Pam Woldow's At the Intersection

“Grubby Money” – Lawyers’ Reluctance to Talk About Fees

By Pam Woldow on May 9th, 2012 Posted in General Counsel, Law firm management, Law firm practices, Law Firm Profits, Legal Project Management, Legal Spend, New Normal, Outside Counsel

It’s no secret – and no surprise – that in today’s competitive and cost-constrained legal landscape the Almighty Dollar has taken center stage: clients are increasingly fixated on tightened budgets and efficient service delivery. It’s also clear that discussing the dollars is something a lot of lawyers prefer to avoid.

We recently led a Legal Project Management (LPM) workshop that included both law firm partners and representatives of one of their biggest clients, a financial services giant. The format proved very successful in airing out a variety of issues and building some new communications bridges.

The Elephant in the Living Room

Then the conversation turned to budgeting, and the tenor turned tense. One partner, speaking with a hint of self-righteousness in his voice, said, “our priority is to provide the finest possible legal service. We find it distasteful to talk about grubby money matters with clients. We want to do the legal work to the best of our ability and then send the bill.”

Jaws dropped. The client-side folks looked at each other in disbelief. Silence darkened the room. After a pregnant pause, the highest-ranking client lawyer cleared his throat.

I don’t think you guys are getting the memo. Look, we are in the business of talking about money. In fact, money is our business. We want to talk about legal costs. We do not consider negotiations about money to be…grubby.

Historical High Ground: Dollars are Dirty

Partner discomfort with discussing the details of what legal services cost is hardly unusual—or hardly surprising, especially because firms often don’t know what it costs them to deliver service. Historically, they just passed all the costs of doing business through to the client – along with a healthy premium. They hid behind the time-honored claim that law was a profession, not a business, and that the discussion of price and costs was rather unseemly.

Today’s Client Perspective: Law is Business

Regardless of what law may have been historically, today it is undeniably a business. Big business, with big stakes and big money.

As Paul Lippe pointed out in his splendid recent blog post, Is Your Firm or Legal Department ‘Old Normal’ or ‘New Normal,’ the old law firm orientation was that “every matter is unique – to think otherwise is to devalue and ‘commoditize’ the profession.” The new orientation is that “every matter is similar to other matters…and reinventing the wheel leads to…excess costs and clients avoiding lawyers.” Historically, the highest praise for law firm lawyers was that they were “ethical.” Today, the highest compliment is that they are “operationally excellent.”

A Double Standard

Funny, partners don’t seem averse to talking about money when it comes to divvying up the booty into partner points and annual compensation. In fact, many want so much more of that “grubby money” that they readily jump ship to another firm with a higher PPP.

Clients are justifiably chagrined that their lawyers are so reluctant to talk about the critical measure of value conferred. They tell us they like it when money matters are addressed candidly, forthrightly and early. When law firms balk at discussing the coin of the realm, they would do well to remember who rules the realm these days.

Corporate Counsel: How to Stop Bluster, Boilerplate & BS in RFP Responses

By Pam Woldow on April 19th, 2012 Posted in General Counsel, Legal Spend, Outside Counsel, Request for Proposal

We’re seeing huge increases in the number of RFPs corporate legal departments are issuing to try to get the best law firms, lawyers and service. But we’re not seeing huge increases in the quality or effectiveness of those RFPs. To flip the old phrase on its head, a lot of RFPs are garbage out, garbage in. If your RFPs are to distinguish the wheat from the chaff, you in-house folks have to do a lot better at framing questions that matter. Many of your current efforts simply are not effective at eliciting the information necessary for astute decision making.

As someone who is often retained to help clients draft RFPs or to help review law firms’ RFP responses, I must say that dreadful responses often are the result of dreadful questions — questions that utterly fail to discriminate the stars from the also-rans. I have a request to general counsel: do better. Put in the time, skill and effort to help your potential vendors truly put their best foot forward.

Bag the Boilerplate

Good RFPs give clear instructions. One instruction they all should include is: “Don’t, don’t, DON’T just repeat your website copy in response to our RFP questions. We’ve read your website already. We believe you have the experience and expertise to do the job. This isn’t a beauty contest to get through the screen. It’s the endgame. That’s why we asked you to respond to our RFP, and it’s why our RFP asks you to provide more detail.”

Ask questions that cut to the heart of the engagement, not boilerplate created by committees. All too often, the RFP committee looks at the last few RFPs and follows the easy path of simply recycling ready-to-wear questions asked before. Please, take the time for some custom-tailoring. Frankly, about half of your canned questions (and, therefore, half the responses you receive) are not really relevant to the selection criteria. If you don’t want your time wasted by reading twaddle churned out by law firm marketing departments (no offense intended), don’t waste respondents’ time and resources by asking them to expound at length (and frequently ad nauseum) to questions that make needless inquiries about pointless issues.

When you ask the questions that matter, that define your needs and incisively describe your expectations, always ask for proof. It is easy to “spin” or BS just about any example, so you corporate counsel need to reduce law firms’ bluster, banter and hogwash by requiring descriptions of objectively measurable outcomes. Make your respondents stand and deliver. Insist on specificity. Demand specific references.

A Gold Star and a Brownie

There are those who get it right. Recently, a GC client sought to retain several firms capable of competently handling their matters while managing to budget. This RFP was NOT for commodity work; it was for important matters where budget was definitely a driving factor.

The RFP instructions made it clear that the company wanted firms that really knew how to manage legal matters. The company only wanted to see examples of effective management where a reference was provided. Any unsupported example was null and void: No reference, no go. It was that simple. And – gad, don’t you just love this? — the GC also requested “beautiful brevity.” Finestkind. (Suggested supplemental reading: “Power Tools for General Counsel: Creating RFPs that Really Deliver the Goods”)

Cut to the Chase

Below are five of the questions that this particular GC put to the competing bidders:

In a matter similar to the one for which you are bidding, describe how you delivered legal services efficiently. Provide references for each examples
Provide a projected budget for the matter on which you are bidding, broken down by phases of the matter.
We expect your firm to comply with budgets it provides. In previous matters for other companies, describe how accurate you were in budgeting matters (comparing your original budget and the final legal fees) and provide references for the examples.
When there were changes in matters that impacted budgets, describe how and when you communicated changes to the client. Also, describe what proactive steps you took to minimize or contain legal costs. Provide references for your examples.
At the end of matters (or periodically), we require our firms to meet with our team and review matters. We will expect you to present “lessons learned” from handling our matters that will help us avoid similar issues or problems in the future, and we view this as a non-billable event. Are you willing to provide this value added service?

These are not unreasonable questions. They are the voice of the future.

Why Lawyers are Lousy Collaborators

By Pam Woldow on April 16th, 2012 Posted in Law firm management, Legal Project Management

Guest Post by Douglas Richardson

Partner, Edge International

In an evolving legal profession in which the players are ever more functionally interdependent, the ability to collaborate has become a core competency. In managing law firms and legal departments…managing legal projects…in client service and client relations…and in marketing and business development, the ability to play well with diverse colleagues and constituents has become absolutely pivotal.

The Hard Wire

So, if the benefits of collaboration so evident, why are so many lawyers such poor — or at least reluctant — collaborators?

In part, it’s because so many people who self-select into a legal career are hard-wired to work independently and crave the rewards of individual achievement. Put differently, lawyers are not naturally collaborative, and many do not play well with others. In part this is because their personality does not predispose them to share responsibility, power, turf or glory.

On various personality tests, samples of lawyers generally score near the 90^th percentile for autonomy, as compared with about the 45^th percentile for the general population. The scores are about the same for skepticism. On the other hand, they are less flexible and adaptable: their resiliency score is about the 30^th percentile, far below that of the general population. And get this: lawyers’ sociability score hovers around the 12^th percentile, while the “other folks” average around the 70^th percentile.

In a recent article, “What Makes Lawyers So Challenging?,” Dr. Mark Sirkin suggests, “What is clear is that the personality traits of many lawyers make them less amenable to general law firm knowledge management efforts. When reinforced with ‘eat what you kill’ compensation systems, they apparently have little incentive to share, cooperate or collaborate.”

Sirkin voices concern that the personality type that promoted success in the “pre-collaborative” (and more adversarial) era of law may leave many lawyers “ill-equipped for the new style of lawyering involving project management, focused team work, effective knowledge management and transparency.” He wonders if the sea change in the legal profession may require a basic change in hiring practices to better align lawyer’s temperament with today’s critical success factors.

There’s More to It

This emphasis on personality type may oversimplify things. The real causes of poor collaboration may be contextual as much as temperamental. Collaborativeness may not, in fact, be a simple personality trait, and collaboration is, in fact, a complex interplay of factors and incentives.

People can and will collaborate only if three conditions are met:

1) they are motivated to collaborate; and

2) the perceived rewards of collaborating outweigh the perceived risks; and

3) everyone collaborating understands what to do in order to collaborate effectively.

The first two conditions relate to incentives (or, conversely, to disincentives) to work in close concert with others. Many legal leaders and managers are surprisingly indifferent to the factors that will promote buy-in and engagement of all team members. They assume that compensation and advancement are lawyers’ sole moving forces, and that subordinates will commit to any task their superiors orders them to undertake.

Attitude surveys of associates show how misguided this assumption is: morale is not strong throughout the ranks of younger lawyers these days. Efforts to understand individual lawyers’ motivational drivers, build that understanding into personalized incentives, and individualize delegation and feedback can produce remarkable improvement in buy-in, resiliency and personal sense of ownership.

The Crucial Ingredient: Role Clarity

Suppose we can get past the motivational issue and assemble a team of contributors willing and able to function collaboratively. Will they automatically function together like a well-oiled machine? Not unless all players’ trust and commitment is supported with a clear and concise understanding of exactly what they are supposed to do.

Before putting a project (or department or company) in motion, the skilled leader should take steps to assure that every participant is fully informed regarding all relevant factors in the “collaboration equation.” This happens less often than you’d think. All too many leaders and managers function on a “need to know” basis, assuming that only one person – them – needs to understand all the moving parts. This leads to a hub-and-spokes management style that leaves all the people out on the rim out in the dark. A more productive operational motto: All stakeholders in the loop, all of the time.

**Roles, Responsibilities and Ownership**

The best way to get autonomous lawyers to collaborate more effectively is for their leaders and managers to provide them with very clear role clarity that includes distinct boundary lines of responsibility and accountability. Savvy, autonomous people know they can’t do everything themselves, so the skilled leader’s challenge is to create complementary roles among team members that let each achievement-oriented contributor retain some sense of a personal win even as the team as a whole wins.

Big Problems with Delegation

Across the board, the quality of delegation of tasks and responsibilities to younger lawyers is shockingly bad. Managers often make unverified assumptions about the “delegatee’s” level of understanding and expertise. They give instructions in shorthand and/or at hyperspeed. Any extra time a delegator takes to determine if a particular task is being handed to the right performer, coupled with a moment of extra effort to reality-check that the “delegate” fully understands all what he or she is being asked to do, produces immediate increases in collaborative-looking outcomes – that is, fewer do-overs, write-downs, and dropped balls.

The bottom line is that many of the problems with lawyers’ collaboration come from poor instructions. This suggests, therefore, that one of the best ways to promote collaboration is to spend more time – at the outset of a project — explaining to team players:

what we’re doing
why we’re doing it
what each individual’s role is in the overall project
the sequence of project’s phases and tasks; and
the standards by which performance and success will be measured.

A Case Study at the Cutting Edge: Legal Project Management in Australia

By Pam Woldow on April 12th, 2012 Posted in General Counsel, Law firm practices, Legal Project Management, Legal Project Management tools, Legal Spend, New Normal, Outside Counsel

The legal profession, sad to say, rewards its denizens with relatively few breakout moments, a dearth of challenges that allow its movers and shakers to break new ground. All the talk about law’s “New Normal” notwithstanding, the legal landscape is a pretty conventional place, populated by more “first followers” than “first movers.”

That’s why it was both a privilege and a career highlight to work with King & Wood Mallesons to roll out Australia’s first comprehensive Legal Project Management (LPM) initiative. Even those familiar with international law firms may not recognize the name, because until the firm’s other recent astonishing bit of innovation – combining with China’s King & Wood to create King & Wood Mallesons , a 1,800-lawyer super firm — it was known as Mallesons Stephen Jaques. Clearly the combination with an Asian firm, rather than, say, a UK Magic Circle firm, reflects the firm’s determination to bust outside the box.

Selective Perspective

King & Wood Mallesons spent the better part of a year assessing options for their full-immersion LPM initiative before selecting Edge to support LPM design, rollout, introduction and training. “We traversed the entirety of the providers in that professional services space,” says their Managing Partner for Clients & Markets, Beau Deleuil, “and we thought they would give us the edge.”

My colleague, Doug Richardson, and I soon found ourselves juggling a myriad of moving parts in collaboration with the firm’s newly-minted internal project management department, headed by can-do-guru and Director of Legal Logistics, Michelle Mahoney.

Building in a Client Focus

Part of our brief was to design a series of bespoke LPM training client-orientated workshops. “In part [the LPM training] was driven by us and a desire to be more competitive, but in large part it’s also because clients themselves are asking for it,” says Deleuil. “The key benefits are that clients will see a new way of delivering services that gives them confidence, and we think that will be pretty revolutionary in the evolution of the market.” King & Wood Mallesons’ Australia Managing Partner, Tony O’Malley concurs: “Our aim is to make efficiency our business challenge, not our clients.”

These initial client- focused workshops broke a lot of new ground and required constant revision and updating of content — a process the firm has actively continued and augmented. Except for a common basic model of LPM stages and skills, nothing about these workshops came off the shelf. Each agenda was keyed to the kinds of work the firm performs for each client and the issues involved in their client relationships. Each program had to introduce LPM precepts while also providing a forum for candid exchange of ideas, clarification of client priorities and, yes, diagnosis of friction points.

As facilitators of these training workshops, we were called upon for some fancy footwork: keeping dialogue candid and focused…making sure all voices and viewpoints were heard and respected…keying content to LPM efficiencies and action steps…making sure the firm’s lawyers made the most of this unprecedented client relations opportunity…and debriefing the training to assure that post-training workshop momentum was maintained on both the law firm and the client side. Exhilarating stuff, with feedback that showed the effort had been well worth it.

Spreading the Knowledge

King & Wood Mallesons’ goal, however, was not just one-and-done training for a couple of selected practice groups. The firm wanted to take their LPM learnings from these workshops and design their own King & Wood Mallesons LPM training, facilitated in-house by their own people and tailored to meet the needs of their lawyers and clients across all practice groups. To support this goal, part of our role involved helping to bring a pool of carefully-vetted senior lawyers bringing them up to speed with instruction and LPM specific materials.

By the end of 2012, King & Wood Mallesons will have delivered LPM training to their 480 lawyers with more than three years of experience, across all of their Australian centres.

Looking Ahead

Although initial LPM rollout and training has focused on the firm’s Australian lawyers, Deleuil says he already is receiving inquiries from the firm’s overseas offices in Beijing, Hong Kong, Shanghai and London. “In Asia and China it’s one step at a time. We want to get it right here first, and we will have to adapt it to those markets.”

Deleuil expresses particular satisfaction with this initial phase of LPM activity and believes it eventually “will become something everyone [at KWM] chooses to do. Why wouldn’t you do this?” he asks. “My strong view is that the early adopters of this, the lawyers who volunteer for training, run at it, and implement it, will lead the pack internally and externally. They will be speaking a language that clients get. They will gain confidence in what they are doing, and I think this will become the new normal.”

We could not agree more.

A New Frame of Reference: Reflections on the Legal Industry from the Amazon River

By Pam Woldow on April 1st, 2012 Posted in Law firm practices, New Normal, Outside Counsel

It’s strange to find myself ruminating on the changes in the legal profession as I travel on the Amazon River in Brazil, 20 miles upriver from the city of Manaus. What could the global legal marketplace possibly have in common with one of the world’s largest and most complex watersheds?

A couple of similarities swim into view:

The collision of diverse “ecosystems” precludes a comfortable and unchanging status quo.
The most successful species of flora, fauna are the ones that adapt fastest to the changing conditions.
After a huge storm sweeps through and floods the place, things never go back to the way they were.

Here on the Amazon, the unprecedented river floods of 2009 forced riverside homeowners to lift their houses significantly to higher stilts, to move their fields to higher ground. This year, it looks like rainy season river levels will be even higher than 2009, and taller stilts just won’t suffice. So, what are we suddenly seeing? Floating houses. The point: It’s never enough just to wait for current high water to recede. Agility is the name of the game.

Similarly, the Global Financial Crisis (GFC) overwhelmed traditional economic norms and reshaped the face of the legal profession as well. Today, lawyers talk about law’s “New Normal” as if the GFC simply floated law firms and their clients from one kind of stable “ecosystem” to another – from an environment where the law firms shaped the rules of engagement to another where clients are reshaping the fundamental nature of the client-law firm relationship. But even after all the players think they have adjusted to its changed landscape, the “New Normal,” will not be a static equilibrium, a set of taller stilts. The so-called “New Normal” actually is a gateway to a process of continuing and often startling changes.

The Amazon teaches that change never stops. And, that’s my point as I sit here on a boat looking across the 2 mile expanse of the Amazon River just about where it merges with the giant Rio Negro. I am struck by how totally different this place and this moment is from my conventional work life and work day. To an exceptional degree, we lawyers get our heads into our game and keep them there. We operate in a synthetic world totally of our own making and generally behave as if it is the “real” world, the only world.

Even those of us advocating for greater innovation and still faster change in the legal profession often find ourselves trying to change our perspectives and actions from inside the box. That may permit small, incremental changes where we all nibble around the edges of innovation, but this convention-based perspective so narrows our focus that it all but eliminates the ability to entertain large and dramatic paradigm shifts. As noted legal consultant George Beaton so aptly puts it: “Where you are defines where you will remain, unless you do something dramatic.”

A Wharton professor recently suggested to me that the difference between strategic and tactical thinking is this: with strategic thinking you envision a desired end-state out there on the horizon and drag that vision back to the present. With tactical thinking, you start where you are at the moment and try to push a goal out toward the horizon. There’s a place for both. But, lawyers, whether they admit it or not, are far more prone to reactive steps based on the present than on re-imagining their craft, its purposes and outcomes.

THE LOW DELTA FIRM: Demise of the Low Ball?

By Pam Woldow on March 12th, 2012 Posted in General Counsel, Law firm practices, Law Firm Profits, Legal Project Management, Legal Spend, Outside Counsel, Request for Proposal

If you are racing to stay competitive in today’s rapidly-changing legal marketplace, you probably have learned some new words and acronyms.

Convergence programs.
Alternative fee arrangements – or AFAs.
RFPs, those increasingly draconian client requests for proposals.
LPM, that is, legal project management.
LPOs, those legal process outsourcing enterprises.

The Key Selection Criterion

All of these neologisms focus on the most salient feature of the current legal landscape: the client is driving. Client demands for better efficiency, predictability, cost-effectiveness and communication are being translated into a new set of selection criteria for outside counsel. Chief among these is the ability to deliver the goods, consistently, as and when promised.

For in-house counsel, a single metric now rules supreme: Actual to Budget.

In other words, clients are using their increasingly sophisticated financial analysis tools to monitor how closely your firm’s actual billed fees parallel the estimates and budgets you trotted out early in the engagement. Many are using LPM in their own departments.

The Pitch: Low and Away

We all know that historically, low-balling has been a common practice: a firm bids whatever number will snatch the business (whether or not the number is realistic or the firm can make a profit at that number), and once the firm gets in the door, is securely entrenched and has the meter running in a given matter, rate ratcheting begins and escalates.

For the client, the problem, of course, is that this practice produces huge variations between projected budgets and final bills. Obviously, blown budgets and constant overruns play havoc with a General Counsel’s ability to forecast budgets for outside legal spend and make a mockery of the predictability of a legal department’s budget. All too often, it causes the GC to lose face and credibility with the company’s management: Our other departments manage to their budgets. Why can’t you?

The Delta Force

Today, therefore, GCs are spending a lot of time scrutinizing the “delta” – that’s math-speak for the difference – between budgets and actual fees of various engagements. High deltas mean a firm is not consistently delivering on the promised budget. Perhaps the firm is low-balling estimates and ratcheting fees later, or gaming the relationship. Or maybe they simply don’t know what matters cost and are making“wet-finger” guesstimates. Whatever the cause, these budget-busting practices illustrate the maxim: “To guess is cheap; to guess wrong is expensive.”

Down, Delta, Down!

So expect to begin hearing a new phrase that more clients are using to praise outside counsel: The Low Delta Firm. This phrase signals a shift toward greater client vigilance regarding what is promised and what is delivered. Being “Low Delta” denotes a firm that can provide accurate and realistic budgets and then manage to those budgets. It suggests a firm that is willing and able to be held accountable for both efficiency and consistency.

Is your firm a Low Delta Firm?

You Can’t Make Lawyers into Techies: 3 Lessons About LPM

By Pam Woldow on February 14th, 2012 Posted in Law firm practices, Legal Project Management, Legal Project Management tools

As a result of a conversation I had this week with David Rueff, a partner at Baker Donelson and an ardent advocate of Legal Project Management (LPM), right now I am particularly mindful of the adage, “never try to teach a rhino to dance. The results are generally unsatisfactory and it annoys the rhino.” Mind you, I am not calling lawyers rhinos. However, I do want to emphasize the futility of trying to coerce lawyers into doing things they are not suited or inclined to do by using the phrase, “but it will make your life better.”

LPM Likes Technology

The focus of my philosophizing is technology, specifically the development of software, templates and tools to support the scoping, planning, budgeting and managing of tasks that are instrumental to effective Legal Project Management. LPM is maturing rapidly, and its rush into adolescence is attended by legions of internal IT experts and outside consultants who want to provide lawyers with elegant technological “solutions” that will support their struggle toward more efficient, predictable and cost-effective management of legal work.

Chapter One: Give It To The IT Guys

The initial efforts of IT gurus to develop software-driven templates and dashboards often produced tools of astonishing elegance – and complexity. At demos for firm partners, these wizards showed off all their tools’ technological bells, whistles, nuances and capabilities with effortless facility. The IT experts loved this stuff.

Ah…No

But when lawyers tried to: a) learn these technologies; and b) apply them to their daily work while also doing their daily work, their heads exploded. Thus did firms learn that development of LPM software and tools could not simply be delegated entirely to the IT jockeys. The rhinos definitely were not dancing…and they certainly were annoyed, as reflected in their wholesale resistance to these new LPM support tools.

Okay, How About This?

Major law firms’ determination to develop better, more user-friendly LPM tools (accompanied by the expenditure of significant resources) rapidly led to development of far more user-friendly software tools, including self-populating dashboards that could manage and integrate information about project scope, phases and tasks, the makeup of the project team, budgets, progress milestone with firm time and billing systems. Many of these much-improved tools were developed with the input of lawyers like David Rueff: legally proficient, technologically savvy, and intensely committed to making LPM work. Among the best of these second-generation efforts, in my opinion, was Baker Donelson’s BakerManage, an integrated tool that was logical, effective, down-to-earth and easy to understand and use. I thought it Best in Class in 2010-2011.

What? Me Training?

BakerManage and other second generation efforts still presented a learning curve to lawyers that necessitated some training and some practice, but the obvious utility of these tools was bound to lead to wholesale adoption with shouts of joy and open arms, right?

Wrong. When offered the manifold benefits of cutting-edge LPM technology, lawyers have complained much, resisted mightily, and generally left the tools to gather dust. A telling example: several global firms have offered their lawyers iPads, on which the firm’s proprietary LPM software is resident. They can’t give ‘em away…oh, wait! They are giving ‘em away! Adoption rate? Less than 1%.

David Rueff tells me that his firm has gone back to the drawing board to further streamline BakerManage. It’s not just that the new iteration is simpler, graphically more accessible and easier to navigate. It’s logic – the way it depicts and handles information – has been fundamentally changed to “think the way lawyers think, and act the way lawyers act.”

3 Lessons to Make Technology Work

Certainly, lawyers are not Luddites, determined to resist progress and deny any change. It’s that they are lawyers, not IT types. So that’s Lesson One: You can’t make lawyers talk IT; IT has to learn to talk lawyer.

Lesson Two is that lawyers insist on immediate gratification. They will happily sacrifice technological sophistication (with its attendant steep learning curve) for instant utility.

Lesson Three is the need for patience when introducing any sweeping change that seriously impacts traditional behaviors. Lawyers don’t welcome transformative changes, but they will accept sequential phase shifts (if only because their competitors do). Dechert’s Ben Barnett put it succinctly in an earlier At The Intersection post: “You should not try to build a perfect system off the bat. Don’t bite off more than the firm – and its lawyers – can chew. Build something that works now, recognizing that you will probably be changing and redesigning almost everything as your LPM function matures.”

Extreme Magical Thinking: Technology Won’t Take You Off the Hook

By Pam Woldow on January 30th, 2012 Posted in Intersection, Law firm practices, Legal Project Management, Legal Project Management tools

On the eve of LegalTech, I have been encountering a lot of magical thinking recently when talking with law firm partners about Legal Project Management. One partner, hoping that the IT and KM folks can simply buy a tech solution so that he could avoid making any real changes to the way he manages matters, engaged in extreme magical thinking when he asked, “isn’t there just some software where I can click one button and it manages everything?” He just wants to keep doing what he’s always done and have technology somehow make the result different.

Sorry, we live in the real world.

Here’s the bottom line: Siri can’t analyze what tasks need to be done (or not done) for a client, and iPads don’t independently tailor project plans. Software sits inert until some lawyer lights it up, infuses legal judgment and knowledge into matters and uses the software to reflect back the enhanced management skills being applied.

If your firm has invested (or is about to invest) in magnificent new software – that elegant integrated dashboard will sit on your computer screen and tie together project scope, phases, tasks, team members, timeframes and the all-important budget-to-actual comparison – but it can’t overcome inefficient or non-existent management of legal matters. Only the lawyers can do that. And, that requires extreme practical acceptance that clients today want excellent lawyers who also are accomplished managers that drive efficient work product.

Software tools support efficient lawyering, but it is extreme magical thinking to suppose that some push-button silver bullet can convert inefficient work into efficient work.

One of the most widely read blog post I’ve ever written deals with this very subject: Legal Project Management Tools: Let Rube Goldberg Rest in Peace.

But, it is worth a reminder that LPM and its technological support tools are about how legal projects are planned and managed. What is practiced and delivered will always remain up to the lawyer. The core functions of being a lawyer and exercising professional acumen can’t be delegated to technology, and that won’t be changed by even the most sophisticated tools, templates and software. As always, those decisions will be up to you.

A General Counsel’s Take On LPM & Foreseeability

By Pam Woldow on January 23rd, 2012 Posted in Alternative Fee Arrangements, General Counsel, Law firm practices, Legal Project Management, Legal Project Management tools, Legal Spend, Outside Counsel

Guest Post by

Russ Dempsey, Vice President and Chief Legal Officer

United Retirement Plan Consultants

Pam Woldow’s recent blog post, Putting Some Pepper Into Legal Project Management, called to mind my own recent successful use of Legal Project Management (LPM) to manage the risks and foreseeability issues in an engagement with one of our outside counsel for reviewing and negotiating leases.

Getting On the Same Page

We lawyers are supposed to be great foreseeability experts, having had the idea drilled into us in law school, and a significant area of jurisprudence, negligence, is founded upon it. As Eugene O’Neill said: “There is no present or future, only the past, happening over and again, now.” Yet both inside and outside counsel too often fail to test our assumptions and identify possible risks in legal engagements, resulting in blown budgets, miscommunication, misaligned interests and sometimes, regrettably, testy disputes. I really wanted to avoid this.

LPM makes a difference in helping firms work within agreed budgets, increase budgeting proficiency, improving communications and – a pressing priority for us these days – structuring value-based billing arrangements. Yes, LPM requires an upfront investment of time, but it can be adjusted to fit the circumstances. Not every engagement requires an elaborate project charter, yet every engagement requires that the parties agree upon their assumptions and look to the future.

Front-End Risk Discussions

I wanted a fixed fee with our firm. They were concerned about the possible impact of some challenging lease provisions, (e.g., escalation-of-rent clauses, building allowances and improvement), as well as onerous leases that threatened the firm with spending so much time that they would take a bath on a fixed fee arrangement.

I worked collaboratively with them to develop a Risk Chart (see below) that would help manage uncertainties that could impact our fixed fee arrangement. The result was that I negotiated a fixed fee that was in my company’s best interest, and the firm came away with a means to manage their time commitment. On our Risk Chart, we agreed on the fee, scope of the engagement, major decision points and who the decision makers were. Then we documented the risks and likely consequences, assigned a probability to each risk, prepared mitigation strategies, listed the triggering events, and – very important – scheduled a time for a project review.

Unlike many fixed fee engagements that attempt to define all possible opt-out circumstances, the risks identified in our agreement did not kick certain problematic leases out of the fixed fee arrangement into an hourly rate. Instead, we used our Risk Chart to create solutions that would preserve the alternative fee.

Hey, It Worked

Our mitigation strategies successfully controlled the potential time-consuming leases. For example, I reviewed my company’s position regarding building allowance and escalation-of-rent clauses – risks highly likely to occur – and we jointly created a term sheet to address these issues at the LOI stage. It proved more effective to discuss these potential problems in advance than it would have been to undertake damage control down the line. That same term sheet also protected both sides by reducing the number of turns of the document by stating my company’s position early in discussions.

We also agreed that there were some risks that were statistically unlikely (e.g., completely onerous lease terms), but that would have a very high impact if they did occur. We applied the same mitigation strategies to these low-probability-high-impact events, agreeing that if our strategies proved unsuccessful, I would agree to review and adjust the fee engagement.

Responsibility Trumps Accountability

The attitude of outside counsel has a pronounced effect on whether negotiations like this produce win-win outcomes. I asked Pam to allow me to praise Porter Wright, Morris & Arthur by name, because they took such a constructive and responsible approach to this engagement.

Pasi Salhberg said it well: “Accountability is something that is left when responsibility has been subtracted.” Responsible firms foster client trust by helping to flesh out assumptions and risks at the outset, rather than by dodging thorny discussions early on and neglecting potential problems until they leap up to destroy budgets, trigger finger-pointing, and erode client-outside counsel relationships. At the outset of your next engagement, I urge you to collaborate with outside counsel on a Risk Chart. As Pam has often been heard to say, “Front-end planning beats damage control, any day.”

Are You Prepared to Kick Butt?

By Pam Woldow on January 18th, 2012 Posted in General Counsel, Law firm practices, Legal Spend, Outside Counsel

This song goes out to all you General Counsel and senior in-house lawyers, and its title is “Sometimes You Folks Get Hosed and Don’t Do Nothin’ About It.”

I could just as easily have directed the song to those law firm lawyers who sometimes are a little, ah, “casual” about the finer points of scoping work, and called it, “Now You Know Where All the Lawyer Shark Jokes Come From.”

But today I’m jabbing at the in-house people, and in a moment, I will tell you why. First let me relate several true-life (if disguised) anecdotes, all of which were reported to me in the last two weeks:

“Do That To Me One More Time”

1) A Deputy General Counsel received an itemized invoice that included a huge hunk of billing time for work the DGC had not requested. He calls the relationship partner to contest the bill, calmly saying he has no intention of paying for work that was outside the agreed scope of the engagement. Ten days later he receives another invoice, this one for the time the lawyer spent on the phone call contesting the bill. The DGC emails the same lawyer back and says that now he’s “really distressed,” that he certainly is not going to pay for a phone call relating to his original overbilling complaint, and that he’d better not receive another invoice for reading this email. “Let this be an end to it,” he closes.

“You Dropped A Bomb On Me”

2) A large firm has enjoyed a long retainer relationship with a publicly-held client, and the relationship partner also sits on the client’s board. Over the years, this account has been churned unmercifully, but payment of the firm’s bills has consistently been rubber-stamped. Out of the blue, the GC receives a lengthy memo on a highly-sensitive topic (together with a bill for this “service”). The distressed GC lights up the phone lines to the relationship partner: “Not only did I not request this memo, I specifically did not want a memo on this topic. You have now created a document that I intentionally did not want. Don’t ever do this to me again,” he says.

“Take The Money And Run”

3) A major client complains about a huge litigation case that already has produced a 100% cost overrun, now in the millions, with the meter still spinning madly. He notes this firm has a history of significant overruns. He asks the firm to “look into it.” The firm dispatches its internal legal project management (LPM) guru to conduct an emergency process audit at the office handling this engagement. The LPM guru finds, among other things, a group of partners sitting around a conference table manually date-sorting documents produced in discovery. Not an associate or paralegal in sight. This is, the LPM guru exclaims with relief, a task that can be done swiftly and efficiently with software the firm already has. The office managing partner orders the guru to leave immediately, saying, “We don’t need you. This is how we make money!”

“My Own Worst Enemy”

In these situations, the GCs failed – evidently over a period of time – to impose appropriate accountability on outside counsel. And these events warranted more vociferous reactions, clearer measures and sterner sanctions. Situations like this demand more than a mild expression of distress or gentle slap on the wrist.

“New Attitude”

We all know that the Great Financial Crisis has shifted the balance of power in the legal profession. In today’s “New Normal,” law firms no longer control the rules (and costs) of engagement, as in decades past. Economic circumstances have provided clients with the leverage to demand greater accountability from their outside counsel. In many cases, as in the three anecdotes above, GCs have every reason to know that their outside counsel are playing fast and loose with them, but they often are reluctant to wield their authority.

In our experience, most GC’s do not like being put into the role of ethical police or hard-assed enforcers; their conflict aversion is legendary. But these three anecdotes should send a message to GCs, CFOs and CEOs: Complaints don’t fix problems. Consequences fix problems.

In short, GCs need to learn from their corporate counterparts that in tough times, you gotta be tough enough to kick butt and take names. In the New Normal, accountability absolutely is the name of the game.