The latest post from Jim Hassett’s blog Legal Business Development.
New Altman Weil survey reveals law firm leaders understand the problem, but not the solution (Part 1 of 2)
For many years before we formed a strategic partnership with Altman Weil, we have looked forward to studying their annual surveys of where law firm leaders see the profession today, and what they predict for the future.
We are especially fans of their Law Firms in Transition surveys, which since 2009 have tracked how managing partners and chairmen view the forces of change, and what they are doing about it. The 2013 Law Firms in Transition survey, published a few weeks ago, summarized the opinions of managing partners and chairs from 238 firms, including more than a third of the AmLaw 200.
This year’s survey found that law firm leaders are more aware than ever before that the legal market is changing permanently, including greater pricing pressure, shrinking demand, growing commoditization and an increasing pace of change. As survey author Tom Clay summed it up, the belief in these trends shows an:
My favorite question in the survey asked “Which of the following legal market trends do you think are temporary and which will be permanent?” 14 trends were listed including more contract lawyers, fewer support staff, more non-hourly billing and increased competition from non-traditional service providers. Two answers were tied for the top, with 96% of respondents saying they were permanent: A focus on greater practice efficiency and more price competition.
What are law firms doing about these permanent changes in the marketplace? Not enough.
When a follow-up question asked “Has your firm significantly changed its strategic approach to the efficiency of legal service delivery?” only 45% said yes. The response to a similar question about pricing was even weaker: only 29% said they had changed their strategic approach. (Both numbers are likely to go up, since 33% said they are currently considering changes in efficiency, and 17% said they are considering changes about pricing strategy.)
More generally, law firm leaders were asked: “What will be your firm’s greatest challenge in the next 24 months?” The top three answers were old school: increasing revenue (15%), new business (15%) and growth (12%). All three would have made a lot of sense as the primary focus of leadership in 2005, 2006 or 2007, when the legal market was growing. But if Bruce MacEwen is correct in his book Growth is Dead, most leaders who consider them the greatest challenge in the next 24 months should be thinking less about how to get bigger, and more about client needs.
The fourth challenge they listed – profitability – is better than the first three, since it reflects a new focus on differentiating between clients in an important way that law firms have traditionally ignored.
But, as Clay noted:
You won’t get a second chance to make a first impression, and if the first legal project management program for your group is not well designed and executed, it may be quite some time before there is a second one.
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. This month’s tip was adapted from my book Legal Project Management, Pricing, and Alternative Fee Arrangements.
This post was adapted from the new Third Edition of the Legal Project Management Quick Reference Guide. It was written by Jim Hassett and Gary Richards.
For senior lawyers, the potential advantages of delegation are obvious, including:
Your team members will also benefit:
The whole firm will benefit if those at the top become more effective delegators:
Last, but certainly not least, clients will benefit when you:
However, it is important to emphasize that delegation is not easy, and everyone has had the experience of spending so much time supervising a delegated task that “It would have been faster to do it myself.” Here are some common objections to delegating:
But unless you plan to work in a solo practice, the only way to prosper in an increasingly competitive marketplace is to delegate properly.
When the total available work in a firm goes down, partners may be tempted to keep all the billable hours for themselves. Most of the time, what they should be doing is delegating more and using the freed-up time to find new work.
Some ways to overcome these objections to delegating:
If you believe you should delegate more, but could use some advice on exactly how to do that, see the sections “How to delegate” and “The delegation checklist” in Chapter 5 of the new third edition of the Legal Project Management Quick Reference Guide.
A few months ago, during a routine review call in our LPM coaching program at Bilzin Sumberg, Executive Director Michelle Weber mentioned that her firm was beginning to require lawyers to systematically track work that fell outside the scope defined by each engagement letter.
Steve Barrett was on the call with me, and we both had the same reaction: Why didn’t we think of that? It is such a simple idea, and such a valuable one, that neither one of us could believe we’d never suggested it, nor heard of anyone else doing it.
When I later learned that Baker & McKenzie was also tracking work this way, I began asking around looking for more examples. So far I have heard of only one other that does this: Faegre Baker Daniels. According to Steve Petrie, the firm’s Chief Strategy Officer, Faegre Baker Daniels uses separate matter numbers to track out of scope work for certain fixed-fee arrangements. This is done in collaboration with the client and is subject to a clear and mutually-understood, change-order process. (If your firm requires lawyers to track work that is out of scope, please email me the details, and I’ll write about them in a future post.)
At the beginning of every matter, lawyers should be asking clients about their goals and expectations, so that the legal team delivers what the client needs, and is willing to pay for. A failure to get a clear understanding at the beginning of a matter can lead to unnecessary work, strained client relations, and ultimately to reduced realization and profitability if clients refuse to pay their bills.
Anyone who has ever worked at a law firm knows that a clear definition of scope at the beginning of a matter often simply does not happen. Many lawyers are impatient problem solvers, and they like to just jump in and start working. In the third edition of my Legal Project Management Quick Reference Guide (page 15), I quoted the executive director of an AmLaw 100 firm (who preferred to remain anonymous) about the ambiguities in a typical engagement letter:
And even if an engagement letter is well defined, there is the question of who sees it. A senior executive at different AmLaw 100 firm (who also preferred to remain anonymous) recently did an informal survey of senior associates during a talk he gave on LPM. He asked very simply: How many of you have seen the engagement letter on the matters you’ve worked on lately? Only 1 in 4 raised their hands. To put it another way, 3 out of 4 of these lawyers had no way of knowing what was in scope, and what was not. When this executive later shared those results with a group of partners, “they were horrified.”
Any system that requires lawyers to classify some hours as out of scope starts with a huge benefit, simply by requiring lawyers to be clear about the distinction.
At Bilzin, at the beginning of key matters they now post the statement of scope on their intranet, where every team member can review it. Then lawyers are required to record each hour worked under two different codes in their accounting system for each matter: one for work within scope, and the other for work that falls outside scope.
As Bilzin partner Al Dotson summed it up:
At Baker & McKenzie the procedures are a bit more complex, as you might expect at a firm with more than 4,000 lawyers in 73 offices around the world. According to Stuart Dodds, the firm’s Director of Global Pricing and Legal Project Management, some groups use the same approach as Bilzin, while others have developed task codes that provide additional detail. For example, in an M&A deal, a particular type of due diligence could be in scope or out of scope, depending on exactly what is involved and what was expected and agreed to. Some lawyers therefore have two task codes for due diligence, one for in scope, one for out of scope.
Whatever system is used, Dodds said, tracking improves awareness, internal management and external communication. If the responsible attorney sees the number of hours beyond scope growing, it is a warning sign to report back to the client and ask “how do you want us to proceed?” before the number gets still higher.
“There are many ways to accomplish this coding,” Dodds said in a recent interview. “We don’t want to be too prescriptive in defining the details. The battle right now is getting lawyers using a tracking system they are comfortable with. The key to success is to keep it simple.”
The first two editions of my Legal Project Management Quick Reference Guide were purchased by firms with over 85,000 lawyers. Today we are publishing the third edition, which adds over 100 pages of new tools and templates that law firms are using to increase client satisfaction, new business, and profitability.
Last February, I published Legal Project Management, Pricing, and Alternative Fee Arrangements to explain WHY firms are focusing on these new areas. This 226-page Quick Reference Guide is a companion volume and is the only book that explains HOW to implement LPM.
A number of sections were written by 13 contributing authors, including lawyers that have been leading the LPM movement at such firms as Squire Sanders, Morgan Lewis, McDermott Will & Emery, and Valorem. The book also includes a complete list of the readings and assignments from our Certified Legal Project Manager® program. Readers of this third edition can now complete much of this program on their own, without signing up for certification.
See the book’s description on our web page for reviews by noted experts a description of what’s new in the third edition, and a downloadable free excerpt.