ILN Webinar Series - An Introduction to Legal Project Management Part II

Last week, we had the first part of our recap from Tim Corcoran's excellent webinar on Legal Project Management. Today, I bring you the second half, which covers: 

  • Legal Project Management (LPM): Concepts - should they be embraced or avoided? Is LPM a friend, an enemy or a frenemy?
  • Process improvement versus LPM: Two different disciplines, though they are related.
  • LPM 2.0: The advanced level of LPM. 

 

To illustrate the LPM process, Tim used a pictorial - a client will call up with an issue, and explain what they need (picture of a tree, with a tree swing that has three wooden seats one on top of the other, and two ropes tied to the same branch). The partner who answers the call takes notes and understands the client's needs to be a tree swing with one seat, the two ropes tied to separate branches. 

They call in an associate to explain the process to them, and the associate designs the swing as a wooden swing with the middle of the tree cut out, the two ropes tied to two branches, which are held up by additional branches. 

The firm then delivers something even more inconsistent with the original request - a tree swing with the seat lying on the ground and the two ropes tied around the trunk. They're a premium law firm, so they charge accordingly (shows a theme park), though what the client really needed was a tire swing. 

Tim said that as the audience looks at these images, they should think about realization rates, an the conversations they have with their clients only during and after an engagement when they get specific about what they want or don't want. How much "woodworking" was done in the creation of the tire swing - if you add up the lost realization, those things that the client simply won't pay for - and you add it up over the course of all of the engagements for all of the lawyers in the firm, on a yearly basis, you can see the extraordinary cost and inefficiency.

This is what LPM is designed to address. It's a process used by businesses to help improve predictability. Tim said that firms may have heard from their corporate clients that the number one rule in business is "no surprises." Firms can make mistakes and even repeat those mistakes, but the one thing that they can't repeat and expect to continue to receive work is to continually surprise the company. 

Tim added that this works both ways - sometimes it's when a firm surprises the business by costing them money, while other times it's bringing in more money than they anticipated - if they're trying to invest capital and they don't know about revenue coming in, this can be as great a challenge as not having enough capital to invest. 

Stages of LPM

Tim then went through the stages of LPM: 

  1. Define Objective: Tim advised thinking long and hard about the objective that the client is seeking, noting that in the earlier example with the swing, the end result of a tire swing could have been identified much earlier with this step. 
     
  2. Define Scope and Constraints, eg budget and timeline: Tim said that every time he speaks with lawyers at a firm retreat, they all say that they address budget with their clients, but when he speaks with the clients, they all say that none of them have that conversation. 
     
  3. Establish the project plan: Understand what the clients wants to accomplish and the constraints, and then use this to put together the plan and staff the plan.
     
  4. Execute the plan
     
  5. Continuously monitor the performance, change management: LPM expects change, and there is a process for dealing with this. 
     
  6. Review and improve. 

Tim paused here to see if there were any audience questions, and Alan said that someone asked who should be the project manager, whether it should be a partner or associate, or whether a dedicated project manager needs to be brought in. 

Tim answered that he's seen all types. In some firms, they believe they're best served by hiring professionals with project management certifications from other fields. In other firms, they delegate this role to associates or junior partners, and in still other firms, they think it should be a partner's responsibility.

It's a function of the firm's culture, but we're talking about a business mindset. So while there may be paths and steps that can be delegated, at the end of the day, it's about having partners who understand these principles and can apply them to improve communication and better manage plans. 

Tim then delved into each of the LPM steps a bit further, and offered a point of differentiation for each. 

Define Objective

This step is about finding out what constitutes a win for the client, and gives attorneys the opportunity to serve as a counselor. They can help the client understand what they really want from this process, and the consequences of various outcomes. 

Additionally, there are sometimes differences between legal outcomes versus business outcomes, and the goal might depend on what the business professionals want - this could be different from what the legal team at the client wants. 

Point of differentiation - your competitors assume quite a lot. The more you assume, the more it factors into lost realization before you're done. 

Define Scope and Constraints

Tim said that what's "out of scope" is defined by what's "in scope." He talked about engagement letters and said that these are typically vague, and in recent years have pages of carve outs and stipulations. He said that defining scope is not like that. Instead, it's about looking at how we incorporate the things we have to deal with as we're pursuing this matter, such as budget, timeline, who we're accountable (who are the stakeholders), and reporting requirements. Typically, the most important of these is budget. 

Point of differentiation - your competitors allow the client to define the scope by writing down legal invoices. 

Tim then addressed why lawyers avoid discussing budget - that's because they believe that what they want to invoice will be far greater than what the client is willing to spend. There is an assumption that the client is always looking for the cheapest rate. They are business people, so they are often looking for lower costs, but budgets in a corporate setting are more about predictability. So at times, a firm can be premium-priced in the services that it offers and still win work over lower cost providers, if they can do a better job offering predictability and minimizing surprise.

He advised not avoiding the cost discussion, but instead embracing it. Tim commented that he often hears that  it's off-putting to bring up budget, but said that talking about budget for a legal matter isn't embarrassing to the business person because they think about budgets all the time. They may not know what the matter is worth to them, but they know how much is in their budget, so it's helpful to have the conversation and can ferret out those clients who might not have the budget to pay your rates. Tim offered some questions to get started: 

  • What would you like it to cost? - use a little humor. 
     
  • It looks to use like the work might cost in the range of $x. How does this compare with what you were expecting. For example, if you say you think it will cost $75,000, and they think it's a $30,000 matter, ask why. 
     
  • What factors have shaped your budget expectations? Discuss this, and ask whether they've considered certain factors, based on your experience in these matters. When you lay out your understanding of how the matter might flow in a way that demonstrates your expertise, it helps to differentiate you from your competitors who are just offering a low rate to win the work. 
     
  • What's the cost to your business if you don't resolve the issue? Clients need to understand what the cost is of doing nothing. So many firms believe that they're hired for really critical work where price is not an object, when in reality, to most businesses, there is a cost to addressing their concerns, and a point at which they're willing to accept some risk. It might not be worth it to them, so it's helpful to know that because you might get more pushback on invoices in those situations. 

Point of differentiation - your competitors are afraid to discuss budgets. 

Design the Project Plan

Tim identified the pieces in this step as: 

  • Basic template: you've identified the standard, variable and volatile tasks, and can put a price tag on the various courses. You may say that you can't know for certain where it will go until you get closer, but you've tried to identify some of the uncertainty.
     
  • Estalish task timelines and budgets: once you know what steps are necessary, talk to the firm's finance team to figure out what you traditionally bill for those services. Break down the process and understand what they cost. 
     
  • Critical Path: This is the process of going through and understanding what steps are absolutely necessary to achieve the outcome, and which steps are nice to have. This is where we have the quality question - some lawyers will leave no stone unturned, but for the client, they may not be willing to pay for that level of thoroughness. As long as work isn't being compromised, the client should have some say in what steps are necessary. 
     
  • What resources are necessary? This might include a project manager, or may just be carving out time for doing more and having better client communication. 
     
  • Review, revise: The project plan is a moving target because things change, so the plan should be constantly revised. 

Tim talked a little bit about Gantt charts, which are used worldwide in managing projects. He said that these can help to establish where you are in the process - major and minor steps, how much it will cost, how long it will take - and can help business people and the legal team at the client understand the legal process in the same way that they think about their investments. This is another opportunity to differentiate your services. 

He added that project plans are effective in all practices - sooner or later, he inevitably gets the question that says that a lawyer's practice is unique and different and can't be reduced to a series of common steps. LPM addresses this though, and is for all types of matters - it's about improving communication and reducing surprise. When we break down our legal work product into its various tasks, we may find a lot of redundancy and inefficiency. 

Point of differentiation - clients hire lawyers who learn from experience, not treat every matter as original. 

Execute the Plan

  • Commence billing legal work.
  • Use the project plan to guide all efforts.
  • Disseminate updates as needed.
  • Track efforts, time, budget, and results.

Point of differentiation - your competitors leap ahead to this step. 

Continuously Monitor Performance

  • Regular communication is critical. 
  • Continuous feedback loop.
  • What's going well?
  • What can we improve?
  • Are we on time and on budget? If not, why not - how can we adjust? The project plan can help with this. 

Managing expectations is critical - no surprises. Tim said that lawyers should tell their clients what they need to know, and not what they think they want to hear. Risk sharing requires two-way trust and communication - this is most likely a learning experience for both parties. 

Point of differentiation - your competitors avoid communication until asked or until they have the "answer." 

Tim talked a little bit about what happens when things change in a project - there are four possible scenarios that result: 

  • Up "Scope Creek" without a paddle - the scope changes, the law firm absorbs the overage, and no one is happy. 
  • The client increases the budget and/or timeline. 
  • The client maintains the budget and timeline, but changes the requirements. 
  • The client accepts the risk of staying the course. 

Point of differentiation - your competitors either absorb most overages or try to negotiate overages at the end of the engagement. Monitoring performance is a critical part of management, because that way, firms can address change to avoid this. 

End of Project Review

  • Learning organizations focus on improvement over time. 
  • Old law firm math versus new law firm math: Tim said he would address this in more detail in the next webinar. There are different ways to generate profitability. Lower delivery costs can improve profitability, improve predictability and quaality - every business outside of professional services relies on this. 
  • What did we do well? What can we improve for next time? 

After such a great session, I can't wait for Tim's next webinar on alternative fee arrangements! 

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