How Matter Planning Actually Works – Part 1

By on February 19, 2012

Firms are increasingly being put under pressure to deliver alternate engagement models, such as fixed fee arrangements or discounted rates, to win new business. In addition to this clients are demanding more transparency in the on-going handling of their matters so they can see for themselves the progress being made and the justification for work undertake.

Before we start to describe the Matter Planning process let examine some benefits firms should experience by using Matter Planning software.

  1. Improve forecasting accurately by leverage historic data on like matters or tasks.
  2. Reduce the risk of taking on matters that will result in lower margins than expected.
  3. Introduce a repeatable process that provides control and discipline in the business development process.
  4.  Reduce the costs and time to respond to prepare an RFP or Alternative Fee Arrangement (AFA).
  5. Drive more new business at a known level of profit.

 Firms can attempt to do matter planning with crude tools such as a spreadsheet or Microsoft Project. This sort of planning can handle the scheduling component of any plan but completely misses the financial analysis requirements. A spreadsheet could be used along with normal time and billing software that offers matter level budgets, however this becomes the start-from-scratch method and it may take years to develop a profitability model that can be manually maneuvered to do a forecast.

 Matter Planning software provides the ability to go back in time and search for similar matters that can then link to provide an immediate historic prospective for a future matter. Convenient links include such items as:

  • Phase and Tasks
  • Specific attorneys and attorney levels
  • Matter rates and actual internal costs
  • Hours recorder and actually billed
  • Disbursements

 After using the Matter Planning software tools the firm can easily develop a “roadmap” of revenue, hours, rates, costs and expected profit for a potential new matter. The firm can now present the client with a comprehensive financial matter plan.

 This however is just the beginning, in How Matter Planning Actually Works – Part 2, we’ll look at how to manage the matters and track budgeted vs. actual performance statistics to then better forecast future matters.

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Categories: AFA - alternative fee arrangement, Best Practices, Financial Management, Law firm billing, Management, Productivity

It’s a Great Idea – But Who Will Pay for It?

By on December 4, 2011

Legal Project Management is a great idea that, apparently, no one wants to pay for.  Law firms find it hard enough to get paid for things they actually “do”. These tend to be specific tasks, write a letter, file a brief, a deposition, a court appearance, etc. It is difficult to get paid for “review file” because the client believes that this type of task should be covered as part of general overhead and therefore included in the rates charged for actually “doing” something. Yet reviewing the status and planning the next course of action might very well be “project management” activities.

Sometimes it’s difficult to describe exactly what Project Management (PM) really is, what do you really “do”?

 Wikipedia even has a definition for Legal Project Management. It’s interesting that even Wikipedia points out the use of PM in the e-Discovery arena.

 We were fortunate to have Steven Levy at our RainMaker Annual Client Conference this year. He provided us some interesting perspectives on legal project management. You should check out his book on Amazon, it is quite interesting.

 One thing is certain; it is hard to understand Project Management. I can tell you for certain that without it you’ll have mismanaged projects and they are VERY COSTLY from a number of angles, including unhappy clients.

  Law firms already do Legal Project Management, sometimes by accident, but do it. The secret to success is to define the best you can to clients and find ways to get paid for it. Project Managers are crucial to the success of any defined project, both firms and clients must agree to a way to pay for the true cost.

 

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Categories: Best Practices, Financial Management, Management, Productivity, The Legal Market

Study of Complexity – From Utilizing Alternate Fee’s to Managing Legal Projects

By on August 1, 2010

Legal tasks, activities and even matters can be categorized into Simple, Complicated or Complex. Each is distinctly different; however only two of them can be defined, priced and managed.

Simple legal tasks, activities or matters are similar to baking a cake from a mix. You can develop a recipe that is pretty reliable and uses commonly measurements. There are some basic techniques that you need to learn, but after that if you follow the instructions these is a high likelihood of success. Law firm activities that fall into this category are the easiest to price and manage. If I need an estate plan, a SEC filing, or a trademark filed a firm should be in a good position to sell these services at a fixed cost, staff them with less costly people and manage them with checklists. See my blog posting on Checklists.  

Complicated is like sending a rocket to the moon, open heart surgery, or building a skyscraper. After a few successful ones the entire process can be broken down into groups of Simple tasks. There isn’t exactly a recipe, but there can be a detailed and well-structured plan. Since there are more people involved and these people may have different areas of expertise, scheduling and communication become much more important.  In complicated matters unanticipated issues will arise, they need to be dealt with, but in general, with enough experience the parties involved can handle or at least anticipate these and have additional resources on stand-by. Some of these tasks might require a very high level of skill, like the surgeon performing the open heart operation. The fact remains; these can be structured and therefore forecasted and budgeted within a reasonable range. A firm might look at any form of litigation as Complicated, for the most part it can be broken down into a series of relatively Simple tasks. Complicated matters are where a firm will gain the most with Legal Project Management and offering the client an Alternative Fee component to the engagement.

Complex has been compared to raising a child; we know it can be done with what would be considered successfully results. However, the skills and experiences necessary to raise the first child may not pertain to the second child. The second child may require a completely different approach. Complex brings with it the inability to forecast an outcome and lack of control.  What is also unique about Complex is that the tasks to be accomplished, although hard to predict may not rise to the level of expertise as those in Complicated. Budgeting and forecasting Complex is almost impossible, regardless of experience. People handling Complex need to be flexible and not bothered by dealing in an unstructured environment. Matters that are Complex will never easily fit into any sort of fixed fee or real “project management” model.

Law firms can benefit by first understanding their lines of business using the above categories and then by pricing and managing them appropriately.

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Categories: Best Practices, Financial Management, Productivity, Technology, The Legal Market

Legal Project Management – 2nd Big Disconnect

By on July 7, 2010

In my June 17th posting I discussed the 1st Big Disconnect that law firms have with Legal Project Management, their fear that planning, structure, budgeting and accountability will lower overall fees.

The 2nd Big Disconnect is –  no one wants to pay for “project management”. Law firms find it hard enough to get paid for things that actually “do”. These tend to be specific tasks, write a letter, file a brief, a deposition, a court appearance etc. It is difficult to get paid for “review file” because the client believes that this type of task should be covered as part of general overhead and therefore included in the rates charged for actually “doing” something.

Sometimes it’s difficult to describe exactly what Project Management really is, what do you really “do”? We have a similar problem in our business at RainMaker where we include Project Management in each system implementation contract, and define it as:

Services including software installation, planning, scheduling, consulting, communicating, coordinating, issue resolving, other unspecified implementation services, including all conversion-related services other than programming.

Luckily we only have a relatively small Project Management component to our overall professional services agreement. Our clients find it easy to understand specific task services like a day of training, or validating the data in a test conversion, but harder to understand Project Management. So why have Project Managers, well I can tell you for certainty that mismanaged projects are VERY COSTLY from a number of angles, including unhappy clients.

Law firms will face the same exact challenge, getting paid to manage a project. Someone will need to update project plans, communicate changes in the plan both internally in the firm and externally to the client. Project Managers are not inexpensive, they may not cost as much as a 3rd year associate but these people go for a lot more than most paralegals.

Project Managers are crucial to the success of any defined project, both firms and clients must agree to a way to pay for the true cost of Project Management.

In my next posting on the subject of Legal Project Management we’ll discuss the3rd Big Disconnect – Who’s In Charge?

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Categories: Best Practices, Productivity, The Legal Market

Legal Project Management – The 1st Big Disconnect

By on July 7, 2010

Steven B. Levy has done an excellent job articulating the concept of Legal Project Management, it is trail blazing and fits nicely into the corporate methodology for forecasting and reducing the costs of legal services. To better understand Steven’s thoughts, you can check out his blog and his new book, Legal Project Management: Control Costs, Meet Schedules, Manage Risks, and Maintain Sanity. It’s available on Amazon (full disclosure I haven’t read the book, I’m hoping it becomes available for my Kindle). I’ve met Steven when he was at Microsoft and at various LEDES meetings.

There are many current disconnects between law firms and clients that currently keep Legal Project Management in the category of “buzz words”, like “alternative fees”, “value billing” and so forth. One major disconnect is the fact that project management requires planning, structure and standardization. Law firms don’t like to be held accountable for plans, budgets and standards. Why, the mystery and uncertainty of, for example litigation is how firms make money. Mystery and uncertainty drive higher and higher fees. Transactional work has little mystery and therefore has a commensurate lower fee structure.

Here is an example:

In our business we use an on-line project management tool called @Task to manage our system implementations. We’ve studied enough past projects to develop implementation plans that are flexible enough to meet the unique needs of new clients. The structure of it is similar to phase and tasks used in litigation. The critical components are people, skills, time frames and budgets. As you might imagine even with a great project management tool, there are twists and turns every day that affect the overall plan. The benefit of the tool is to quickly determine how each twist affects the people, skills, time frames, budgets and the final goal. In the example I’m using we have already set expectations with the client that, based on past experience they can expect the project to be completed on time and on budget.  

At the end of the day BOTH RainMaker and the customer want to know the following:

  • Have we delivered the services required on time thus far?
  • Are we expecting to be able to deliver the future services as per the project plan?
  • Have the services achieved the expected results thus far?
  • Are we on budget thus far?
  • What is the estimate to complete the project, and will we remain on budget?

The biggest fear for both parties is that we are 60% done with the project and have used up 90% of the budget. Today, law firms just don’t think this way. The first “Big Disconnect” is that firms fear planning, structure, budgeting and accountability will lower fee revenue. It probably will in the short term and on any single matter. However, in the longer term it will produce more matters. In a buyers market, where there are more lawyers than premium opportunities, providing clients with project management will be a differentiator and drive new business. The road to get there for a law firm will require substantial change.

We’ll look at other disconnects in future blog postings.

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Categories: Best Practices, Productivity, The Legal Market
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