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Legal Project Management for practitioners – The non-scary version – Part 2

Posted by Jack Bostelman on May 16, 2016 | 0 Comments

This is Part 2 of a two-part series. In Part 1, the chairman of an AmLaw 100 firm considers the disappointing results of other firms attempting to apply legal project management techniques. He reviews in pragmatic terms the key elements of LPM and learns why the other firms' approaches have not worked.

In this Part 2, the chairman is presented with a step-by-step approach to introduce LPM without scaring the practitioners. That approach is based on the notion that only two LPM elements should be introduced at first. These should require only minimal changes to the way practitioners currently work and should be perceived as bringing them immediate value. This Part 2 describes these elements, how to roll them out and why practitioners will respond favorably.

A new approach, which won't scare the practitioners

Keith Mayfield, Chairman of an AmLaw 100 firm, has been thinking about how to introduce Legal Project Management techniques in his firm. He understands the basics of LPM and how it can benefit the firm's bottom line and improve relationships with clients. He is also aware of other firms' failures in trying to implement LPM. He decides to speak again to an outside consultant about how to avoid those firms' mistakes.

Happy canstockphoto10443024

The consultant confirms Keith's gut feeling that the full list of LPM techniques (described in Part 1 of this series) is too much to ask of practitioners, even though the entire list is infused with common sense. Starting with only two LPM techniques will greatly improve the chances of success, the consultant recommends. These two techniques should be selected based on the following criteria:

  • Be least invasive for the way practitioners are currently working
  • Bring immediate value that practitioners will perceive
  • Set the foundation for future LPM techniques

The two techniques that meet these criteria are:

  • Define scope at the outset
  • Track actual work for each major segment of the matter

But how can this be done in ways that won't scare away the practitioners?

How to implement this new LPM approach

Break the work into a few intuitive phases

The consultant explains that the central element in tracking work is for the relevant practice group to define 6-12 phases for their key matter types. The group should start with one matter type. After gaining some experience, the practice group should define phases for the other important matter types in the group. The phases should be intuitive, chronological and small in number.

These phases should be no more than a statement of the way the lawyers already think about the phases of the given matter type. The initiative should start with matters where the client does not require use of its own task codes by the law firm's timekeepers. For example, for a domestic registered securities offering for a public company, a practice group may define the following phases:

  • Due Diligence
  • Underwriting Arrangements
  • Registration Statement/Prospectus
  • Exchange Listing & State Securities Registration/Exemptions
  • Terms of Securities
  • Closing

Code time to these phases

The phases are then converted into task codes and set up in the firm's time entry system. Lawyers are required to code their time on the matter using these codes. This will require some pressure from the partner in charge of the matter, but it will not be difficult for lawyers to implement because, unlike the codes required by clients, the task codes will be intuitive. And there will be fewer of them.

Create simple Excel progress reports for the supervising lawyers

M&A task codes

The following list of task codes for M&A matters have been developed by M&A practitioners as an alternative to the ill-fitting task codes often required by clients in connection with e-billing. These codes should be acceptable for e-billing purposes because they were approved in Feb. 2016 by the LEDES Oversight Committee, the organization that oversees law firm billing codes, including the original litigation codes sometimes referred to as the “ABA codes”.

Unlike those original codes, though, the new M&A codes are fewer and more intuitive. They were developed by a task force of the Mergers & Acquisitions Committee of the American Bar Association's Business Law Section, of which I was a member. The full list of codes and explanatory material are available from LEDES here. The 11 basic M&A task codes are:

  • Preliminary Matters
  • Purchase/Merger Agreement
  • Due Diligence and Disclosure Schedules
  • Ancillary Documents
  • Financing
  • Shareholder/Board Matters
  • Closing Matters
  • Integration Matters
  • Post-Closing Requirements
  • Disputes & Adjustments
  • Deal Management

In addition there are 9 codes for use by subject matter experts supporting the transaction, such as antitrust, environmental, intellectual property and tax. These are intended to promote accuracy in use of the codes by providing these non-M&A lawyers a single code under which to record their time.

“Now for the fun part,” asserts the consultant.

With task coding in place, the partner running the matter and possibly the lead associate can receive a weekly or bi-weekly report with a simple table showing actual fees since inception broken down by each task code. As the lawyers become used to the report, the table could be made increasingly fancy. For example, detail for each timekeeper's hours and fees could be included. Next, comparisons to the prior period amounts could be added.

These progress reports have the following benefits:

  • Visualization. When the lawyers viewing the reports see the work broken down by intuitive phases, they will understand the power of task coding and become strong advocates of this kind of task coding within their practice group.
  • Improved timekeeping hygiene. Lawyers viewing the report will also push hard for lawyers working on their matters promptly to enter their time into the firm's timekeeping system. Late time entries will be apparent and will detract from the usefulness of the report. Because the lawyers will love the report, they will take action to protect its value. This will cause a culture change regarding timely entries.
  • Immediate gratification. Excel reports are easy for lawyers to use without training. They are also easy for the firm's accounting department to prepare, at least on a small scale and can be produced immediately. This avoids the expense, delay and learning curve of acquiring special software before the concept has even been proved to work and before the lawyers even know what they really want in the way of reports.
  • Management. If actual fees on a given phase or for a given timekeeper trend beyond the supervising partner's expectations, he or she will have the opportunity to investigate and take corrective action before the problem becomes severe.

Once the lawyers have accepted the Excel reports, and demand for the reports starts to require a greater degree of manual effort on the part of the accounting department, the firm can consider buying specialized software that can automate the process and support the firm's other LPM techniques. This is a fast-developing software area, and there are several available competing software products. One that is well worth considering though, is called Umbria, by Prosperoware.

Eventually, create budgets at the outset and track against them

If a budget can be established, the progress report can just as easily compare actuals to budget for each task code and display the percentage of budget used. It can also include detail for each timekeeper, either only for actuals if the budget consists of a single dollar amount for each task code or for budget as well if it has been built at the timekeeper level.

The challenge is that lawyers are afraid of budgets. Many don't believe a matter can be controlled sufficiently to follow a budget. Others have no idea where to start or how to do it. Here's a simple way to get started:

  • Establish task codes. Agree on a set of task codes for the matter. Ideally the client will not require codes and the practice group can establish its own intuitive codes, as described above.
  • Code time. Require all lawyers to code their time on the matter using these task codes
  • Guestimate a budget by task code. Establish, by educated guesswork at first, a budget amount for each task code. The amounts should total to any estimate furnished to the client. The budget is solely for internal educational purposes, though. In most cases these training budgets will be too low. As the lawyers see the actuals each period, they will develop a better sense of how much each phase costs.
  • Use experience to make better budgets. In the future, use the outcomes of task coded matters to inform the budgeting process. This data can include all matters of a given type worked on within the practice group. The budgeting lawyer will no longer have to rely solely on instinct to develop a fee estimate. He or she can build a simple budget and provide the total budget amount as the fee estimate.
  • Advance to budgets by timekeeper. In the future, consider building budgets “from the ground up” by estimating hours by task code for individual timekeepers, or generic timekeepers of the relevant seniorities. The budget amount for each task code is the sum of the product of each timekeeper's hours and rates.
Budget 20happy canstockphoto32476807

The purpose of budgeting is to provide a more accurate basis on which to provide fee estimates to the client, and ultimately to be ready for the day when the client asks for budgets.

Once budgets are accurate enough, manage to them

Once the lawyers can build a budget that supports a fee estimate, they can utilize another power of the progress reports – managing the matter to the budget.

When actuals move out of line with budget expectations, such as when they are at 50% of budget but the supervising lawyer knows only 20-25% of the work has been completed, the lawyer can investigate. Has scope silently expanded? Is the matter team doing more work than called for by the defined scope? Are senior people doing junior work? Are junior people taking way too much time trying to do work that's too advanced for them?

Once the reason has been determined, the supervising lawyer can take action – discuss with the client the fee ramifications of expanded scope; get the team back on track doing only the work called for by the defined scope; or reassign the work to more junior or more senior lawyers who are a better fit for the work in question.

Conclusion

Keith is convinced that the key to introducing practitioners to Legal Project Management is to move gradually, in a manner that is non-threatening and provides immediate benefits to the practitioners. Defining and monitoring scope and progress reporting of actual fees by intuitive phases should be the starting points. Simple Excel spreadsheets should be used. The effort should be piloted in a single practice group, preferably one that is receptive to task coding and budgeting because it is feeling pressure from clients. The consultant has advised that success stories will spread by word of mouth and other practice groups will want “in”.

[Photo credit: © Can Stock Photo Inc. / photography33 & cherezoff]

About the Author

Jack Bostelman

Jack Bostelman is the president and principal consultant of KM/JD Consulting LLC. Before founding KM/JD Consulting, Jack practiced law in New York for 30 years as a partner of pre-eminent AmLaw 20 firm Sullivan & Cromwell.

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KM/JD Consulting LLC renders impartial practice management advice to law firms on improving efficiency, increasing profits and reducing risk, emphasizing knowledge strategy.

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Before founding KM/JD Consulting LLC, Jack practiced law in New York for 30 years as a partner of pre-eminent AmLaw 20 firm Sullivan & Cromwell.

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