risk for commercial loans. That work was highly data-based, and I still use a data perspective in developing prices in my present position.

I use data as a starting point. For example, in developing a budget for a piece of litigation, we look first at the costs of various tasks, such as depositions, motions to dismiss, etc., in similar matters. We also ask: What is the possible range of costs? This historical data paints a picture, and then I sit down with the attorneys on the matter and I ask them how the present case is different, if at all, from previous cases that were similar. We can go from there.

LegalBizDev: Are firms like yours becoming more data-driven?

Beekhuizen: Yes, firms are much savvier now, for example, about why and how they should use task codes to capture data in a meaningful way. In addition to the well-known ABA litigation codes that have existed since the 1990s, many firms are developing their own coding systems for all types of matters, not just litigation. And Hilarie Bass (current ABA president and a co-president of Greenberg Traurig) has initiated an ABA working group with the goal of creating broader code sets for a variety of practice types, as well as revisions of the litigation code set, aimed at capturing better data and being more useful in AFAs.

LegalBizDev: What is the relationship between task codes and AFAs?

Beekhuizen: The array of data that can be gathered from completed matters by the use of task codes helps a firm develop detailed projections of the cost of an upcoming matter. These projections can then be used to develop a fee proposal that the firm, with a greater degree of confidence, expects will be a valuable arrangement for the client and the firm.  The use of task codes also enhances legal project management efforts once the matter is under way, so firms can monitor what work has been done, by whom and when in comparison to the fee agreement.

One type of AFA that firms are using more frequently when they are truly data-driven, is task-based pricing. An example of this type of pricing would be that the firm and the client agree on a certain price per deposition, regardless of the number of depositions, or on a certain price for the review of, say, each set of 5,000 documents.

LegalBizDev: What is the relationship between legal project management and AFAs?

Beekhuizen: AFAs can really set the stage for legal project management. Say the work is being done for a fixed fee, which is a common type of AFA. That means that when the firm agreed on the fee with the client, the firm had based the arrangement upon specific staffing (how many people would be used for each aspect of the matter, where they are based, experience level) and expected scope (activity such as number of depositions, number of documents to review, etc.).  The firm needs to staff the matter in the way it had planned and monitor that the work is within scope. So the fee agreement becomes, or should become, a work plan to which the firm must manage. That requires regular reporting and assessing of where things stand, which of course involves project management. Project management becomes indispensable in making AFAs work well.

LegalBizDev: What is the relationship between the growth of legal operations within client corporations and AFAs?

Beekhuizen: Because of the growth of legal ops, more sophisticated clients have set benchmarks for what they want to pay for certain specific legal services, just the same way as firms’ use of data has helped firms come up with benchmarks for the prices that offer the most value to all involved. This is actually very good because it makes the relationship and the negotiation between the law firm and the client more transparent in many ways. Now, if the client and the firm have different expectations about the potential costs for a matter, both can review the data behind the expected cost. This helps firms have a more substantial and fact-based discussion with clients about price. When our clients are trying to implement AFAs for the first time, I always tell them to start with data. Having a legal operations professional on the client side helps with this process.

As legal operations continues to grow by leaps and bounds, as it has, we will be seeing a lot more data-driven requests from clients, and I think that’s a great development.

LegalBizDev: Do you deal with aspects of pricing that are not necessarily reducible to data?

Beekhuizen: Yes. Pricing is both a science and an art, and it ultimately is all about understanding your clients’ needs. Sometimes you may come up with an initial cost estimate that you know is beyond what the client is expecting. For example, a price estimate may represent what the firm believes will be required to win a certain litigation, but that cost is greater than the client’s monetary exposure. At that point, you can explore other alternatives that reduce the cost and create value for the client.

In another situation, the client may want to develop a fee arrangement that has the law firm sharing risk with the client, so that the law firm incentives and client objectives are aligned.

In yet another situation, the value for the client is not so much in cost reduction as in predictability of its legal expenses over a period of time.

In all these instances, our job is to develop an understanding of what the client is really trying to achieve. AFAs and data-driven analysis set the stage for the most important part – talking to the client about what they expect and what they consider value.

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.