In July 2017, general counsels from 25 major companies announced a data sharing plan to gather intelligence on legal fees, billing rates, and other legal matter management questions. The objective is to measure what is really working and what is not. How can clients improve outcomes and reduce legal spend? How can improved legal matter management help?
Clearly law firm leaders are anxious. As reported in the American Lawyer, David Rueff, a partner and legal project management officer at Baker Donelson, which has invested heavily in legal project management, reports that this highly anticipated data might be a “wake-up call for all of us. It’s the next phase in a dramatically changing market.” As noted in the same article, Chris Emerson, of Bryan Cave, while interested in hearing more, expressed concern about the quality of the data. And, Bill Henderson, a professor at Indiana University Maurer School of Law, noted that there are going to be winners, losers, and opportunities.
In this blog, I will explain why companies are finding it hard to get the results that they are seeking from their law firms. It doesn’t matter whether we call it matter management, legal project management, or LPM, clients want lower costs. So, why is that so hard?
Confusion abounds on what legal project management is.
There are many techniques, strategies, methods, and conflicting ideas about project management. Some phrases or words, known by project managers, are Gantt charts, lean thinking, Six Sigma, Agile, Scrum, Kaizen, Prince2, and Kanban. What are these? Will any of these methods, frameworks, or approaches tell you how much more a partially completed legal matter is going to cost? Will any of them help you figure out what to do when a valuable lawyer(s) leaves your firm? Where is any of this LPM stuff working well, and where is it not working well?
Eversheds Sutherland was an early leader in the LPM movement, and today promotes LPM as a “process similar to that which construction firms and other businesses use to define a project, set out its goals, formulate the necessary interim steps, and make sure steps are monitored throughout.” As I will later explain, the process used by many construction firms is badly suited for legal matter management.
Seyfarth Shaw claims a competitive advantage using SeyfarthLean®, which “combines the core principles of Lean Six Sigma process improvement with project management and tailored technology solutions.” While I’m all in favor of lean thinking, it’s important to remember that humans are not machines. You can read my blog on the benefits and flaws of applying Six Sigma principles to work done by humans, here.
Baker McKenzie estimates that “our use of alternative legal services…, our e-discovery platforms and our use of legal project management are already bringing in more than $20 million in annual revenue.” As much as I would like to believe that legal project management helps, it is important to recognize the impossibility of truly measuring causality in an increasingly complex and multi-faceted world. Lawyers, clients, project teams, and law firms cannot be put in petri dishes and analyzed like cancer cells. Even when the data from this GC project are announced, I will be cautious in my analysis of the conclusions.
Managing a legal matter like a construction project doesn’t work.
As my regular readers know, I take strong exception to the notion that a legal project can be managed like a construction project. Consider this:
If you are building a house, you have to dig a hole before you can pour the foundation. You have to put up the studs before you can staple in the wiring. And you have to hang the sheetrock before you can paint. You can estimate time, labor, materials, and costs. And at the end of each month, you can walk around the job site and estimate the progress you’ve made. You can actually count the windows that have been installed, or the walls that have been painted. It won’t be perfect, but it is observable.
Construction lawyers will confirm that legal matters are not like construction projects. While transactional legal matters are more predictable than litigation, even there, changes can come down the pike unexpectedly. Lawyers learn from their experience, from the actions of opposing counsel and judges, from changing demands from their clients, and from new decisions rendered, often in other matters. A better course of action can easily emerge in the middle of any matter. The deliverables are often contracts, prospectuses, merger agreements, leases, legal briefs, depositions, filings, or opinions. No one can look at a partially completed deliverable and really estimate progress, certainly not any kind of reliable percentage of the work that has been done.
Suppose, for example, you are writing a brief. First, a team of smart lawyers must agree on what that brief should say and how the brief should be written. Second, the details can change every day, particularly as clients have their say. Third, the brief must actually be written and edited to its final form. You can count on completion taking longer than you have predicted. And the more people who need to approve the final version, the longer it will take.
You cannot look at the work that has been completed and accurately estimate the percent complete, and in traditional project management, that is a requirement. Not only is it a requirement, traditional project managers spend a lot of time and energy making judgments about their projects using badly flawed data.
Additionally, lawyers often work on many matters at the same time. They have numerous commitments, have to balance the needs of different clients and competing priorities, and can be immediately called into something more pressing. They can’t give you a schedule of their availability for the duration of a matter. And yet, to manage resources using the traditional construction approach requires that team members commit to a schedule of availability. That’s the way the software is built, and it just doesn’t work on legal matters.
LPM is complex project management with a few extra wrinkles.
Many lawyers are familiar with the term complex litigation. They are likely not familiar with a relatively new and expanding conversation around the difference between complex and complicated projects. Complicated projects are typically linear, predictable, and can be modeled with logic. Complex projects have too many factors involved to be predictable and often evolve in response to real-time decision-making. Building a bridge is a complicated project. Designing and testing a new drug is a complex project. In today’s rapidly changing world, complicated projects are becoming more complex and the lines are beginning to blur.
The differences between complicated and complex projects are profound. More importantly, the differences explain why law firm clients are struggling to see the results that they want from their law firms. Many law firm clients engage in complicated project work. That is their mindset. Lawyers bring a different mindset to the table with their understanding of complex projects.
Legal matters have several wrinkles that other complex projects don’t have. For starters, in litigation, there is an active opponent throwing ammunition at you during the course of the matter. And then, there is the court system, where judges can, at any time, issue rulings that might impact your strategy or odds of winning. In sizeable legal matters, you may have large numbers of interested stakeholders and legal jurisdictions, which add another layer of difficulty to your project. It’s not lawyers who make legal project management more difficult. It’s the large numbers of stakeholders, ambiguities, complexities, and changing realities that make it harder.
Offices of general counsel, and their employers, are familiar with the project management efforts taking place in their own organizations. They have increasingly insisted that their law firms adopt some version of project management. Yet, few people grasp the nuanced distinctions between complex and complicated projects and the impact of those distinctions on how we manage legal matters, technology projects, construction projects, and other business projects.
Law firms are conservative and resistant to change.
Law schools train lawyers to look backwards. That’s where the precedents are. Judges look for the narrowest grounds on which to decide cases on which the lawyers work, so lawyers cater to what judges want. Corporate lawyers, putting together deals, have to consider the tiniest issues that could render a deal invalid when they craft documents. All of this contributes to their conservative nature. Clients, on the other hand, are always thinking ahead, looking at the big picture, and taking risks. They are not conservative.
Years ago, law firms billed on a “value received” basis. When the case was over, the winning clients paid big and the losing clients paid much less. But no one knew what the final bill would be until the case was over. Clients pushed the lawyers to change to the billable hour model, because it gave the clients more predictability and avoided the shock of huge expenses coming due at the end. On longer matters, which might last for years, it allowed law firms to get paid before the conclusion of the matter.
Law partners with gray hair likely remember, without fondness, the TQM movement, which was largely thrust on them by their clients. For younger readers, Total Quality Management (TQM) was an organizational effort during the late 1980’s and early 90’s to improve the quality of work being done. The effort was eventually supplanted by a focus on Lean manufacturing and Six Sigma. So, law firms today may well be inclined to simply wait this whole LPM movement out, and hope it disappears like the other fads did.
Lawyers don’t want it. OR, they think they are already doing it.
Seasoned lawyers have been managing legal matters for years. Many of them know how to run a legal matter. They do it intuitively, based on years of experience. But, they don’t often make the implicit very explicit. They assume that the client understands why someone needs to research jurisdictional matters early. They don’t take the time to explain value to the client. They don’t write down the risks on the project, quantitatively and qualitatively assess them, and address the top-ranked risks in a disciplined way. They aren’t measuring costs on a week-to-week basis and thinking about how to save the client money. But clients want those things.
Furthermore, lawyers don’t really want to be project managers. They don’t want to sit in classrooms being trained to be project managers. And I don’t blame them. I wouldn’t want to go into the legal profession, and then find out that I needed to be a project manager.
Project management is about details – LOTS and LOTS of details. It’s about managing costs, quality, deadlines, communications, people, risks, problems, meetings, contract requirements, notes, decisions, lessons learned, and a host of other particulars. I know a lot of lawyers, but I don’t know a single one who really wants to manage all of the many details associated with the average project. They want to practice law.
So, if clients really want improved legal matter management, is there any hope? My answer is YES! Over the next two weeks, I’ll give you some suggestions. And, in the meantime, if you are interested in legal project management, look me up on LinkedIn – here. I’m always seeking to expand my network.