The latest post from Jim Hassett’s blog Legal Business Development.
Livia Kiser is a Chicago-based partner at Loeb & Loeb who represents defendants in consumer class actions, primarily those that relate to claims by consumers of a defect or a false claim about a product. She also reviews product advertising in advance to counsel clients on their advertising and what is likely to be a “red flag” for plaintiffs’ counsel.
Her LPM coaching, with Michelle Stein, focused on the litigation side of her practice.
“This training has made me more cognizant of how to create and implement a realistic budget on every matter, even one that can seem historically hard to quantify or to control, such as a class action brought by a plaintiff,” Livia says. “Even for cases which are hard to predict, I have learned how to provide more accurate budgets, not only because it is important for internal business reasons, but these days clients understandably expect it.”
“I am very interested in strategies for how we can stick to a budget. Will this particular task really take ten hours? Should we budget it for that amount of time? These are the kinds of questions LPM causes you to consider,” Livia says.
Livia says that as a partner and lead counsel, she is also required to get involved in planning the time of other attorneys such as associates. She says many associates don’t think about these issues until they become partners. When the issues become relevant to them, they’re not prepared. LPM, Livia says, is not only about numbers and budgets; it’s about human beings.
Livia uses Excel to prepare budget documents – just garden-variety Excel that she’s already familiar with. She receives weekly updates on her projects from Stephanie Flitcroft and also speaks with Stephanie at least once a week, if not more often.
Stephanie reports that “We provide many ad hoc reports so that lawyers can compare budgets to actuals along the way. If there is a variance, they can determine if it was caused by a change of scope or whether some timekeeper simply didn’t understand the requested task. This allows them to deal with issues before they get too far off course.”
Livia says Stephanie and her team are involved both in ongoing client matters and in pitching new matters. They are also extremely helpful in working on alternative fee arrangements (AFAs). “We cost out all the scenarios that make sense before we propose an AFA,” Livia says, “and Stephanie helps provide the assumptions and ideas that we need.”
The more lawyers take this approach, the easier it gets. As Andrea Danziger explained, “We endeavor to share the actual tools and templates that have come out of the coaching program, as well as others that we’ve developed for proposal bids. This has been a grass roots effort. We’ve tripled the number of people in the program since you first wrote about it, and we want to keep going, because the more lawyers incorporate LPM into their matters, the more the ideas spread.”
What does the future hold? According to Deputy Chairman David Schaefer, “I think legal project management is going to become one of the core business skills of running a law firm. Even in situations where we still bill hourly, every client wants to know: How much is this going to cost? How long is it going to take? What’s involved? It may take a few years, but it will become part and parcel of how we do business. Lawyers will be comfortable having those discussions. They will expect it. And I think that you’ll see an increasing growth within our firm, and other firms, of non-legal professionals who will take a bigger and bigger portion of these tasks under their wing.”
Schaefer has also seen that the benefits of LPM go not just to clients, but also directly to the firm’s bottom line: “LPM has already protected our profitability in very significant ways. These days, lawyers are more prepared to provide accurate bids. We have better data and more reliable information. In the past, when we looked at a class of cases or of deals, and there was a fairly significant range between the high and the low, we really didn’t know why we had such a wide spread. Now we understand what the key considerations are. We can look for those at the outset of a matter, and try to address that with the client, rather than letting it catch everybody by surprise. And so I think that LPM has made our processes much, much better.”
Ross Emmerman is a Chicago-based corporate and M&A lawyer at Loeb & Loeb who was coached by Fred Kinch. Ross says that although many attorneys at the firm start out by considering LPM to be just one more thing that management wants them to engage in, Loeb & Loeb’s National Business Manager Stephanie Flitcroft has “taken the laboring oar” and helped the firm add a great deal to its capacities through the use of LPM. He is in constant touch with Stephanie and says he uses LPM tools at least twice a week.
Ross knows that the firm uses ENGAGE “behind the scenes,” but he works with easier to use Excel spreadsheets prepared by Stephanie. (A sample format for a typical spreadsheet for a sell-side M&A transaction appeared in a previous post.)
From a practice standpoint, the most important aspect of LPM for Ross is that his sophisticated clients “understand that changes in scope are inherent in transactions” but matters still need to be on budget and on time. In comparing an attorney’s role with LPM to a general contractor’s role to a construction project, Ross mentioned that no builder would tell a prospective homeowner in advance that a new home would cost anywhere between $300,000 and $600,000; that is much too large a range and does not contain any analysis. A home builder would not be expected to have enough data to hit the number on the spot before all the variables were known, but bids would be expected to fall within a much smaller range, such as $420,000 to $450,000. In today’s marketplace for legal services, the same is true for predicting legal costs.
The essence, according to Ross, is not whether a firm uses Excel or ENGAGE or other software. What matters is the data that a firm retains and how the firm tracks and uses that data to come up with a reasonable advance analysis of the cost of each phase of a project. As a partner, he says, “I am accountable to the client,” and his ability to provide accurate estimates in advance is very helpful to creating and maintaining client relationships.
During the coaching, he not only developed more detailed budgets himself, but also sent out budget hours by task to the team members at the start of matters to get their input and buy-in. In the future, he expects that the team members will become accustomed to this process and may even be call upon to set the initial budgeted cost and time estimates.
Back in the old days, he says, lawyers simply did this by the seat of their pants, and no one knew where you were going with the deal or its costs. That is no longer acceptable. One of the reasons that better budgeting was not possible years ago was that firms did not retain their data for this purpose or kept their data in a “big lump,” with no effective way of breaking it down. Now Loeb & Loeb and other leading firms retain their data in a form that can be broken up into pieces as needed. They can then use the data “quickly and intelligently.”
Ross joined Loeb & Loeb in March 2013, and in his previous firm he had received LPM training. But LegalBizDev’s coaching was able to take him “from theory to practice.”
According to Andrea Danziger, Loeb & Loeb’s director of business development and practice management, a number of people who went through the program had similar experiences: “Once they started working with a coach, they realized right away, I’ve been doing LPM all along. But now it’s more methodical and sophisticated, supported by new resources, including business managers, budgeting software, and the various reports that we run. That makes lawyers much more confident to explain to clients how they will use LPM to manage a matter within budget, and communicate effectively about mutual expectations.”
Last year, I wrote Part 1 of this series about our pilot test of legal project management coaching at Loeb & Loeb LLP a law firm with more than 300 lawyers in Los Angeles, New York, Chicago, Nashville, Washington, DC, Beijing and Hong Kong. At the time, I did not know that there would be a Part 2.
Since then, Loeb & Loeb has selected a total of 19 lawyers to complete our two to three month coaching program, with more on the way. They have also expanded the role of their internal business managers in LPM, refined their use of ENGAGE software, and even added a section to their firm web site describing Loeb & Loeb’s commitment to LPM.
One reason they are expanding the program is that clients are demanding LPM in increasingly sophisticated ways. According to Andrea Danziger, the firm’s Director of Business Development and Practice Management:
Why do clients care about LPM? According to the firm’s Deputy Chairman, David Schaefer, one reason is that:
Miriam Cohen is a finance partner in Loeb & Loeb’s New York office, whose practice primarily involves representing lenders on secured loans. She recently completed a three month program with LegalBizDev coach Michelle Stein.
The most important advantage of LPM, in Miriam’s view, is that it helped her to come up with a system to obtain and present information for clients quickly and readily, so that clients understand the entire array of time and budgeting data for a project -- based on a single document.
“I can now create this quickly for any client,” she says. “[Clients] just want the bottom-line numbers, and there are so many assumptions that go with the numbers. I just plug in the numbers and I have something that a client can understand. If you don’t get them the data fast enough and in this manner, they will give the work to someone else.”
Miriam says this applies to existing clients, who, when they need a new project done, will usually obtain three bids – one from Loeb & Loeb and two from competing law firms. Since the borrower typically pays the bill for lender’s counsel in these transactions, both the borrower and the lender have an incentive to keep the bill low and to know in advance how much it will be.
The document that Miriam prepares is a budget worksheet that contains all the assumptions regarding the upcoming transaction – staffing, time, complexity, and so on.
“For example, the assumptions I typically make in preparing the document,” Miriam says, “include that borrower’s counsel will be competent and can deliver an appropriate product and that there will be no more than four turn-arounds of the lending documents before they are final.”
In the past, Miriam says, most lawyers made these budgets and assumptions “on the back of a napkin” but not surprisingly that process didn’t consistently result in accurate estimates.
These days, much of the calculation at Loeb & Loeb is done in the background by Stephanie Flitcroft, a national business manager working out of the firm’s Los Angeles office. When Miriam needs information and budgets based on past experience, Stephanie and her team use ENGAGE to find the best information and send Miriam the info she needs. Stephanie prepares the output in Excel, and Miriam uses it in a Word table that lays out the budgeting and task information in a logical fashion. When they win the work, Stephanie also provides weekly spending reports.
The LPM coaching, Miriam says, “helped me to create this document where everything is in one place. Now, no client should be surprised by the bill when they receive it.”
In addition, Miriam says, everyone in her group uses standard task and billing codes now.
“This is a great way to force discipline from my team. I created my own time and billing codes, based on the type of work that the team does, and this accurately reflects their time.”
That’s a great example of the value of improved communication, Stephanie says:
For Miriam, LPM has already led to new business as a result of the more systematic approach to engagement letters, and the increase in client confidence in budget estimates.
What gets measured gets done. Keeping a weekly list of how many hours you put into business development, and how many advances you achieved will help keep your business development effors moving forward. Tracking behavior works for people who are increasing exercise or changing their diet, and it will work for you when you develop new business.
The first Wednesday of every month is devoted to a short and simple tip to help lawyers increase efficiency, provide greater value to their clients and/or develop new business. For more information on improving results, see page 54 of my Legal Business Development Quick Reference Guide, which is now available in both paperback and Kindle editions.
You won’t get a second chance to make a first impression, so if your first legal project management (LPM) program is not well designed and executed, it may be quite some time before there is a second one.
We have consistently found that the most effective way to change LPM behavior and build momentum within a firm is for motivated attorneys to directly experience immediate benefits and then become internal champions who spread the word. And the most efficient way for lawyers to experience those benefits is to work one-on-one with a legal project management coach.
Who should be coached first? We recommend starting with the motivated: lawyers who are open to new ideas and who have the most to gain. They could be the key partners who are responsible for new alternative fee arrangements. Or they might be relationship partners who are worried about protecting business with key clients who are looking for greater efficiency. Or maybe an entire practice group is considering new checklists, templates and processes to improve its competitive position.
The exact individuals and groups will vary from firm to firm. But in every case, the best lawyers to start with are those who are open-minded about change and efficiency, in a position to benefit when it works, and influential enough to quickly spread the word of their success.
That’s the model we used when we began working with Hanson Bridgett a Northern California law firm with more than 150 attorneys that has launched many new initiatives to increase client satisfaction by providing greater value, including several focusing on project management. As Managing Partner Andrew G. Giacomini put it: “The legal marketplace is changing, and as a result Hanson Bridgett is making a significant commitment to what we are calling 'Pricing to Client Value': fairly pricing the creative scope of work and efficiently delivering what's most important to the client.”
Last August, we began an LPM pilot program test with eleven of their lawyers, who were split between our two most popular programs. Five lawyers completed three months of individual coaching, and six others were enrolled in a just-in-time training program that began with a group workshop and also included one month of coaching.
Based on the testimony of the first group, firm management was interested in expanding the program, so the firm was faced with the task of identifying the candidates who would provide the greatest return on investment.
Program leaders Garner Weng – a partner who participated in the pilot program -- and Chris Fryer – their IT Director and internal project management guru -- developed a very brief questionnaire to pick the best candidates. When we saw the questionnaire, our first question was: Why didn’t we think of that? Our second question was: Could we share it with others through this blog?
They said yes, so here are the five questions Hanson Bridgett asked, emphasizing the need for each lawyer to provide specific and concrete examples:
Hanson Bridgett used the results to select ten more lawyers to begin a LegalBizDev coaching program in April. It is a hybrid which combines the just-in-time workshop with two to three months of coaching. We will describe the results of these programs in future case study posts.