Issue 35, Winter 2012

Happy holidays! The close of the year is filled with fun and good cheer, but it’s also a time for reflection and giving thanks. I am deeply grateful to my clients, colleagues and readers for your ongoing support and friendship, and I wish you all the best in the year ahead.

For this newsletter, I applaud those law firms that are teaching their lawyers project management skills. While this is a good step in the right direction, much more is needed if firms hope to remain profitable while producing high value services at a lower cost. (Read more)

In This Issue

Project Management: A Good Start, But Just a Start

Today’s clients insist on greater value from law firms at lower cost. They refuse to pay for lawyers who cannot show they add value to the work. If they pay by the hour, they want discounted rates and more say in staffing, often restricting which lawyers can work on their matters. Or they refuse hourly arrangements altogether and insist on fixed or flat fees and other alternatives to hourly billing. When clients will pay a set amount for the work regardless of who does it or how much time it takes, firms must know what it costs them to produce the work and then find ways to do it more cost-effectively. Otherwise every engagement presents inherent risks that could erode firm profits or create serious losses. 

In order to achieve greater efficiencies at lower cost while maintaining high quality, law firms are trying to improve the way lawyers manage the work they do. They are doing this primarily by hiring trainers to teach their lawyers project management skills. At its heart, project management is an ancient and simple concept: applying a disciplined approach to a piece of work so that the desired outcome is achieved on time and on budget. It helps lawyers clearly define the scope of work, develop a plan and create a budget at the outset of an engagement. It then enables them to supervise a project so that it moves ahead to completion according to plan.

But improving lawyers’ project management skills is not enough to minimize the financial risks and create the efficiencies that law firms need. While it gives lawyers a structured, deliberate way to plan, staff, budget, and execute legal work, law firms need streamlined processes and reward systems that support project management. Project management techniques will only achieve desired outcomes if they are part of a broader change initiative that includes utilizing analytical tools to measure work processes, engaging in continuous process improvement, and rewarding lawyers for efficiency. 

Analyzing and measuring how work is done.

Determining the cost of producing legal services requires analyzing those processes to determine their cost and efficacy. Only by using such systems and metrics will firms be able to make better process and staffing decisions with greater predictability for their own internal planning and budgeting purposes, and to negotiate fixed or discounted fees with a better sense of what the costs and risks will be.

Firms can use knowledge management and other software tools to conduct this analysis. These tools can collect historical and current data, break down work into component parts, map work processes, track work progress, assess efficiency and measure profitability. When firms want to try out new processes, these tools enable lawyers to implement and monitor those processes; provide budgeting and planning checklists and other tools to make the processes work as intended; scrutinize and control time and costs expended; provide platforms for clients to monitor work progress and communicate with project teams; and track projects to search for additional process improvements.

Process improvement.

To be implemented effectively, project management must be coupled with ongoing process improvement. As I explain in my new book, project management involves the application of knowl­edge, skills, tools, and techniques to work activities to meet project requirements. It involves a role and set of skills that ensure “best processes” are used appropriately and that schedules, staffs and deliverables are actively managed throughout an engagement. Process improvement helps determine what those best work processes are in order to achieve efficiency, excellent quality of work and service, a high probability of successful outcomes, and predictability.[1] It involves team members and the client constantly looking for ways to increase efficiencies and improve processes, performance, and profitability in both the current project and future engagements.

In most law firms, process improvement will transform the way legal work is conceived, staffed, and performed. Process improvement involves more input from and ongoing communication with clients; the use of new kinds of legal personnel, not all of them lawyers or employees of the firm; greater selectivity about the work that will be done, possibly omitting work that is not essential to the case; the disaggregation of some legal projects into discrete parts that may be handled by more than one law firm or vendor; and greater collaboration with the client and other legal service providers working together on a matter.

Lawyers who learn project management skills must have systems and support in place that will enable and encourage them to work this way. Preparing a plan and a budget are relatively easy once lawyers learn to use project management tools and techniques. The harder parts involve executing the project and changing the attitudes and behaviors of legal teams who may have to work, and think about their work, in unaccustomed ways.

Rewarding efficiency.

Law firms measure – and compensate - lawyers' productivity by the number of hours they bill. Those who bill ("produce") the most hours are deemed to be the most productive. But this view of productivity is upside-down. The real measure of productivity is the ratio of output to input, or how much is produced per hour of work. Enhanced productivity is the ability to produce more with the same or less input and to extract the most value out of each hour of work. The most productive lawyers are therefore those who can capably produce the requisite services most efficiently - i.e., in the fewest hours – not those who bill the most hours. Firms must understand and accept this distinction in order to comply with clients’ expectations, and if they hope to profit from legal work performed on a fixed fee, contingency or other non-hourly basis. When lawyers will be paid the same regardless of the time they spend doing the client’s work, working more hours will reduce rather than increase profitability. To profit in this environment, lawyers must produce high-quality work in fewer hours.

But compensation systems in most law firms do not value efficiency; in fact, they discourage it by measuring value on the basis of hourly billings. They do not reward lawyers for effective teamwork, outstanding client communication, or achieving a great outcome for the client quickly, with less rather than more time spent. A firm that really supports efficient work management will compensate lawyers for finding ways to streamline processes, monitor and control time and costs, and manage cases and transactions more economically, even though it may result in fewer hours being expended (and if working on an hourly basis, fewer hours being billed).  

Compensation systems will also need to reward lawyers who successfully manage and maintain client relationships, not just those who originate those relationships. With client loyalties based increasingly on a search for high value at low cost rather than on personal or historical relationships, factors like efficiency, client communication and teamwork will become ever more important. In this new marketplace, lawyers who can please and retain clients should be valued – and compensated - far more than they are now. Ideally, client origination and relationship management should be seen and rewarded for what they are: interconnected parts of client-focused service.

So by all means, firms should teach lawyers to be better at project management. But by itself this training will have limited benefit. To stay profitable while meeting clients’ new expectations, law firms must produce greater efficiency, predictability and risk reduction while delivering high quality, high value work. Project management is a good start, but it is only one step. More fundamental changes will be needed in how lawyers work and how they are compensated.

 

 

 

Ida Abbott helps lawyers develop, manage and retain legal talent. You can find additional information about project management as an element of professional development in Ida's most recent book, Lawyers' Professional Development: The Legal Employer's Comprehensive Guide.

 

 

 

 

 

 

 


[1] 2011 Legal Lean Sigma Institute, http://legalleansigma.com/

Highlights of the Year

The past year has been a very productive and satisfying one for me. These are a few practice highlights:

LPDThe 2nd edition of Lawyers’ Professional Development: The Legal Employer’s Comprehensive Guide was published in October and has been very well received. Completing the book made me realize what great strides we have made in professional development during the decade since the original book came out. Today when I advise clients, we can focus on which talent management strategies and systems are best for them, not whether they need to have a professional development function at all!

My work in leadership development, especially in preparing women for leadership, has been equally rewarding. I have written here before about the importance of including men in efforts to advance women. I have been bringing that message to men and in particular, enlisting men to serve as sponsors for women. I have also continued to help firms design gender initiatives so they have a clear, strategic purpose and substantial administrative and financial support. For many years I have argued that these conditions are necessary if such initiatives hope to have a significant and beneficial impact. The first national study of women’s initiatives recently published by the NAWL Foundation validates and underscores this position.

NLMCI was invited to join the Executive Committee of the recently formed National Legal Mentoring Consortium and delivered the keynote at their conference. If you are interested in mentorship in the legal profession, you should join this Consortium.

Hastings LAWThe 2012 Hastings Leadership Academy for Women once again brought together a group of amazing women who are the rising stars of the legal profession. The dates for next year’s course are July 23-27, 2013 and space is limited. If you would like to attend or send someone to the 2013 Leadership Academy, registration is now open.

The Roundtables I run for professional development leaders in global law firms and for women law firm leaders continued to grow and thrive throughout 2012. Registration is now open for both of these groups. 

I traveled to India and spent some time meeting with legal process outsourcers, visiting the knowledge centre of an international firm, and conferring with women lawyers who are facing considerable challenges as they try to advance in their careers. Seeing the dramatic and dynamic developments occurring in India, and hearing from the lawyers practicing there, gave me a deeper appreciation of the impact they are having on law practice in the U.S.

I am looking forward to an equally exciting and fruitful 2013. If your plans for the coming year might include my programs or services, contact me and let’s explore possibilities.

Recent Publications

The Peer Bulletin, November 2012. Reprint of my article about coaching, mentoring, sponsorship that appeared in a previous issue of Management Solutions. The article is an excerpt from my new book, 2nd edition of Lawyers’ Professional Development: The Legal Employer’s Comprehensive Guide. The Peer Bulletin is published by Peer Resources Network, which specializes in the development of peer, coach and mentor programs. 

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Upcoming Events

Law Without Walls

January 19, 2013 - January 20, 2013

The kickoff for the 2013 semester of Law Without Walls will be in Segovia, Spain, and I plan to be there! As in past years, I will serve as a Practice Advisor to a team of law and business students from around the world.

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Media in which I am featured

Josh Mitchell, "Women Notch Progress," Wall Street Journal, December 6, 2012

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