How lawyers benefit from legal project management

In How lawyers benefit from legal project management Hans Schuurmann examines legal project management (LPM) from a business and managerial point of view. He shows how LPM improves processes between client and lawyer – and how both sides of the exchange benefit as a result.

While, as a generalization, matters are well managed, there are many possible improvements in workflow management at the start, during and on completion of every matter.

LPM defined. Making explicit what was implicit before the introduction of formal LPM is the structured preparation, execution, and evaluation of a matter based on the clients’ requirements. The concept provides tools for planning, the offer and the execution of the assignment. After the presentation and client acceptance, the matter is executed according to the guidelines that are agreed in advance. LPM provides tools for reporting deviations and making adjustments in consultation with the client. Where necessary, modifications are made.

Evaluation, to close the learning loop, is an important step after completion of a matter. Lessons learned can be used to improve the process. This is represented schematically in the graphic.

The depth is dependent on the size, complexity, and risks of the matter. LPM is a means to an end, that is, LPM is a purpose-driven rational approach, and not an outcome in its own right. In many cases, project leadership traditionally lies with the responsible lawyer for the matter, but there is an increasing understanding of the benefits of LPM and therefore the use of a dedicated or specialized legal project managers.

Preparation

In this phase, the lawyer examines the assignment of the client and tries to get a clear understanding of what needs to be addressed from the client’s point of view. Then, there is an inquiry regarding the client’s objective/s. By way of illustration: An employment dismissal for a minor offence may be unwinnable, but if the client wants to set an example within his company, the objective and conduct of the matter will be very different from the approach to a routine matter.

During preparation, the lawyer makes the following points explicit:

• The problem: First of all, the question of the client is clearly formulated. In other words: the problem is defined. At this point, the lawyer and client also define the point at which the client will receive substantive advice on the matter.
• The result: This is a clear description by the lawyer of what the client actually wants as the outcome. So, not the client, but the lawyer describes this as accurately as possible in a way the client understands.
• Form: In what way does the client want to receive progress reports and advice from the lawyer? Should it be elaborate advice or a simple email? Does the client prefer working sessions with the legal team, or only the responsible lawyer?
• Quality: Does the client want outlined advice or is it required to go to great lengths in a legal sense? Do we intend to go all the way?
• Lead times and phases: Through the description of the lead times and the various phases of the matter, the lawyer gives the client insights into the steps to be taken and the time frames in which the phases and steps will be taken. This way, the lawyer allows the client to see in advance where in the process decisions need to be made. For example: After the preliminary investigation, do we proceed or settle?
• Responsibilities: Who is responsible for what part of the work in the matter?
• Risks: By naming the risks in the initial assignment, the lawyer shows where possible setbacks might be foreseen in the process, such as exceeding the time frames. Important to know and communicate is that in this stage, the lawyer has not had any deep insight into the case yet. This also means that no overview of the opportunities and threats of the case can be given yet. It is therefore important to state an explicit reservation. It is important to clearly describe whether and how the threats are included in the stated price. This reservation also stands for issues that arise from fact-finding during the case. If this is not the case, then the consequences thereof should be clearly described.
• Price and pricing models: In this part of the assignment and its confirmation, the lawyer should clearly state what is included in the price and also what is not. Under what conditions is extra (not foreseen) work charged? In the end, the wishes of the client concerning price (un)certainty are taken into account and determine the proposed fee model. 

The intention is that everything is combined in a clear and transparent confirmation of the assignment. The client is explicitly asked to accept this and the lawyer explicitly confirms it.

In this way, the project leader knows whether the expectations are the same on both sides. LPM is applicable for large as well as small organizations. The project leader in a smaller organization is usually the lawyer himself. If a developed approach and agreement on an overall price are not possible during the phase of acceptance, it is it is important to explain how and when this will be available, e.g. in a dedicated meeting with the client.

Execution

During execution, work is done within the frameworks agreed in the preparation phase. In the meantime, the progress of the substance is measured in figures and made transparent in clear reports. The limits of the matter are clear for both parties because there is a well-defined or capped budget; the same goes for the time frame and the available capacity. In the preparation phase, it has already been defined where the focus lies. Divergences that come up when handling the substance of the case are naturally discussed with the client and some adjustments are made where necessary.

There is a clear picture of the scope of the case. For additional work outside the scope of what has been agreed upon, a solution is defined together with the client (postponement, additional budget, etc.). At the end of the matter, an assessment is undertaken whether what was agreed in the preparation phase, has been delivered.

Evaluation

After completion, an evaluation takes place and lessons learned have been learned in order to further improve processes and the interaction with the client for future assignments.

LPM is not a target in itself but rather a tool for better preparing and managing matters. Use of LPM is, therefore, dependent upon the size and risks of the case.

A large case may require very detailed preparation and planning. Project leadership may be given to a specialized project leader. For smaller cases, it can be much more limited. In the latter case, the following five questions may already be enough, followed by a written confirmation:

1. What is the required final outcome?
2. By when must it be ready?
3. Is the following approach accepted?
4. I estimate that it will take X time at Y rate (or a fixed fee). Is this acceptable?
5. Does the client agree to the work on this basis?

Procurement of legal services has become considerably more professional in recent years; the expectation is that this professionalization will further increase. International research of Buying Legal indicates that in 39% of procurement cases, the procurement department of the company is involved to a larger or smaller extent: http:// www.buyinglegal.com.

Communication

The client expects to be -and stay- informed regarding the progress of the case; not only about the content but also about the financial consequences. At the start, it is agreed upon with the client what will be communicated about the most important developments and divergences within the case, how frequently and with whom. In the framework of LPM, communication with all players who are working on the case is key (as shown im the graphic). At the start, the activities to be carried out, the goals to be attained, and the framework within which the project must be executed are agreed upon with the client. This is established in a confirmation of assignment or in the case project plan.

A method for the communication during execution is the progress report. This report is sent to the responsible and accountable lawyer on a weekly, preferably, daily available. This report states who have worked on the case and what divergences there are with respect to earlier estimates or budgets. It is a prerequisite that hours worked are filled in daily. Non-planned contributions or more time spent are visible at an early stage (instead of when drafting the final invoice). The remaining workload, the number of expected actual hours (fewer vs. more) becomes clear because of the increased transparency. The progress report becomes a tool to increase grip on the progress of the case and offers and makes clear what to discuss with the client.

The realization of milestones and progress of the project plan is easier to detect because steps are transparent and agreed upon. The uncertainties that have been recognized at the start are replaced by reality. As soon as an ‘uncertainty’ changes in a ‘certainty’ it is time to inform the client and when necessary discuss the next steps.

As the plan, steps, delivery, execution, and result are discussed at the beginning of the case it is also very important the review the process when the case is closed. It’s very important that the lawyer and client talk about their expectations and the result before the case is definitely closed.

Understanding the business of the client By clearly determining (during the intake) why there is a case, the underlying facts of the case and how to solve the it, the probability that the process better corresponds with the client requirements will increase. The intake of a case is, therefore, not only about in-depth legal facts, but also about the framework in which the assignment is being carried out. It is defined for delivery of the end-product. Questions such as these are very important: Do we deliver an academically detailed report? Or does the client want two clear PowerPoint pages to explain to his not legally trained Supervisory Board?  that the legal issues are part of the company environment and culture. And, the matter may be just a small part of a bigger company problem that has to be solved. This also determines the form in which the final product must be delivered. Therefore, this must be coordinated with the receiving party, the client.

Remember that legal issues are always part of the wider company environment and culture. And, the matter may be just a small part of a bigger company problem that has to be solved. This also determines the form in which the final product must be delivered. Therefore, this must be coordinated with the receiving party, the client.

Alignment of interests

When establishing the assignment, financial interests partly play a role and alternative pricing models are more and more requested. A price estimate is more often an implicit price cap. It is therefore important to figure out what exactly is expected by the client. If the client agrees with an hours x rate model, the lawyer has to inform him about the risk of exceedances otherwise this can become a risk the lawyer takes. The risk shifts to the firm when models such as fixed, capped or value pricing are agreed upon.

The interests trade-off can go two ways: When a firm has a stronger position, then the client will weigh the value against the price of the case.

If it is the other way around, the firm must ask itself whether it is in the position to finish the job in a profitable way, with price-down pressure taken into account.

Increasing the profit margin

There are not only reactive arguments to be made about managing a case efficiently. It can also have a positive effect on the profitability of a case. By restraining the hours spent, or in other words – by working as efficiently as possible on a Fixed Price dossier, the overall price to declare remains the same even though fewer hours are spent. This means that the profit margin of the case is increased because the costs are lower than what was estimated in the quotation. These hours can be used in alternative ways, for example in another paid case. But keep in mind that the quality of the case involvement and work at hand must be maintained.

With repetitive activities, the project management structure can consist of models and checklists. Drawing up the models for the first case takes time. But the appreciation for the first and last case remains identical in the eyes of the client.

After developing the models, work can be subsequently done in accordance with the standardized models and only case-specific adjustments need to be implemented.

Value Pricing also offers openings here. The value of a case in the eyes of the client is sometimes much higher than hours x rate. A specialist can add much value to the client in less time. This may justify a higher Fixed Price in order to earn back an earlier investment. Clients recognize how LPM contributes to a better service and budgets are more frequently allocated to LPM activities. This means the time for managing a case is more frequently becoming billable time.

Conclusion

In a market where the client becomes more critical, and more billable work is expected to be done for a lower price, LPM is a sound alternative. LPM offers the tools for aligning expectations in time, money, and quality and the use of frameworks. Where fewer hours are spent – not asked for by the client – the quality of the work is not reduced and is possibly even increased by avoiding unnecessary additions. The hours not spent can lower the price, thus taking into consideration the requirements of the client. However, better coordination serves more goals: The predictability of the case increases, the communication with the client becomes better, the lawyer responsible for the case has a better grip on the progress, and LPM activities are more and more remunerated due to a willingness to allocate budget for this type of work.

Author

Hans Schuurman is consultant and interim CFO, specializing in process and profit improvement for law firms. Hans is experienced in leading large improvement projects.

He regularly speaks and publishes about the profit model of law firms and the new developments in the legal sector. Hans and his partners improve the commercial, administrative and management processes of law firms.