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...

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The latest post from Jim Hassett’s blog Legal Business Development.


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.

 

      


How CLOC is helping law firms to improve efficiency (Part 3 of 3)

While the CLOC LPM initiative described in Part 2 of this series was aimed at LPM novices, other CLOC initiatives are aimed at those who already accept the need for LPM and are digging into the details of how to implement it. 

For example, the Patent Prosecution Initiative was designed to establish “a common language and framework” for in-house legal departments to use when defining scope for patent prosecution work. This initiative aims to:

  • Speed up the process
  • Reduce misunderstandings and miscommunications in defining scope
  • Design fee schedules, and
  • Help manage budgets

According to a May 2017 article in Corporate Counsel, this document grew out of the work of May O’Carroll as head of the Legal Operations, Technology and Strategy team at Google, and it incorporated contributions from more than 60 companies, law firms and other third parties.

The CLOC (Corporate Legal Operations Consortium) Patent Prosecution Deliverable Framework can easily be downloaded from CLOC’s webpage. It lists 21 core deliverables, from the “Pre-filing Assessment” to “Issuance” and “Appeal.”  Each is described in detail, along with “add-on options” and suggested UTBMS task codes.

According to Doug Luftman, currently General Counsel at Nomis:

This approach will provide us all with a way to more effectively manage our budgets. We also will be able to more successfully track how efficient projects are. Further, we will be able to more easily develop new benchmarks (so that we are comparing apples to apples) and gain a better understanding into how we are all performing.

In an interview for this post, James Hannigan, formerly a Project Manager at Fenwick & West and a member of CLOC’s core working group for this initiative, argued that if companies begin to adopt this new standard, they will increasingly demand that law firms also adopt project management techniques when they perform work:

Clients will have access to more precise data, which will compel the firms to manage the budget more effectively.  Project management will be easier to implement because the data is available to properly do it

According to Aileen Leventon, Principal of Edge International, this and other CLOC initiatives can help law firms take a more sophisticated approach with their clients. 

Law firms tend to look at clients as a monolith, whether it’s a single point of contact or a full law department.  But CLOC takes a supply chain approach, identifying and improving the various handoffs that go on between an internal business client and the law department, within the law department, and with outside counsel.

To the extent that CLOC’s approach is embraced by in-house counsel, Leventon believes it will have a significant impact on law firms for many reasons, including:

  • Law firms will have to accelerate their use of LPM.
  • Law firms that have embraced LPM will need to become familiar with the CLOC framework.
  • In-house counsel will become more efficient in serving their internal clients.
  • In-house counsel will be better prepared to define a successful outcome, which will result in better formulations for setting objectives and defining scope.
  • Budgeting and changes in assumptions will be easier to articulate with a systematic process that in-house lawyers better understand.

On the last day of the first CLOC conference (held in 2016), a panel discussion examined the issue of “why law firms are not responding faster and more fully to their clients’ needs and demands for improved legal service at more reasonable fees.” According to panelist Ralph Baxter, former Chairman and CEO of Orrick and currently Chairman of the Advisory Board of the Thomson Reuters Legal Executive Institute, the panel discussed:

How clients can achieve the change they need from their law firms instead of in spite of them. . .. The pace of change is painfully slow [because many law firms] lack the motivation and resolve to [change].

Baxter went on to describe how CLOC’s influence is being noticed within the legal industry: 

CLOC is quickly becoming one of the most influential players in legal service delivery… CLOC members have an unprecedented opportunity to accelerate change… They have the mandate, they have the motivation and they have the buyers’ power.  And, thanks to CLOC, they are organized.  

While law firms have made substantial progress in the two years since Baxter wrote these words, there is still a very long way to go. 

So, if you are committed to meeting client needs through LPM and increased efficiency, and you don’t yet know much about CLOC, it’s time to learn more.

      


How CLOC is helping law firms to improve efficiency (Part 2 of 3)

According to a 2017 Inside Counsel article about CLOC:

[One] big challenge around project management in law departments is that legal teams didn’t understand it or what was being asked of them. So, a team of over 20 industry professionals… created an executive summary to educate legal leadership teams of what legal project management is, what the benefits are and how they can get started. The CLOC LPM Initiative team also created a playbook that includes a simple checklist for each matter stage and templates that can be used and configured by legal teams to easily apply project management in their delivery.

Aileen Leventon, Principal at Edge International, led the group that prepared the resulting 14-page paper, LPM for Legal Teams.  It begins with CLOC’s definition of LPM, built around four major stages – intake, planning, execution, and review – and is summarized in this diagram:

Communication_Pic2




Naturally, CLOC looks at LPM from the client’s point of view. Their paper provides details for each stage, listing activities, results, and success criteria. It also provides templates such as:

  • Matter Complexity Guidelines
  • Request for Legal Service Checklist
  • LPM External Briefing Checklist
  • Monthly Matter Status Report
  • Post-Matter Review Form

Some of these tools can be used as-is by law firms; others provide useful insights into the way sophisticated clients look at LPM.  (While the paper itself can be downloaded for free by anyone, the internal links to templates are available only to CLOC members.  However, joining CLOC is easy and relatively inexpensive.) 

You don’t need to be a CLOC member to download another useful document which was created as part of this initiative:  A 16 slide PowerPoint presentation entitled:  LPM – The Business Case and Action Plan for Legal Departments.

Again, as suggested by the title, this presentation is aimed at in-house law department staff, but many of the concepts apply to law firms as well.  One of the most interesting slides addresses the myth that project managers “spend lots of time documenting and updating project plans.”  In reality:

LPM is 90% about communication and speaking the client’s language:

  • Defining and managing the scope of the work
  • Making sure all those who need to be involved are in the loop
  • Making sure that risks are addressed on time by the right people
  • Providing status updates
  • Facilitating meetings and discussions
  • Communicating meeting minutes and action items.

The emphasis on communication is completely consistent with our experience coaching lawyers in LPM for more than a decade.  For example, when Bilzin Sumberg COO Michelle Weber was interviewed for our white paper, A Model for LPM Success: The Case of Bilzin Sumberg, she said: “If I were to distill [our LPM] program into one highlight, one thing that everyone learned and changed, it was improved communication. It sounds so simple but improving communication with clients and within the firm is very hard.”

Finally, for people who need to make the case for LPM – whether in a law department or a law firm – the slide “What is driving the need for LPM?” (reproduced below) may be especially useful:

What is driving the need for Legal Project Management?

  Table_Pic3

 

      


How CLOC is helping law firms to improve efficiency (Part 1 of 3)

By Tim Batdorf, Jim Hassett, and Ed Burke

How much do you know about CLOC, the Corporate Legal Operations Consortium?  If the answer is very little, and if you work at a law firm that cares about legal project management (LPM), you may be falling behind your competitors. 

As suggested by its name, the Corporate Legal Operations Consortium is primarily intended for in-house staff at corporate legal departments.  But a growing number of law firms are becoming involved with CLOC for both substantive reasons (to better understand what clients are looking for) and for marketing purposes (to improve communication with current clients and with potential new ones).

CLOC’s mission is to help legal operations professionals and other core corporate legal industry players (e.g. tech providers, law firms, LPOs, law schools, etc.) optimize the legal service delivery models needed by small, medium and large legal departments to support their clients.  As summarized on CLOC’s web page:

In a technology and data driven world, when business moves faster than ever, legal is totally out of step. Our industry has been frozen in time, slow to change.  We organize all players in the legal ecosystem to help reform and shape our industry.

CLOC’s influence has exploded in the last few years.  According to a recent Bloomberg Law interview with its founder Connie Brenton (chief of staff and senior director of legal operations at NetApp Inc.), CLOC started in 2010 as a small discussion group which, at that time, might have best been described as “an information book club” or perhaps as “therapy.”  In 2016 CLOC became a non-profit, and according to Brenton:

In two years we went from an informal group of 40 to nearly 1,400 legal operations professionals.  

That was in February.  More have joined since, and at the time of this writing, CLOC had approximately 1,500 members and over 750 member companies, including roughly 30% of the Fortune 500. CLOC membership represents 43 states in the US and 39 countries around the world, and member companies have an estimated combined external legal spend of over $40 billion.

CLOC’s growing influence on the legal profession can also be seen in the fact that attendance doubled at each of its first three US meetings: from about 500 participants in 2016, to 1,000 in 2017, and nearly 2,000 in 2018. 

Given those numbers, it is clear why law firms are increasingly involved with CLOC.  According to Melissa Prince, Ballard Spahr’s Chief Client Value Officer, the most important benefit of CLOC involvement is proactive communication. 

For years, clients and law firms have had the common goal of transforming the way legal work is done, but until CLOC they were not really talking to each other about it in any meaningful way.  The reality is there will never be any long-term change in the legal industry until clients and law firms really start talking to each other.  CLOC encourages us to tackle tough issues and to be brutally honest with each other about what isand more importantly what is not working.  This is exactly what we need in the legal industry.  

After attending CLOC’s meeting in Las Vegas last month, David Clark, LPM Partner at Lathrop Gage, noted that:

CLOC emphasizes how clients and their in-house legal departments want law firms to collaborate with them.   This runs counter to a common misconception in law firms that clients are just using things like LPM and alternative fee arrangements to drive down legal fees, without regard for the law firms which represent them.  Instead, most clients want to increase collaboration with their law firms through LPM and similar tools.  While it is true that these tools allow law firms to more efficiently and cost-effectively handle legal work, at the same time, clients are rewarding collaborating law firms by increasing the volume of their work and paying success fees.  CLOC helps law firms understand that implementing LPM can foster increased collaboration with clients, resulting in more value for clients and deeper engagement for the law firm.

CLOC conferences are designed primarily for in-house departments, and the first session at each conference  provides an overview of the 12 core competencies identified by CLOC and summarized in this graphic:

  CLOC_12_Competencies_Pic1 Pic1_Copyright

All remaining sessions at each conference describe how best to execute against those competencies.  According to Jeffrey Franke, Assistant General Counsel at Yahoo Inc. and a member of CLOC’s Leadership Team:

The core competencies are the reference model for achieving operational excellence by in-house legal teams.  Legal operations professionals, working with their GCs and legal leadership teams develop strategic and tactical plans to create service delivery models (in-house, law firm, LSO, and tech solutions) to deliver the right quality of legal support at the right cost by executing against those competencies.  Each core competency is comprised of several sub-core competencies.  Until CLOC created the 12 core competencies, there was no comprehensive definition of legal operations.

Typically, legal teams focus on the 12 core competencies in a clockwise fashion – representing CLOC's operational maturity model.  Franke estimates that 60% of legal departments operate primarily at the foundational level, 35% at the advanced level, and about 5% at the mature level.  Franke says there are similar, observable patterns in the way in which legal departments evolve over time:

The parallel to operational maturity and the core competencies is functional maturity: we've found that legal ops teams mature (grow in size, scope, talent, and reporting structure) in a similar way over time as legal departments understand what it takes to execute at the highest levels.

CLOC’s web page also lists a number of crowd-sourced initiatives based on the idea that:

When experts from across the legal ecosystem work together to take on the biggest challenges of our industry, almost anything is possible… The CLOC initiatives… each led by a CLOC member, draw on contributions from law firms, alternative legal providers, technology companies, and law schools.  The result – best in class solutions that shape the present and the future of our industry.

While some initiatives are of primary interest to in-house law departments (such as the “Legal Ops Career Skills Toolkit”), others are of substantial interest to law firms, starting with CLOC’s LPM initiative, which will be described in Part 2 of this series.

      


The Best Way to Increase Firm-Wide Commitment to LPM: A Panel Discussion by LPM Champions

By Tim Batdorf and Jim Hassett, LegalBizDev

The single most difficult step in implementing a firm-wide LPM initiative is getting the attention, interest, and buy-in of busy lawyers. 

In more than a decade of working with law firms of all sizes to implement LPM, we have consistently found that the most effective way to generate interest is to conduct a carefully structured panel discussion where LPM champions discuss their success stories and how other lawyers at the firm might benefit from LPM. 

(Note: This approach assumes that the firm already has at least a few influential partners who have succeeded in increasing client satisfaction and/or profitability by increasing efficiency and applying LPM.  If that is not the case, the panel discussion must be preceded by a one-to-one coaching program or other initiative to develop the first LPM champions.) 

The reason that a panel discussion is so effective is that the testimony and proven experience of lawyer colleagues is much more effective and convincing than anything any outside expert could say.  Whether the panel discussion is featured at a retreat, or simply the basis for a lunch meeting for a small group, the keys to success are:

  • Pick the right participants based on both their presentation ability and their influence with colleagues in attendance.
  • Identify a skilled facilitator to organize and conduct the panel discussion to assure that the participants focus on benefits rather than getting lost in the details. (Note: It may be best to hire an outside consultant to facilitate the panel discussion.)
  • Decide whether the facilitator should be an outside expert or an internal staff member.
  • The session should be planned with a clear, concrete, and measurable goal, such as:
    • Identifying volunteers for LPM coaching
    • Increasing the use of internal LPM staff and resources
    • Increasing the use of on-line just-in-time training LPM tools
  • Hold one or more brief preparation meetings or pre-calls with the champions to review the goals of the session, what they will each talk about, and how long they will have for each section. (Note that this should NOT be a practice session of exactly what people will say.) 
  • Encourage all participants to keep the tone of the discussion positive and upbeat and avoid any negative comments about other lawyers or practice groups within the firm. Avoid any controversial law firm subjects.
  • Structure the panel so that no champion speaks for more than 5 or 10 minutes at a time. Make sure that all of the champions have a chance to speak and share their stories. 
  • Determine whether participants will want to display slides or samples of spreadsheets and other LPM tools while they speak.
  • Consider how best to arrange the order of the participants. As every lawyer knows, it’s always best to make a good first impression and present a strong closing.

The facilitator’s primary role is to assure that panelists consistently focus on LPM benefits, such as:

  • Increased new business and profitability
  • Meeting client needs for cost reduction
  • Meeting client needs for predictable budgets
  • Greater client satisfaction and better client relationships
  • Improved alternative fee arrangements (AFAs)
  • Improved definitions of scope
  • Improved communication

These questions can be used to help structure the panelists’ discussion: 

  • What were your goals and expectations when you started working with LPM?
  • What have you done differently with clients and/or your team as a result of LPM?
  • What specific benefits resulted from LPM – for clients, you, your team, and the firm?
  • Would you recommend LPM to other lawyers in the firm? If so, why? 
  • Any thoughts about which lawyers might benefit the most from LPM?

In the preparation meeting or pre-call, the facilitator should circulate a detailed agenda to all panelists.  These are guidelines at best, and the facilitator is ultimately responsible for managing the time. 

The sample agenda below was used at a firm retreat for a 60-minute session that ran from 10:00-11:00 am and included four panelists and audience questions.  Some firms hold a longer, 90-minute session and have three to five panelists, including the managing partner.  Some firms also extend the optional section (shown starting at 10:07 below) if an external facilitator provides slides discussing how other firms are using and benefitting from LPM.

Approx. start time

Total minutes per section

Who

What

10:00

2

Facilitator

Overview of the goals of the session, panelist introductions

10:02

5

Managing partner

Background on why LPM is important to the firm, current plans and initiatives, and why the firm is making this commitment, including any specific examples that highlight the need for LPM (e.g., client requests for LPM)

10:07

3

Facilitator

(OPTIONAL) Expand on key concepts mentioned by the managing partner, such as the definition of LPM, why it is important, and a list of firm clients that have requested LPM (ideally a slide showing their logos).

10:10

20 total

(5 mins each)

Four panelists

Each panelist answers these questions:

  • What were your goals and expectations when you started working with LPM?
  • What have you done differently with clients and/or your team as a result of LPM?

Each lawyer will focus on benefits such as increased client satisfaction and/or profitability.  (Sample templates used by each lawyer could be projected in the background while they speak, unless the templates are distracting or give an impression that LPM is overly complicated.)

10:30

20 total

(5 mins each)

Four panelists

Each panelist answers the following questions:

  • What specific benefits resulted from LPM – for you, your team, for the firm?
  • Would you recommend LPM to others in the firm?   If so, why? 
  • Any thoughts on which lawyers would benefit the most from LPM?

10:50

3

Managing partner

Summarizes lessons learned about LPM so far, and the importance of LPM to the firm in the future.

10:53

7

Facilitator

Questions from the audience.  In case there are only a few audience questions, the facilitator should be prepared to ask panelists additional questions, based on what was discussed already, or to end the session a few minutes early.

11:00

 

Facilitator

END

On the day of the panel, the facilitator must:

  • Monitor the time each lawyer takes.
  • Coordinate with the panelists to use a subtle signal (e.g., passing a note) if it is necessary to send a message like: “Please finish this answer soon so we can go on to the next question.”
  • Constantly bring the conversation back to LPM benefits whenever needed.
  • Make appropriate judgment calls. For instance, if the lawyers’ stories are engaging, allow them to go a bit longer and have fewer audience questions.  Be willing to flex by focusing on where the audience is most attentive.
  • End the session on time or a few minutes early.

Note:  This post was adapted from a tool in the digital 5th edition of the Legal Project Management Quick Reference Guide and is not available in any LegalBizDev books.

      



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