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A recent survey of law firms suggest that somewhere in the neighborhood of 80 law firms employ a “Pricing Specialist” of some sort. The report states that “the use of pricing specialists remains relatively rare in all but the largest firms.” Of course this report caught my eye since it also notes “that increasing management control over pricing decisions lead to positive pricing outcomes.” This means pricing people have a growing and increasingly valuable role within law firms.

But I digress … the first point is the real subject of this post. A group of pricing people, or more broadly Alternative Fee Arrangement (AFA) and Legal Project Management (LPM) people, has come together to form a community. We are doing this under the umbrella of ILTA. In one month’s time our group grew by 70%, which I thought was fantastic. Then I saw the survey report numbers and realized we have a ways to go to fully capture this community.

So … if you are a pricing specialist or have an AFA or LPM role at a firm or your role covers one of those functions in some fashion, please shoot me a note. I will add your name (and your firm) to the list.

The goals for our group include developing best practices and creating professional development opportunities for people in these new, emerging roles. We see the need to advance our emerging profession and look forward to expanding this group and accelerating our positive influence on the legal profession.

Legal Project Management (LPM) can now officially be crowned the buzz-phrase of 2012. Although not many firms have fully integrated LPM in to their practices, the need for embracing it is a foregone conclusion. Being faced with this challenge has caused me to put many brain cells on the how and why of LPM and what will drive productivity growth in law firms. Ron’s post on productivity helped bring my thinking in to the clarity of this blog post. From what I am seeing, the market is setting lower prices and now firms are trying to reduce the cost of their services, which translates in to productivity growth.

To Ron’s points on growth in productivity, law firms need to become ‘better, faster, cheaper’ (BFC). Obviously LPM plays a role in this. However, I believe LPM is necessary but not sufficient for BFC. Because in most respects (and I’m sure other bloggers may chime in here) LPM is about doing something the same way only with more discipline. It’s about defining how we do things and then institutionalizing that effort in a standardize way.

I have touched on this point before, however the BFC angle refined my thinking and I drove me to the following BFC definitions:

Better: Doing it (a task, matter, etc.) with the same or more resources but driving an improved outcome (a.k.a. higher value).
Faster: Doing it with the same resources and with the same outcome, but in a shorter period of time.
Cheaper: Doing it with fewer or cheaper resources and driving the same level of outcome.

Translated in to ‘legal’ these become:

Better: Doing it with the same or more hours, but getting a better result.
Faster: Doing it with the same hours, but in a shorter time-frame (probably with more people).
Cheaper: Doing it with fewer hours or by using people with lower rates or with technology.

There is an old engineering adage that says “Faster, better, cheaper — pick two.” This idea basically argues any system can optimize at most two factors, to the detriment of the third. Using LPM, at best you can restructure the project plan to improve one or maybe two of the factors, but only by sacrificing a reduction in the third one. Clients seem to be pushing on ‘cheaper’ with minimal attention to the other 2 factors. This begs the question of where should the focus be?

Real productivity growth comes when you change the system, which leads us to process improvement. This is where most businesses gain a competitive edge. They employ long-term process improvement techniques, along the lines of Six Sigma.

Which brings me back to my point: LPM is necessary but not sufficient to drive improvements in law firm productivity. Project management brings discipline to a process, but is not about improving a process over time. I believe growth in productivity is what clients really want, whether they see this explicitly or not. Discussions about ‘efficiency’ are too often vague with no real discussion about what that means (e.g. no first year associates on the bill). Instead the presumption is that ‘cheaper’ equals efficient.

So I’ll start my campaign now for BFC to become the heir-apparent buzz phrase for 2013. Instead of being a technique like LPM, it’s actually the desired goal.

As much is Greg is hungry for free stuff, I am hungry for new technologies that will help ease my pain relative to alternative fee arrangements (AFAs) and related, emerging legal project management (LPM) challenges. So I am pleased to announce a new option on the market that may ease that pain.
Back in the Fall, I had spoken with the ERM Legal Solutions Team and gave them some input on direction their product might take. They listened.
ERM announced their updated offering heading into LegalTech. As I was otherwise committed, I did not attend LegalTech this year, so I requested a web demo after the show. What I saw gave me hope.
One of the challenges of bringing project management (PM) concepts to lawyers is carefully and diplomatically inserting these ideas in to the ways lawyers already practice. I have previously noted that imposing PM at full-force on to a practice would likely end in failure. To that end, ERM’s product is both flexible and highly integrated with other firm systems. You can build highly detailed, hour-by-hour plans, or you can easily go with a fixed fee price, decide what leverage you will use, drop in some time keepers and have a plan in place. The system also connects with your DMS, time and billing, CRM and other applications. This integration is reflective of the thinking that went in to this application. The ERM system is not another silo of knowledge.
On the AFA side, the system can be a quick, easy way to develop a budget. And it can give you a high-level profitability analysis. It also has a template feature, which I typically view as a mixed blessing. Templates are great tools – it’s just that no one ever wants to be the one who builds and maintains them. However, over time, I would at a minimum expect templates to emerge from various budget building efforts.
Admittedly I only saw a brief demo of the ERM system. However, its direction is promising. I plan to keep an eye on this offering and hope to take a more in-depth look at it in the near future.
Note: Ron Friedmann also posted a review on ERM here.

A recent post on Slaw highlighted an interesting tool called eGanges which employs the Ishikawa Fishbone approach to solving legal problems. This approach uses river logic in contrast to a decision tree approach. Beyond the wonderful ‘Ishikawa Fishbone’ name, I see some potential applications in the AFA world for a tool like this and river logic in general.
To understand river logic, consider starting with the outcome of a project instead of with the inputs. To better illustrate this idea, compare that concept to the traditional decision tree approach which starts with inputs, determines probable outcomes from each one, links those with dependencies from other outcomes, and determines a probable overall outcome (excuse my convoluted, yet over-simplification here).
The river approach gets its name from the analogy of starting at the mouth of a river (its outcome), instead of at the trunk of a decision tree (where the fruit is the outcome). The “Fishbone” moniker is another visualization of river logic, with the mouth of the fish being the mouth of the river and the fish bones being the tributaries.
As a means to more fully describe this approach, I have an idea for applying it to AFAs. When lawyers approach me about putting together a fixed fee or even just a budget for a matter, their instinct is to take a decision tree approach. They want to gather up a list of inputs (tasks) and select the timekeepers and number of hours for each task. Then these task costs (rates times hours) add up to an outcome: the budget. This approach works, but it also takes quite a bit of time to construct. And even then, the lawyer will invariably question the final number.
My preferred approach is to use the river logic method (although I only started calling it that today). I ask the lawyer what they think the final fee will be (a.k.a. the outcome). Now, standing at the mouth of the river, we move up-stream to identify any tributaries and establish how much water (fees) is coming from them. Some tributaries need to be explored to identify their water source to make sure it won’t fluctuate (think spring run-off). For legal work, these tributaries might be “discovery” or “jurisdiction” or “aggressive negotiators” – you get the idea.
With the river logic approach you spend your time testing your instinctive assumptions on a priority basis, only spending time on those that need it. Whereas the decision tree approach treats all aspects as equally important, forcing you to expend limited un-billable resources on low-value tasks.
Does the eGanges tool work well for this? That is yet to be seen. At a minimum, the river logic, Ishikawa Fishbone concept gives us a new way of approaching budget building for AFAs and any other fee deal.
Maybe we should rename our blog, “River Geeks.” OK … maybe not. That doesn’t sound quite as elegant as river logic.

In a recent blog post, Jeffrey Brandt makes the point that we should drop legal from legal project management (LPM) because it is driving him batty (or something like that).  In the end, we all agree that project management is a proven discipline that adds a lot of value.  I’d like to thank Jeffrey for continuing the legal project management dialogue.  I find it interesting that he focused on semantics when talking about prefixing legal to project management.  After spending nearly half of my life working in the legal industry, I believe that much time is spent in legal dealing with semantics, so it seems fitting here as well.

Legal project management is a subset of project management, and yes, LPM is a “marketing” ploy to get better adoption within the law firm.  In other industries, we do not see such prefixes.  For example, I’m not aware of a push for the term software design project management (SDPM) in order to gain adoption, because the owners of the software design companies already understand the value of project management and have already embraced it.  In this case, adoption is not optional.  Within the legal space, this is not the case.  We are seeing some adoption, but it is slow. 
LPM is a label we use to describe a defined process.  This is very similar to the way that law firms use areas of practice to market expertise.  This practice is not unique to law firms, it applies to most businesses.  Call it marketing or labeling, in the end it is an effort to distinguish your product or services from others.  If adding legal as a prefix to project management creates a tipping point for adoption, then I’m all for it.
[Ed. Note: This question is the subject of the next Elephant Post. If you have an opinion, then share it with us!!]