The latest post from Jim Hassett’s blog Legal Business Development.
Stuart J.T. Dodds is director of global pricing and LPM at Baker McKenzie, one of the largest law firms in the world, with over 4,500 lawyers and 77 offices in 47 countries. Dodds is widely recognized as a leader in linking LPM to business development, and he is the author of two related books published by the American Bar Association: Smarter Pricing, Smarter Profit, and Pricing on the Front Line.
In a recent interview, Dodds noted that
In fact, Dodds says, members of the senior project manager team that he heads (including over 40 project managers) typically become directly involved in the pitching process and interact with prospective clients as part of the business development team.
When the firm begins work on a large client matter, a project manager is assigned to work alongside the attorneys. For smaller matters, the firm relies on a training program that it developed and executed in-house, in which all of its attorneys have been trained in project management to a high enough level that they can handle the basics of budgeting and planning, with occasional assistance from a project manager. As Dodds says, in those instances the use of LPM is “attorney-driven but expert-supported.”
Interestingly, as director of global pricing and LPM, Dodds reports to the firm’s Chief Marketing Officer. His 40 project managers are an integral part of the global firm’s nearly 400-person-strong marketing staff.
This type of integration with the marketing department is currently unusual, but may reflect a growing trend. In 2015, we published an article related to this topic in Bloomberg BNA’s Corporate Counsel Weekly™ entitled “Why Law Firms Must Change Their Marketing Priorities.”
The article started with an account of how Kramer Levin, a firm with over 350 lawyers in New York, Silicon Valley, and Paris, hired Jennifer Manton as its Chief Marketing Officer in 2014 in part because of her experience in using LPM to meet client demands for improved communication and efficiency. One of the first things she did after starting at the firm was to arrange for seven lawyers to complete LegalBizDev’s one-to-one LPM coaching. This pilot program led to increased confidence and ability to provide better price estimates, client communications and more. Since then, Kramer Levin has gradually expanded this program with more coaching and other LPM initiatives.
However, our Bloomberg article also noted that
It would be nice to report that since that article was published the approach of legal marketers has changed rapidly, but the phrase “rapid change” is rarely found in articles about law firms.
In fairness, LMA has recognized the importance of these issues by organizing an annual “P3 conference” (focusing on the “three Ps” of pricing, project management and process improvement, all of which are included in our definition of LPM). However, to see how little integration has occurred to date between marketing and LPM, one need look no further than the titles of the speakers at this conference. Of the 69 speakers at the most recent P3 conference, only 10% had titles that included words like marketing, business development or sales.
Nobody has ever said that implementing LPM will be fast or easy. But the firms that are effective today in changing lawyers’ behavior, delivering more value, and meeting client needs will be tomorrow’s leaders in business development.
The best way to develop new business is to give clients what they want. And the data on what legal clients want is crystal clear. In its most recent Chief Legal Officers Survey, Altman Weil asked the question “What would you most like to see from outside counsel?” The top three answers were greater cost reduction (53%), improved budget forecasting (43%), and non-hourly based pricing structures (36%).
All three are related to legal project management, so you could say that the top three things legal clients want these days are LPM, LPM, and more LPM. The answers to this question in the Chief Legal Officers Survey have been supporting this same conclusion for years.
To put it another way, current clients and new ones are choosing law firms at least in part because of the firms’ ability to deliver value to them by increasing efficiency. LPM professionals are extremely aware of these client needs and have become increasingly involved in marketing and business development.
For example, at Lathrop Gage, a firm with 300 lawyers in ten offices from Los Angeles to Boston, Dave Clark was recently named the firm’s full time LPM Partner. Before taking on this role, Dave was a practicing IP litigator for over 30 years. He has completed LegalBizDev’s Certified Legal Project Manager® program, and he is now collaborating with a team of analysts and managers to help the firm’s attorneys increase client satisfaction while maintaining profitability.
In terms of the implications for business development, Clark notes that:
He went on to explain that:
Clark’s conclusions are quite consistent with those of the majority of AmLaw200 managing partners, chairs, and others we interviewed for the book Client Value and Law Firm Profitability. Here are typical comments from three of the firm leaders in our survey:
At Ballard Spahr, a national firm with over 500 lawyers, Melissa Prince is the Director of Pricing and LPM, and another alumna of our Certified Legal Project Manager® program. Whenever an RFP comes in to Ballard Spahr, Melissa or a project manager in her department participate in the initial phone call that is run by the business development manager who is coordinating the RFP response.
“They look to us for input from a pricing, legal project management, technology and client value perspective. We work well with Business Development and Marketing, and our Chief Marketing Officer is one of our biggest advocates and supporters. She understands that what our team is doing in many cases sets us apart from our competitors. She advocates to our partners that have a seat at the table when we are selected for the final rounds of RFP meetings, and we have received very favorable responses from our clients,” says Prince.
Like Clark, Prince was formerly a practicing lawyer. She oversees a pricing and legal project management team that focuses on a variety of aspects of LPM within Ballard Spahr, including pricing, process improvement and practice innovation to help lawyers come up with more efficient ways of practicing law. She reports to the firm’s managing partner of finance and operations and to the firm’s executive director.
“Our partners have been amazingly responsive to our team, which has been in large part driven by the support that the firm's senior management, departmental leadership and Board has given us,” says Prince. “They understand that the legal marketplace is changing and the firm needs to be willing to change with it. It's really exciting to see, and there is a strong feeling at the firm that we are in this together for the benefit of our clients.”
As issues of project management and efficiency have come to the fore in major corporations, a new type of corporate position, that of Director of Legal Operations, has emerged – and that too has had an impact on the way in which clients select their attorneys.
Writing in 2015 in Bloomberg Law’s Big Law Business, reporter Susan Hansen noted that the position of Director of Legal Operations, which often focuses on process improvement and efficiency in getting legal work done for a company, started in Silicon Valley and has spread quickly in corporate America.
Ballard Spahr’s Prince is well aware of this trend, in which professionals in corporate legal departments have a great deal to say about efficiency and about the selection of outside counsel on that basis:
To be continued in Part 2....
According to Altman Weil’s recently released 2017 Law Firms in Transition (LFiT) survey the top two trends that are transforming the legal profession are “More price competition” (95% of the 386 managing partners and chairs who participated in the survey said this is a permanent change) and “Focus on improved efficiency” (94% said this is permanent).
So what are law firms doing about these fundamental changes in the marketplace? Not nearly enough.
When the LFiT survey asked “Has your firm significantly changed its strategic approach to the efficiency of legal service delivery?” only 49% said yes. (20% said it was “under consideration,” and the remaining 31% replied with a flat no.) These proportions have been surprisingly steady for the five years that Altman Weil has been asking this question. It seems that about 20% of firms have been considering change since 2013, but they still haven’t done anything about it.
Could the slow rate of change reflect the fact that clients don’t really care about efficiency?
No, that’s not it. In Altman Weil’s most recent Chief Legal Officer survey, the number one service innovation that clients wanted was “greater cost reduction.” There are only two ways to meet this fundamental requirement: become more efficient, or cut into your prices and profits with discounts. (These days, most firms seem to be choosing deep discounts, sometimes to the point of what consultant Bruce MacEwen has called “suicide pricing.”)
Could the failure to act reflect a belief that the pace of change will slow down, or that it doesn’t matter?
No, that’s not it either. In fact, 72% of the LFiT respondents believe that the pace of change in the legal profession will increase (p. 2). The fact that more than half of all law firm partners are “not sufficiently busy” (p. 36) also suggests that the forces of supply and demand will continue to put downward pressure on prices. And in our research for the book Client Value and Law Firm Profitability, 85% of AmLaw 200 leaders said that firms will have a competitive advantage if they change more quickly.
When LFiT respondents were asked “how serious are law firms about changing their legal service delivery model to provide greater value to clients?” the median rating was just 5 on a scale from 0 to 10 (p. 11). If that’s not bad enough, clients think it’s even worse. When clients were asked the same question in the Chief Legal Officers Survey, their median rating was a distressing 3 out of 10 (p. 23).
When directly asked “Why isn’t your firm doing more to change the way it delivers legal services?” the number one answer was “partners resist most change efforts” (65%, see p. 14).
Summing it up: Clients want lower prices; more than 9 out of 10 law firm leaders believe there is a need to become more efficient; but less than half of law firms are doing anything about it. These results may be alarming, but for grizzled law firm veterans, they are not really surprising.
As Eric Seeger and Tom Clay, the authors of the LFiT, noted on the first page of their report (p. i) “Law firms are slowly changing [but]… we see firms making only cursory investments where they should be aiming for broader, deeper transformation. And still many partners resist change in all its forms.”
But wait, the slow pace of change is not the only problem. It gets worse. When law firms do try to change, they often employ the wrong tactics.
This year, for the first time, Altman Weil listed eight of the most common tactics to increase efficiency, and they asked which ones each firm was pursuing. More importantly, they asked which tactics “have resulted in a significant improvement in firm performance?” The graph below (adapted from p. 57) summarizes their findings:
Note that the two tactics that firms are using most often (knowledge management and using technology tools to replace human resources) are among the least likely to actually improve performance. And the two that have had the greatest impact (shifting work to contract lawyers and to paraprofessionals) are among those least used. Clearly firms should reconsider their priorities.
If you study the graph above closely, you may also notice another fact that supports an argument we’ve been making for years: project management training finished dead last in effectiveness. In 2010, many firms first became aware of LPM when one AmLaw 100 firm got a lot of headlines by training every partner in their firm. Lawyers love precedent, so that led to a fad of LPM training. As explained in a post in this blog we here at LegalBizDev refused to participate in this fad, and declined to bid on RFPs that took this approach. We knew from our two decades in the training business that it would simply not work. As noted, in our recent posts on the “Top five ways to increase LPM results”:
That’s why for years we have recommended that firms start with one-to-one coaching to solve problems that lawyers care about and to produce behavior change and quick wins. These tactics have been proven to overcome the partner resistance which is slowing so many firms.
While this post focuses on efficiency data, that’s just the tip of the iceberg of the 124 page, free 2017 LFiT report. The report provides a gold mine of additional data on the key topics that law firms need to focus on to prosper in the current climate, including profitability, staffing, and growth.
Many of these findings should affect your strategy. To cite just one example, the tactic that law firms rely on most to improve pricing – developing data on the cost of services sold – is also the least likely to improve firm performance (p. 62). The tactic that is most likely to improve performance is also the one used least often: adding a pricing director or assigning pricing responsibilities to a current staff member.
As Seeger and Clay summed it up (p. iv):
Full disclosure: LegalBizDev is a strategic partner of Altman Weil, and we specialize in the very types of pilot programs they recommend.
3. Publicize successes within the firm
The lawyers who achieve quick wins often become internal champions who spread the word to their partners. This is most effective when the firm establishes procedures to publicize successes internally.
For example, Bilzin Sumberg, a Miami-based firm with more than 100 lawyers, started with a panel discussion at a retreat in which three lawyers who had completed LPM coaching described their experience and results. One of the three, Al Dotson, the firm’s Land Development & Government Relations Practice Group Leader, described how his LPM activities had led to new business in just a few months. Dotson’s practice involves public-private partnerships in economic development in south Florida. It includes securing land use, zoning, and other key government approvals and permits for large real estate developments. His clients loved the LPM approach because they use project management to run their own construction businesses. Within a few weeks of starting the coaching, one of his clients was so impressed by a legal project plan Dotson had produced that he asked Bilzin to take on a significant amount of new work.
Based on the endorsement of internal champions, the majority of Bilzin Sumberg's partners volunteered for and completed LPM coaching. They then proceeded to work LPM concepts into the very fabric of the way the firm operates, as described in a case study on our web page.
LPM successes can also be publicized in practice group meetings; through emails from firm leadership; at firm retreats, lunch and learns, panel discussions; and in many other ways.
4. Use just-in time training materials
In our three decades in the training and coaching business, the profession has changed radically. When we started our company in 1985, most training was built around classes and workshops. These days, it is far more common to use a just-in-time training approach which enables people to solve the problems they have, the moment they have them.
For example, if you need to use some unfamiliar features of Microsoft Word, it is very unlikely that you would consider taking a class. You will simply find the exact information you need in online help, precisely when you need it.
This approach has been applied in almost every field you can think of, including project management. When a research study of “The use of just-in-time training in a project environment” was published in the International Journal of Project Management, the authors pointed out that “Around 40% of the knowledge acquired in training is lost after a break of one month, rising to 90% after six months.” They then performed an experiment to show how the problem could be solved by providing access to tools that allow people to solve the problems they care about, just in time.
Full disclosure: LegalBizDev has developed the most complete library of tools and templates to support just-in-time training for LPM. This library has grown to over 400 pages in the fourth edition of our Legal Project Management Quick Reference Guide. Lawyers in our coaching and training programs have used this book to quickly find the information they need when they need it. Whether they want to define the scope for a new matter, plan a budget, increase delegation, improve client communication, or increase efficiency in other ways, the Legal Project Management Quick Reference Guide provides checklists and step-by-step advice to save lawyers time in finding the solution that best fits their client and their personality.
In 2017, LegalBizDev also began offering electronic versions of these tools and templates, which lawyers can access anytime, anywhere using their laptop, tablet, or phone. These online templates are frequently updated to include new tools that we are constantly adding to the collection.
A number of firms have also begun to develop their own custom tools, from budgeting spreadsheets to checklists for planning an alternative fee arrangement.
Firms that want to apply the just-in-time training approach to LPM must decide whether to “build or buy.” They can create their own complete library of firm-specific LPM tools and templates, or start from the foundation we provide with over 150 customizable electronic LPM tools and templates that provide step-by-step advice to solve the most common problems.
5. Assure continuous improvement by following up relentlessly
To retain current clients and find new ones, a law firm simply needs to be just a little better than its key competitors. The good news is that until recently that was easy, because other lawyers were not focused on efficiency. The bad news is that it is getting harder to beat competitors, as more of them focus on LPM. The bar is going up, and what was good enough to win new business last year may not work this year.
For example, one of the most interesting developments in LPM is the application of “Agile” approaches. In the traditional approach to project management, you start by creating a plan, including deliverables, deadlines and budgets, and then work your way to the end, one sequential step at a time. In contrast, Agile takes a more flexible approach to managing projects by constantly reviewing priorities and a team’s ability to respond to change rather than sticking to a rigid plan created before the work began.
Agile first emerged in software development, but it can be extremely useful in managing legal matters where deadlines, tasks, and even goals change frequently. Planning at the outset of every engagement remains important, but the ability to reprioritize tasks as further information becomes available is often critical to the success of legal matters. If you don’t know whether a case will be in court for years or settle tomorrow, a static plan simply will not work. Agile speeds up the change process with an iterative approach that seeks client feedback more quickly and uses it to maximize client value.
According to Jeff Sutherland, one of the founders of the movement:
[Agile is] based on a simple idea: whenever you start a project, see if what you’re doing is heading in the right direction, and if it’s actually what people want. And question whether there are any ways… of doing it better and faster. (p. 9)
Some of the tips Sutherland offers in his book Scrum: The Art of Doing Twice the Work in Half the Time run counter to the way lawyers have been trained to proceed. However, these tips can save an enormous amount of time in rapidly changing legal matters. To give you a sense of how Agile works, here are a few suggestions quoted from Sutherland’s book:
We predict that Agile will transform LPM over the next few years. Whether our prediction is correct or not, there is no doubt that LPM will require continuous improvement as the legal marketplace evolves.
To this day, some law firms are trying to identify a complete LPM solution before they take the first step. A committee is formed, monthly meetings are held and delayed, and months or years are devoted to analysis and debate before anyone actually does anything.
But the simple fact is that no one can possibly know what LPM will look like in ten years, or even in two years, because the legal profession is changing so rapidly.
Keeping up with these changes will require constant attention and management support. As a senior executive from one AmLaw 200 firm summed it up in our book Client Value and Law Firm Profitability:
I think that [LPM] will require a lot of work, and daily support from the top, not just lip service from the partner team twice a year. (p. 192)
In the last few years, many legal clients have been demanding greater efficiency and more predictable budgets. Law firms have responded by investing in legal project management (LPM) to increase client satisfaction and profitability. They have tried a variety of approaches to this evolving specialty, including LPM coaching, training, hiring LPM staff, and purchasing new software. Some of these initiatives have been quite effective in changing lawyers’ behavior, and some have not.
This two part series provides a high level summary of the five most effective ways to increase LPM results:
1. Focus on changing behavior and solving problems
In 2011, when the LPM movement was just getting started, the Association of Corporate Counsel and the American Bar Association published an account of a meeting “at which leaders of corporate and law firm litigation departments rolled up their sleeves and tackled the complex issues surrounding present day concepts of value in litigation.” After the meeting, the authors of a follow-up report emphasized that future progress will not be based on improved understanding or increased knowledge. Instead, “The challenge is change/behavior management.” It’s not a question of knowing what to do; it’s a question of actually doing it.
At about the same time, many firms started implementing LPM by launching large-scale education programs. Lawyers love precedent, so when one AmLaw 100 firm announced that it had trained all of its partners in LPM, a number of others jumped in to do the same thing. These training programs enabled firms to “check the LPM box,” write RFP responses praising their own LPM efforts, and put out press releases. What they did not accomplish, however, was to get many lawyers to change the way they practice law.
As the chair of one AmLaw 200 firm that invested heavily in LPM training put it in our survey Client Value and Law Firm Profitability:
Every shareholder and top level associate [in our firm] has had a full day of project management training. I’d like to tell you that they use it, but they don’t.(p. 193)
LPM requires partners to change the very way they practice law. And as the managing partner of another AmLaw 200 firm in our survey put it:
Project management is not natural to lawyers. We’ve always been trained to get the case done well to win, but now we also have to get the case done efficiently, and that is not part of the natural toolkit for most people. (p. 191)
It is not exactly news that education does not necessarily lead to behavior change. Taking a workshop about how to lead a healthier life by exercising regularly, losing weight, and eating more vegetables does not mean that you will actually do any of these things.
The key to getting started in changing behavior throughout an organization is to help lawyers solve the problems they face, such as living within a fixed fee budget or increasing realization. And the best way to do that is to first identify lawyers who are motivated to change, and then to coach them one-on-one to create quick wins.
2. Aim for quick wins to create internal champions
Lawyers are most likely to change their behavior if they are provided with convincing evidence that it is in their own self-interest. If respected colleagues say that LPM helped to make a fixed fee deal more profitable, or to avoid a write-down with a difficult client, they will listen.
As ALM Legal Intelligence noted in a survey entitled Legal Project Management: Much Promise, Many Hurdles (ALM Legal Intelligence, 2012, p. 17), “The quicker there are demonstrable positive benefits, the faster other partners will take notice.” (p. 17)
The value of quick wins in changing behavior has also been shown in many other professions.
A few years ago, John Kotter published a Harvard Business School Review article entitled “Leading Change: Why Transformation Efforts Fail,” summarizing a ten-year study of more than 100 companies. Most of their change efforts had failed, and Kotter outlined eight phases that were necessary for success: generating a sense of urgency; establishing a powerful guiding coalition; developing a vision; communicating the vision clearly and often; removing obstacles; planning for and creating short-term wins; avoiding premature declarations of victory; and embedding changes in the corporate culture.
Kotter, who is now a Professor Emeritus at Harvard Business School, went on to refine these ideas in a number of publications, including the book Leading Change, which TIME magazine listed as one of the "Top 25 Most Influential Business Management Books" of all time. According to Kotter (p. 123), short-term wins:
When LegalBizDev coaches lawyers in LPM, we look for the low hanging fruit that makes it easiest to generate short-term wins such as better budget control, improved client communication, or negotiating changes of scope.
In more than three decades in the training business, LegalBizDev has found that the single most important factor in success is selecting the right people to be trained. This is particularly critical in an area like LPM, where there is resistance and skepticism about changing behavior.
We recommend starting with lawyers who are open to new ideas and who have the most to gain. That could be the key partners who are responsible for new alternative fee arrangements. It could be relationship partners who are worried about protecting business with key clients that are looking for greater efficiency and increased value from their outside counsel. It could be an entire practice group that is considering new checklists, templates, and processes to improve its competitive position.
Experience has shown that our training pays for itself several times over by enhancing client relationships and profitability. That success creates a new group of champions within the firm who will spread the word that legal project management can help serve clients better.
The exact individuals and groups will vary from firm to firm. But in every case, the best lawyers to begin focusing on LPM are those who are (i) open-minded about change and efficiency, (ii) in a position to benefit when LPM makes a difference, and (iii) influential enough to credibly spread the word of their success.
To be continued in Part 2.....