Amanda Braun, Esq., CEDS, PMP
Salazar Jackson, LLP
For centuries, lawyers have operated under the familiar paradigm of billing for their professional services in units of time, but consumers are demanding more now than ever before. With ubiquitous access to information and reviews from a hand-held device, they are well informed and armed with comparison data. In the new consumer-driven market, that paradigm must change. Project management tools can provide lawyers the means to get there.
This paper is intended to be a case study with practical application. It will focus on how a traditional boutique law firm evolved from offices, cubicles, files, and billable hours to an open workspace with no assigned offices, stand-up meetings, and constant, focused collaboration using techniques borrowed from various project management methodologies.
Introduction to the Case Study
I had been a project manager in the information technology (IT) field for nearly a decade when I earned my juris doctor and graduated from law school. During my legal education, I read a few articles about this “new” idea of project management in law firms. Intrigued by the idea of joining other pioneers in a developing field, I started to think about making legal project management my niche.
Shortly after becoming a licensed attorney, I began working at a boutique law firm as the firm project manager. Accepting the job offer was the easy part; figuring out what it means to be a firm project manager is an ongoing undertaking. As a newly minted attorney, I had a basic understanding of the operational underpinnings of legal services, and as a seasoned IT project manager I had plenty of experience managing projects and project teams. Melding the two knowledge areas is the adventure!
We Don't Make Widgets!
While legal matters (a.k.a. “cases”) can be notoriously complex, few legal projects resemble software design, engineering, construction, or manufacturing projects. The delivery of legal services is inherently different than the delivery of a new piece of software, the shipping of a completed product, or the ribbon cutting at a newly constructed building. Nevertheless, at the core, there are similarities that beg for the application of disciplined processes.
It should come as no surprise to experienced project managers that service industries are ripe for project management methodologies. According to A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, a project can create “a service or a capability to perform a service” or “a result, such as an outcome or document” (p. 3). Relevant PMBOK® Guide project examples include:
- Developing a new service or result;
- Effecting a change in the structure, processes, staffing, or style of an organization; and
- Implementing, improving, or enhancing existing business processes and procedures. (p. 4)
Legal services are by definition service driven. By applying project management techniques, law firms can most definitely shape new results and effect changes within their organizations. Law firms are business organizations and as such they can benefit from implementing improved business processes and procedures. Project management is the vehicle for achieving these benefits.
Legal Project Management
Increasingly, legal clients are looking for the value of the output from their lawyers. In response to unprecedented financial and budget pressures, legal clients are demanding “greater control, predictability, accountability, and responsiveness” from their lawyers (Woldow & Richardson, 2013, p. viii). As a result, a new field of project management emerged: legal project management (LPM).
According to Woldow and Richardson (2013, p. ix) in their book, Legal Project Management in One Hour for Lawyers, clients want the following from their lawyers:
- Value conferred as viewed through the eyes of the clients,
- Efficiency in managing to budget with lean and efficient staffing and lower outside legal spending,
- Predictability so there are no costly surprises and fewer unexpected events,
- Communication that is timely, responsive, accurate, and complete,
- Understanding all aspects of their businesses, not just their legal needs, and
- Alignment between the clients’ interests and the firm's behaviors.
As those of us in the profession know first-hand, project management is a significant discipline in its own right, and it is highly unlikely that lawyers can become seasoned project managers in an hour's time or after reading a single book on the matter. That being said, the book provides an excellent jumping-off point for new legal project managers. Woldow and Richardson propose five steps of legal project management that map neatly onto the five Process Groups from the PMBOK® Guide (see Exhibit 1).
Exhibit 1: Five PMBOK Guide® Process Groups versus five steps of LPM.
According to Steven Levy, “Legal Project Management is designed for attorneys rather than project managers, taking account of the constraints surrounding both the practice and the business of law” (2009, p. 21). Using the framework proposed by Woldow and Richardson as the starting point, attorneys can begin to realize the financial benefits associated with effective project management.
Alternative Fee Arrangements
In these changing times, many law firms have reluctantly undertaken the challenge to offer alternative fee arrangements (AFAs) to their clients. The “alternative” is in contrast to the “hourly billing” model that lawyers have used for charging for legal services since the mid-1970s (Susskind, 2013, p. 16). For years, lawyers have been conditioned to charge for their time. Up until a few years ago, clients expected nothing less than to be billed by the hour. New market conditions changed this expectation.
What was once considered the alternative is now becoming more mainstream. Alternative fee arrangements began to gain traction shortly after the economic crash of 2008 and have gained momentum ever since then. By early 2009, “a number of law firms [were] heeding the call to abort and [were] offering flat fees, success fees and contingency fees” (Reed, 2009). At the time of this writing, a quick web search on “alternative fee arrangements” yields more than three million results of articles delivering advice or arguments in favor of this alternative. The rate of adoption within law firms is unknown, but based on anecdotal evidence it is rather low.
Delivering value has become a cornerstone in the emerging field of legal project management. Value is a dichotomous proposition. There must be value to the client, but there should also be value to the law firm. After all, law firms are businesses and entitled to a reasonable profit for their services. One of the most common manifestations of value-based pricing is through a fixed-fee arrangement.
With a fixed-fee arrangement, the cost of legal work is negotiated upfront and the final project is billed at that rate regardless of the number of hours actually worked to complete the project. This provides the client with predictable costs and eliminates surprise legal bills that often lead to back-end bill negotiations and write-offs. Many lawyers fear that fixing a price in advance is too risky because legal matters follow trajectories that are too unpredictable. Clearly, the more information known in advance of the start of a legal matter, the more accurate the estimated predictions will be regarding the way it will develop, and the easier it will be to determine a reasonable, yet profitable, fixed-fee arrangement. This requires direct input during the planning and estimation stages from experts who will perform the actual work.
Fixed-fee projects are the epitome of project management. They require more time upfront to plan and budget appropriately, and they require more time throughout to monitor and manage costs. To maximize success in starting and managing a fixed-fee legal project, start with the follow steps (adapted from Hassett, 2009, pp. 9–12):
- Identify the matters that are most suitable for a fixed fee. It makes sense to start with matters that follow predictable paths and have a history of predictable hourly costs.
- If necessary, break down large matters into smaller ones. Decompose complex matters into manageable parts that can be priced in phases. Perhaps hold off on pricing future phases until early phases are completed and form a more predictable path for the future of the matter.
- Consider the financial value to the client. What is the client willing to pay? What is the expected value of a successful outcome? Legal fees should not exceed the amount of a potential judgment.
- Estimate the cost to the client on an hourly basis. Even if you are planning to offer pricing based on what the client will value, it is still important to understand and estimate how many hours of work will be required so your costs are covered and value to the firm can be evaluated.
- Identify factors that drive cost and consider how to control them. This may include leveraging less-costly personnel to complete the work (e.g., contract attorneys, paralegals, paraprofessionals).
- If needed, set an upper threshold maximum that defines an upper boundary for work that will be performed for a certain price. This gives the client motivation to avoid unreasonable requests and protects the firm in that case.
- Define your fee and terms. Keep it simple. Fixed-fee arrangements work best in an atmosphere of trust.
- Manage the work to a successful conclusion. Keep records throughout the matter of how many hours were worked and review periodically against the estimates. Make adjustments to work plans as needed. Track any discrepancies to assist with better future planning and pricing.
Ultimately, the fixed-fee approach works best when developed through proper project scoping and management. Determining what is “proper” when it comes to legal project management may vary depending on the nature and complexity of the matter.
Finding the Right Mix
Transitioning from IT project management to legal project management, I searched relentlessly (or at least it felt that way) for information on LPM. I found plenty of articles and books advocating for legal project management (or, in the case of some large law firms, marketing their LPM models) and relatively few resources providing guidance for implementing LPM in a boutique firm.
Like a master chef, I decided to create my own recipe for a successful LPM system by selecting ingredients from various project management methodologies to create an environment where we could offer our legal services at fixed fees. The following is a brief overview of the methodologies considered and examples of how we borrowed elements from each to create our custom blend, which I dub “Law-gile.”
Traditional or “Waterfall” Project Management
The traditional approach to project management flows logically from the beginning of a project through the end. In the most general sense, the five process areas from the PMBOK® Guide provide the framework for traditional project management. Incidentally, as illustrated in Exhibit 1, the Woldow and Richardson's guide, Legal Project Management in One Hour for Lawyers, mirrors this traditional framework.
In the rapidly changing environment of a boutique law firm, I found the more traditional approach largely impractical. Furthermore, management did not wholly support this methodology—or what they understood about this methodology. Without support from management, success is unlikely.
Granted, a full, traditional project management system implementation would be a large project in and of itself. We needed project management immediately! Not to be discouraged, I kept the five project management process areas in mind as a foundation upon which to build my system without necessarily adopting all the overhead required in a purely traditional project management system.
Lean Six Sigma
There is nothing so useless as doing efficiently that which should not be done at all.
– Peter F. Drucker
At the most basic level, there are two ways to increase profits: (a) increase price, or (b) reduce cost. We have already established that the current market for legal services is generally not supportive of increasing prices. Therefore, the most logical place to increase profitability in a fixed-fee arrangement is through cost reduction.
Lean Six Sigma provides tools to eliminate cost by eliminating waste. In the world of Lean Six Sigma, anything that does not add value to a customer is a waste (GoLeanSixSigma.com, 2015). There are eight types of waste that are easily remembered using the mnemonic “DOWNTIME” (see Exhibit 2).
Exhibit 2: Eight wastes in legal services.
Waste elimination was, and continues to be, an important ingredient for our creation of a legal project management system. With a keen eye toward reducing all types of waste, we are able to reduce cost and increase profitability. Waste identification and elimination is iterative and requires vigilant monitoring.
Kanban is a visual project management system that underpins scheduling just-in-time production. In Japanese it literally means “signboard” or “billboard.” One of the main benefits of Kanban is providing visibility and limits to work in progress, thus reducing the waste of “inventory.” In addition, Kanban reveals bottlenecks so they can be addressed.
Kanban is incredibly simple but at the same time incredibly powerful. In its simplest form, a Kanban system consists of a big board with sticky notes placed in columns. The notes represent work items as they flow through the process represented by the columns. Our legal Kanban board is set up in the most basic sense with only three columns:
- Backlog – This is basically our “to-do” list. All pending work is placed in this column on sticky notes. The work is broken into units that can be completed in one day of work effort.
- Hot – This is our work-progress column. We commit to finishing any work placed in this column before leaving for the day. Only work in the “hot” column can be worked. All “hot” work must be completed before pulling more work from the “backlog.”
- Done – Only work that is completely done is placed in this column. It is critical to share a defined meaning of the word done to eliminate confusion. If the work is simply on pause awaiting feedback or other information, then the note cannot move to “done.”
According to Wikipedia, “agile project management is an iterative and incremental method of managing the design and build activities for engineering, information technology, and new product or service development in a highly flexible and interactive manner” (n. d.). The iterative process is a hallmark of agile project management and supports changing requirements along the process.
Within agile, Scrum is a popular method that concentrates particularly on how to manage tasks within a team-based environment (Waters, 2007). Scrum is relatively simple to implement. Each morning, at precisely 10:00 a.m., our team meets for our daily Scrum, or daily stand-up, meeting next to our legal Kanban board. Our meeting is time-boxed at 10 minutes (attorneys’ time is expensive after all!), and each person in our firm shares with the rest of the team three things:
- What did I finish yesterday? Was it everything I committed to finish?
- What do I commit to finish today?
- Are there any impediments for me meeting my commitments?
In these short meetings we are able to evaluate the priorities of the law firm for the day and ensure that there are adequate resources assigned to meet any deadlines.
Customize to Create Your Own!
Project management is not one-size-fits-all. While it is a professional discipline, as professionals we know that tools and techniques must be culled and applied with an editor's deft hand or adoption rates will be low and frustrations will be high. Ultimately, we created our own system of LPM that works well for us as a boutique law firm.
Case Study Application
To implement LPM at our firm, we first reflected on our current practice to evaluate practical application. Our boutique firm serves businesses and individuals seeking to seize financial or business opportunities through start-ups, mergers, acquisitions, and divestitures, or confronting financial crisis, complex commercial litigation, or government investigations. We handle a variety of case types, so even within the firm our project management approach varies between legal matters.
Our Law-gile framework incorporates components from across four project management methodologies:
- Traditional. We base our general framework on traditional concepts. We are more disciplined at planning and scoping all our legal matters in advance, leading to enhanced goal clarity and more effective client communications. Periodically, we monitor our work progress against initial estimates and regroup. Next, we will turn our process improvement focus toward project closing with the goal of formalizing post-project reviews for consistent feedback and improvement.
- Lean Six Sigma. After providing our team with an initial training on the “8 wastes,” we began identifying wastes within the firm to tackle. This has helped us keep costs down as we promote more fixed-fee arrangements. We have also incorporated continuous improvement efforts because we know it is an iterative process. One of the biggest improvements has been on first-draft quality as we aim to reduce re-work and over-processing.
- Kanban. As intended, Kanban has made the greatest visible impact on our work. Most of us work within sight of our legal Kanban board, where the vibrancy demands attention and keeps us focused on our commitments and priorities. In addition, the satisfaction gained from moving notes from the “hot” column to “done” is a great morale booster!
- Agile. Our initial incorporation of agile project management is through our commitment to the morning stand-up meeting. Without fail, we hold the meeting in front of our legal Kanban board every morning, and peers hold each member of our firm accountable. We have also incorporated a legal version of the backlog review. On a regular basis we meet as a group to review and prioritize our backlog to set the goals for our next sprint. This keeps our team focused on mutually agreed-upon priorities and increases productivity during the next sprint period.
The shift to Law-gile also shifted our entire practice. We moved into a new office space to align with our team approach. No lawyer has an assigned office anymore. Everyone was issued a laptop, and each workspace is equipped with a docking station. There is a large, shared workspace where team members congregate for collaborative work, and some private offices where lawyers can complete confidential work. Clients walking into our office for the first time often comment that it feels more like a software start-up than a law firm (I like to think my IT background had some influence on that!).
With the open-office environment supporting new work habits, we have realized many positive outcomes. Law-gile has resulted in greater collaboration and teamwork. Consequently, productivity and profitability are on the rise. In addition, overall communication has improved internally and with our clients.
Law-gile has allowed us to build our portfolio of fixed-fee projects. Before, all of our work was billed on an hourly basis. Now, approximately 25% of our matters are managed on a fixed-fee basis. As a result, we have also increased our client portfolio.
As the firm continues to adopt project management techniques, we expect this positive trend to continue. Our Law-gile foundation solidifies each day, and we continue to evaluate and incorporate additional project management techniques as LPM skills sharpen among staff. The evolution continues.
A satisfied customer is the best business strategy of all.
– Michael LeBoeuf
I agree wholeheartedly with the assertion that “the success of any LPM effort begins and ends with those individuals tasked with managing a firm's legal projects” (Easton, 2012). The legal industry continues to learn and apply the project management lessons of other industries as we evolve our practice.
Law-gile is a value-driven delivery model for legal services developed through the hybridization of legal work with project management. This transformation occurred in a law firm, but it could have just as easily occurred in an accounting firm, a consulting firm, or anywhere else where professional services are sold. Reimagining how project management can help those in the professional service industries is the answer to the demands of today's consumers in a commoditized world. The application to other industries is limited only by project managers’ creativity and drive.
As this area of discipline continues to evolve, more and more legal practitioners will become Law-gile. By leveraging experience, knowledge, and skills, seasoned project managers are positioned to make a large impact on the legal and other service industries with their customized solutions. In these uncertain economic times, having transferable project management skills is invaluable. The demand for project managers in the legal field is on the rise (Project Management Institute, 2010). Will you answer the call?
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© 2015, Amanda Braun
Originally published as a part of the 2015 PMI Global Congress Proceedings – Orlando, Florida, USA