5 Essential Legal Project Management Metrics Every Law Firm Should Track
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- Kristopher Lawrence
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1 5 Essential Legal Project Management Metrics Every Law Firm Should Track The Jackson Reforms have not only impacted on how litigation cases are run but have brought into sharp focus the need for Legal Project Management (LPM) of all legal matters within the industry. LPM is aiding the shift from the practice of law in the abstract to its practice in the context of a business, whether that is a firm s profitability or a department s budget. It has become less about the letter of the law and more about how cases are run and costed, which can often predetermine the success of a case nowadays! And now with the industry focus on client value and alternative fees, matter management is being employed to maintain service level commitments and key performance metrics (KPIs) for both clients and firms. As a legal case can follow many paths due to unknown changes and with few guarantees, how can you the firm determine the most efficient way to run a case? Well, even before you consider the law behind the case the following LPM metrics need to be considered. We call these The Early Questions The Early Questions How can I conduct my client s work efficiently? How can I focus on my client s business needs? How to avoid work the client does not want to pay for? I need to control and predict my costs! I need to devise and meet schedules! I need to manage the risks each projects presents! You will need to provide answers to the above questions at the same as providing effective legal services to your client!
2 Budgets & Fixed Fees Alternative (AFA) and fixed fees now mean lawyers are faced with the need to be more efficient in how they deliver legal services. Firms are learning that succeeding without cost overruns in AFAs means treating the cases as projects, transferring project management concepts into the legal world. The good news is that within the scope of AFAs there is enough variation to cover most needs, and enough to provide firms with both great incentives and risks. However, budgets and fees/chargebacks, and their related tradeoffs, can be a difficult conversation without a structure to guide the discussion. What every lawyer needs at their fingertips is the following: Your firm s services accurately priced and know exactly how much it costs to perform those tasks. Be armed with the right information to price with confidence. By automating pricing with LPM software it can instantly solve AFA allocation per case. By offering the client a range of pricing options law firms can continue to make a profit in spite of fees being fixed. Have to hand the firm s work/tasks/phase codes. Look at the corresponding hours and fix a price to that type of work. With a large enough population prepare a probability curve. If you re no statistician the legal software can create this for you when you input the correct data.
3 1 Cost Control Law practices face mounting cost pressure. Firms are now forced to manoeuvre within the borders of a fixed or flat fee arrangement whilst in-house counsel face reducing budgets and growing needs from internal clients. So, how to ensure costs do not spiral? Determine in advance with your client a clearly defined scope in terms of costs estimates. Constant management of client communication and expectations will avoid the relationship being at risk later on down the line when the case runs over budget. Use your client relationship skills to negotiate what s called changes in scope rather than a hard cap. If the client is insistent on capping the budget then you will know to limit your work to within those parameters.
4 2 Lowering Risk Professional liability insurance is one of the most expensive overheads for most firms. When underwriters set the rates for individual practices, one factor they take into account is how well the firm manages risk. LPM can reduce professional liability risk in a number of ways: Maintaining quality control of the work the lawyer is performing Meeting critical deadlines Avoiding or quickly resolving fee disputes with clients Maintaining active, open and timely communications with clients on all aspects. It s nigh on impossible to eliminate risk, so the key objective here is to lower project risk i.e. minimise the impact of unplanned events. Risks will occur, however, what matters is how you mitigate them and deal with them. It s also important early on to have a frank discussion about what could possibly go wrong and the steps to deal with each eventuality. With that in mind you need to obtain absolute clarity on the following questions immediately following your first consultation with your new client or case: What is the client s business problem? What does it look like when solved? What are the two or three critical success factors? What steps will most likely get me to the solution? How long will those steps take? What is the client s desired timeframe and what is realistic? What external factors such as court dates will delay the case? What are the conditions driving the client s satisfaction which will influence their repurchase intent?
5 3 Time We all know the phrase time is money but did you know that as a commodity time has become ever more valuable? Solicitors cannot afford to misuse time and this is where LPM comes into its own: Delivery on schedule is critical and LPM helps lawyers control or predict the time spent, both cumulative time (hours) and running time (schedule): 1. How long will each stage of the case take to reach resolution? 2. What external factors such as court dates will delay the case? 3. What is the client s desired timeframe and what is realistic? Delivering the value that the client seeks on schedule is also important. By understanding the client s business needs and by asking key questions early on, you the lawyer can increase the timely value of legal services and increase the value that the client perceives in your firm or department.
6 4 Profit Pricing strategy has become the buzz topic at most partner meetings and protecting profits is paramount. So how can you utilise LPM to gain and maintain market share whilst also getting your pricing management right? Focus on what the client needs and the client s perception of commercial value. What does the client plan to spend on this legal matter? Who has a stake in the outcome, and are there clients within the client s business not directly visible to the case? Keep an eye on who is doing the work. For example, a matter may become less profitable because a partner performed some of the work instead of a junior lawyer. Following LPM-related processes will ensure that such situations are accounted for within a firm s case management. Always make a distinction between a partner s profitability to the firm versus the partner s client s profitability to the organisation.
7 5 Resourcing (scheduling) Once the cost and value of a matter has been determined then the lawyer project manager can assign appropriate resources (staff) to the project and define a suitable schedule. Resource allocation, scheduling of critical tasks and regular reporting to all key stakeholders can all be worked out with LPM. This increased transparency increases the likelihood of timely corrective actions being taken should things start to unravel. So, how do I execute LPM? The most important tool of Legal Project Management besides the framework for organising the project and getting out in front of its issues, is the automation software. With automation software, LPM guides and builds on the tools and skills experienced solicitors already have, without expecting them to become professional project managers. As cost budgeting becomes ever more complex the tools that software provide and the speed with which they can be employed cannot be substituted. LPM systems are particularly valuable for managing risk, sharing knowledge and communicating within the team. In this respect, they add both fiscal value and timely value to any case.
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