This post is the first part of a whitepaper written by Scott Preston and Ryan McClead. The full paper can be downloaded here.
Legal Project Management, why now?
|Image [cc] – “Burning Rubber” Lori Hersberger|
Project Management, which has been around since the 1950s, is defined on Wikipedia as “the discipline of planning, organizing, motivating, and controlling resources to achieve specific goals”. Lawyers have been performing these functions as they relate to delivering legal services since the beginning of the profession. They plan matters, delegate responsibilities, mentor their subordinates, and ensure that each legal project is completed in a manner that will please the client. A select few lawyers have used general-purpose project management software, such as Microsoft Project, to manage their matters for years, but most project management in the legal sphere is still performed by instinct. Attorneys rely on their vast experience to guide management decisions, which has always worked well. Or at least, has always worked “well enough”. Unfortunately, the hourly billing model actively rewards inefficiency. If it takes fifteen hours to complete a task that should have taken five, then the inefficient lawyer has just tripled revenues. In such an environment even those attorneys that are inclined to actively manage their projects have no incentive to improve their management techniques and the profession as a whole has no impetus to evolve.
We may have continued indefinitely down this path with attorneys managing projects “by ear” and raising their rates ten percent annually, but the economic downturn in 2008 provided a much needed wake up call to the industry. Over the previous decades many of our clients have begun to implement quality assurance and efficiency measures like Six Sigma and LEAN borrowed from manufacturing industries. When they began to feel the effects of the 2008 downturn, they started to assess their service providers just as they had themselves. They began to demand the same levels of quality, accountability, and efficiency from their legal service providers in the name of controlling costs. Many law firms responded in the only way they knew how: they discounted their services. They took a percentage off of their hourly rates; they wrote off expenses that they had traditionally recharged to the clients; they pretended that the task that had taken them fifteen hours to complete had only taken them five; they laid-off non-essential workers, then less-essential workers, and then, in some cases, attorneys. Five years later many firms still act as if the old way of doing things will return just as soon as the economy turns around. However, a recent report co-written by Citi Private Bank and Hildebrandt Consulting based on surveys conducted by Citibank and Thomson Reuters Peer Monitor states:
… it is time to let go of any lingering notion that the industry will revert to the boom years before the Great Recession anytime soon. With profit growth and other financial indices reaching lower setpoints in the past four years, we anticipate that the current state of the industry will remain the norm for the foreseeable future.
Gone are the days of one-line billing “for services rendered” and they are never likely to return. In order to survive in this new world law firms must be accountable to their clients, providing greater transparency, price predictability, and open communication. In this environment the ‘ad hoc’ project management that lawyers have done for years will no longer be sufficient. Practicing law in the “new normal” will require a mature and systematic approach to Legal Project Management (LPM).