The latest post from Jim Hassett’s blog Legal Business Development.
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:“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:
Whatever tactics law firms decide to pursue, Altman Weil’s report (p. viii) concludes that law firm leaders must “pick up the pace:”
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.
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:
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:
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:
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:
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:
Baxter went on to describe how CLOC’s influence is being noticed within the legal industry:
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.
According to a 2017 Inside Counsel article about CLOC:
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:
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:
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?
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:
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:
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 is – and 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 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:
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:
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:
CLOC’s web page also lists a number of crowd-sourced initiatives based on the idea that:
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 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:
The facilitator’s primary role is to assure that panelists consistently focus on LPM benefits, such as:
These questions can be used to help structure the panelists’ discussion:
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.
On the day of the panel, the facilitator must:
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.