2/25/13

LPM - Where the Rubber Meets the Road - Part 3 of 5

This post is the third part of a whitepaper written by Scott Preston and Ryan McClead. The full paper can be downloaded here.

Legal Project Management 1.0

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Even before the economic slump a handful of legal technology vendors recognized an opportunity to help firms better understand and budget for their non-hourly billing or Alternative Fee Arrangements (AFA). AFAs are not new to the legal industry; contingency and fixed fee pricing have been available for a long time, but in recent years there has been a significant increase in AFA requests from the client side. Corporations have begun to push back on the standard annual increase in lawyers' billing rates. They want not only better pricing, but better communication and a better understanding of the amount of time and effort spent completing individual tasks. Attentive vendors have started adding AFA planning and budgeting functionality to their existing software solutions, or in some cases writing new solutions from the ground up.  These rudimentary systems have quickly garnered the label Legal Project Management software (LPM 1.0).

While Project Management as a discipline has had nearly 60 years to mature and develop, the application of PM principles and techniques to the legal environment is still very much in its infancy. Traditional Project Management can be thought of as a stool resting on three iterative and overlapping developmental stages: Planning and Design, Execution, and Monitoring and Controlling. For our purposes in LPM we call the first stage Planning and Budgeting rather than Design. All attorneys believe that they execute, monitor, and control their projects already, but many will concede that they do not plan or budget adequately. Consequently, Planning and Budgeting is the clear low hanging fruit of LPM 1.0 and vendors have focused most of their efforts where they believe they can most easily gain a foothold.

Planning and Budgeting 

After a new legal project opportunity is defined planning begins to determine the full scope of the project. This is done by defining the desired outcome for the project and developing a Work Breakdown Structure (WBS) that will ultimately lead to that desired outcome.  The WBS defines any major objectives and project phases, and then breaks those down into discrete tasks required to meet the objectives and complete the phases.

Once the desired outcome and list of tasks is established, the project manager can determine the necessary resources and levels of expertise required for each task, as well as any resource constraints that might impact the outcome.  Those constraints might include expertise (Do we have the right people to do the work?), or time (Do we have the capacity to complete the project on time?), or technology (Do we have the right systems in place?).

Budgeting is intended to provide a realistic estimate of the eventual costs to the client as well as considering the firm’s expenses.  The project manager assigns individual people, or resources, to specific tasks identified in the WBS, and then estimates the amount of time each task should take to complete.  This is where the various alternative staffing scenarios come into play. By experimentally adjusting the degree of leverage on a particular matter (i.e., pushing work to the lowest cost performers who can adequately complete the work while meeting all other project completion criteria), the firm can reduce the cost of its services for the client, better compete with other firms on price, and potentially increase their own profits.

LPM 1.0 promises to provide firms with three new abilities: (1) The ability to create baseline preliminary project plans or templates; (2) the ability to create matter specific budgets based on prior client work that can be used to win new client work; and (3) the ability to compare alternative staffing scenarios, which will allow the firm to produce the same work product at a lower cost to the client while still making a profit for the firm.

Unfortunately, most of these first generation LPM products struggle to balance the development of project plans that are detailed enough to create accurate budgets without being so complex that they slow the budgeting process to a crawl.  Many of them have trouble modeling a firm's prior work to develop project plans for future work, because phase and task codes available from past matters are not accurately or consistently recorded. And while alternative staffing scenario analysis sometimes makes it possible to reduce the cost of services to the client, it does little to help the firm better understand the process or arrange their staffing levels over time.

In contrast to the Project Management three-legged stool, LPM 1.0 is a one-legged stick chair. It can hold up as long as the project is otherwise perfectly balanced, but the slightest wobble sends the project swiftly to the ground. Legal projects are rarely so well balanced. The greatest plan and budget in the world is often out of date as soon as the matter begins. Attorneys must “work the plan” and adjust as they go. If they don’t actively manage and adjust resources throughout the course of a project, then successful completion of a matter or even successful achievement of today’s immediate goals may be nothing more than coincidence and will certainly not be easily repeatable. LPM 1.0 with it’s focus on Planning and Budgeting is a good and necessary step, but on its own it does nothing to reduce the risk of bad outcomes, cost overruns, time delays, or client dissatisfaction. Additionally, it does nothing to improve the firm’s efficiency, or to increase the transparency and quality of communication between the firm and the client.

The promise of LPM 1.0 is that Planning and Budgeting, in conjunction with the work a firm is already doing, will be enough to meet client demands and maintain business, but in reality, it is in the next two stages that the proverbial LPM “rubber meets the road”.

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2 comments:

Time Management Software said...

Time management software is most important for a middle level or high level organization. By the help of this software you can save your time as well as resources also. By Using Excel there are various chances to be crashed but if you are using Time Management Software there are very less chances to be crashed and hacked. This software now a days very commonly used in various organization for various purpose like Attendance record , salary division and many more.

Loretta Ruppert - LexisNexis Firm Management said...

Ryan, a fundamental focus on project management is good but requires all stakeholders to have ownership, deadlines and responsibility to deliver high-quality client work while streamlining and improving law firm processes. More robust practice management software solutions now offer workflow and document management across the organization, time entry, billing, mobility and deep integration into email clients and financial software which facilitates the three key pillars you have outlined.

 

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