May 16, 2018

The Best Way to Increase Firm-Wide Commitment to LPM: A Panel Discussion by LPM Champions

By Tim Batdorf and Jim Hassett, LegalBizDev

The single most difficult step in implementing a firm-wide LPM initiative is getting the attention, interest, and buy-in of busy lawyers. 

In more than a decade of working with law firms of all sizes to implement LPM, we have consistently found that the most effective way to generate interest is to conduct a carefully structured panel discussion where LPM champions discuss their success stories and how other lawyers at the firm might benefit from LPM. 

(Note: This approach assumes that the firm already has at least a few influential partners who have succeeded in increasing client satisfaction and/or profitability by increasing efficiency and applying LPM.  If that is not the case, the panel discussion must be preceded by a one-to-one coaching program or other initiative to develop the first LPM champions.) 

The reason that a panel discussion is so effective is that the testimony and proven experience of lawyer colleagues is much more effective and convincing than anything any outside expert could say.  Whether the panel discussion is featured at a retreat, or simply the basis for a lunch meeting for a small group, the keys to success are:

  • Pick the right participants based on both their presentation ability and their influence with colleagues in attendance.
  • Identify a skilled facilitator to organize and conduct the panel discussion to assure that the participants focus on benefits rather than getting lost in the details. (Note: It may be best to hire an outside consultant to facilitate the panel discussion.)
  • Decide whether the facilitator should be an outside expert or an internal staff member.
  • The session should be planned with a clear, concrete, and measurable goal, such as:
    • Identifying volunteers for LPM coaching
    • Increasing the use of internal LPM staff and resources
    • Increasing the use of on-line just-in-time training LPM tools
  • Hold one or more brief preparation meetings or pre-calls with the champions to review the goals of the session, what they will each talk about, and how long they will have for each section. (Note that this should NOT be a practice session of exactly what people will say.) 
  • Encourage all participants to keep the tone of the discussion positive and upbeat and avoid any negative comments about other lawyers or practice groups within the firm. Avoid any controversial law firm subjects.
  • Structure the panel so that no champion speaks for more than 5 or 10 minutes at a time. Make sure that all of the champions have a chance to speak and share their stories. 
  • Determine whether participants will want to display slides or samples of spreadsheets and other LPM tools while they speak.
  • Consider how best to arrange the order of the participants. As every lawyer knows, it’s always best to make a good first impression and present a strong closing.

The facilitator’s primary role is to assure that panelists consistently focus on LPM benefits, such as:

  • Increased new business and profitability
  • Meeting client needs for cost reduction
  • Meeting client needs for predictable budgets
  • Greater client satisfaction and better client relationships
  • Improved alternative fee arrangements (AFAs)
  • Improved definitions of scope
  • Improved communication

These questions can be used to help structure the panelists’ discussion: 

  • What were your goals and expectations when you started working with LPM?
  • What have you done differently with clients and/or your team as a result of LPM?
  • What specific benefits resulted from LPM – for clients, you, your team, and the firm?
  • Would you recommend LPM to other lawyers in the firm? If so, why? 
  • Any thoughts about which lawyers might benefit the most from LPM?

In the preparation meeting or pre-call, the facilitator should circulate a detailed agenda to all panelists.  These are guidelines at best, and the facilitator is ultimately responsible for managing the time. 

The sample agenda below was used at a firm retreat for a 60-minute session that ran from 10:00-11:00 am and included four panelists and audience questions.  Some firms hold a longer, 90-minute session and have three to five panelists, including the managing partner.  Some firms also extend the optional section (shown starting at 10:07 below) if an external facilitator provides slides discussing how other firms are using and benefitting from LPM.

Approx. start time

Total minutes per section

Who

What

10:00

2

Facilitator

Overview of the goals of the session, panelist introductions

10:02

5

Managing partner

Background on why LPM is important to the firm, current plans and initiatives, and why the firm is making this commitment, including any specific examples that highlight the need for LPM (e.g., client requests for LPM)

10:07

3

Facilitator

(OPTIONAL) Expand on key concepts mentioned by the managing partner, such as the definition of LPM, why it is important, and a list of firm clients that have requested LPM (ideally a slide showing their logos).

10:10

20 total

(5 mins each)

Four panelists

Each panelist answers these questions:

  • What were your goals and expectations when you started working with LPM?
  • What have you done differently with clients and/or your team as a result of LPM?

Each lawyer will focus on benefits such as increased client satisfaction and/or profitability.  (Sample templates used by each lawyer could be projected in the background while they speak, unless the templates are distracting or give an impression that LPM is overly complicated.)

10:30

20 total

(5 mins each)

Four panelists

Each panelist answers the following questions:

  • What specific benefits resulted from LPM – for you, your team, for the firm?
  • Would you recommend LPM to others in the firm?   If so, why? 
  • Any thoughts on which lawyers would benefit the most from LPM?

10:50

3

Managing partner

Summarizes lessons learned about LPM so far, and the importance of LPM to the firm in the future.

10:53

7

Facilitator

Questions from the audience.  In case there are only a few audience questions, the facilitator should be prepared to ask panelists additional questions, based on what was discussed already, or to end the session a few minutes early.

11:00

 

Facilitator

END

On the day of the panel, the facilitator must:

  • Monitor the time each lawyer takes.
  • Coordinate with the panelists to use a subtle signal (e.g., passing a note) if it is necessary to send a message like: “Please finish this answer soon so we can go on to the next question.”
  • Constantly bring the conversation back to LPM benefits whenever needed.
  • Make appropriate judgment calls. For instance, if the lawyers’ stories are engaging, allow them to go a bit longer and have fewer audience questions.  Be willing to flex by focusing on where the audience is most attentive.
  • End the session on time or a few minutes early.

Note:  This post was adapted from a tool in the digital 5th edition of the Legal Project Management Quick Reference Guide and is not available in any LegalBizDev books.

May 02, 2018

A model for LPM success: The case of Bilzin Sumberg (Part 5 of 5)

By Tim Batdorf and Jim Hassett

Implications for other law firms

First and foremost, to maximize LPM success while minimizing its cost, law firms would be wise to follow the same five steps that Bilzin Sumberg followed when implementing LPM:

  1. Focus on changing behavior and solving problems
  2. Aim for quick wins to create internal champions  
  3. Publicize successes within the firm
  4. Use just-in-time training materials
  5. Take action now and follow up relentlessly

But these come with an important caveat: To maximize results, the initiative requires strong support at the executive committee level. At Bilzin Sumberg, the key champions included managing partner John Sumberg, managing partner elect Al Dotson, and COO Michelle Weber. Their follow up over the last few years has been patient but relentless.

At other firms, on more occasions than we care to remember, a managing partner or chair would begin an LPM program that achieved substantial successes, but momentum would be lost when they became distracted by other pressing priorities or left the firm.

Perhaps the most widely publicized effort in LPM has been at Seyfarth Shaw, which began its work on process improvement around 2006. Six years into their program, Steve Poor, then Seyfarth’s Chairman and now its Chair Emeritus, wrote in the New York Times DealBook (May 7, 2012):

Never underestimate the resistance to change from lawyers… The continuous move forward takes persistence and, perhaps, a bit of stubbornness.

So the vast majority of lawyers should be expected to resist LPM until they see “what’s in it for me.” It is up to the firm’s leaders to keep initiatives moving forward.

Some of the things Bilzin Sumberg’s law firm leaders did were very simple. For example, according to COO Michelle Weber, “we found that sometimes using the phrase LPM is a roadblock, so we used the word efficiency instead.” As Al Dotson described in Part 1 of this series, when he talked with lawyers across the firm, “every single practice group said they could not use LPM.” So he decided a language change was necessary to remove the roadblock:

We took the acronym “LPM” off the table, and asked practice group leaders to instead think about what would make your group more efficient.

This simple change in terminology helped reduce resistance.

During the 2017 panel discussion that we facilitated for Bilzin Sumberg, several partners described how important it was to have management’s assurance that they had LPM support available. This included hiring external consultants to conduct the initial coaching, obtaining new software, and hiring new staff or reassigning existing staff to focus more on LPM.

In July 2014, Paul VanderMeer became involved in the LPM effort as the Chief Knowledge Officer at Bilzin Sumberg (after working there since 2009). Suzanne Amaducci-Adams offered one example of how Paul helped her by creating a more efficient system for tracking all of her matters, which simplified looking up documents and project costs.

Paul came up with this whole system where I just hit a button, and I can get a quick list of every matter I’d worked on in the firm the last 20 years. I can tailor this list to find what I need in about 90 seconds or less. If that saves me 10 or 15 minutes of my day every day, that’s a lot of time that I could be doing other things.

In the next few years, we expect most firms to expand their internal LPM staff. Unfortunately, as we explained in our posts on “How to Hire LPM Staff,” it won’t be easy. Just about every firm is looking for people who have combined expertise in two different areas: project management and law firm operations. But LPM is a new field, and there just aren’t that many people around who have both. The result has been that too many law firms are pursuing too few people, leading to a great deal of mobility in positions that would benefit from stability.

In February 2016, we posted the results of interviews with 15 LPM Directors about their priorities and achievements. While researching these posts, we went to LinkedIn to see how many of the 15 had changed jobs in the two years since we conducted interviews. Almost half had: four to other law firms, two to in-house law departments, and one to start his own consulting company. In our view, this job mobility reflects not only the competition for experienced staff, but also the difficulty of a position which many law firms have not fully defined.

Our posts on “How to Hire LPM Staff” include the recommendation that “It takes much longer to understand a particular firm’s culture and operations than it does to learn the fundamentals of LPM… [Therefore] the best candidate may be someone who already works at your firm as a lawyer or a senior legal assistant....”

The details of how one firm followed this advice can be seen in our case study of LPM initiatives at Lathrop Gage. In short, they appointed Dave Clark, an IP lawyer who had been at the firm for 30 years, to the new position of LPM Partner. As Clark put it in that case study (p. 7):

We felt it was very important to change lawyer behavior, and what better way to do that than to put someone in charge of the program who has been here more than 30 years and who knows all the lawyers and the pressures that they face on a daily basis?

Clark’s LPM training, and the initial rounds of LPM coaching at Lathrop, were completed by LegalBizDev. Now that this foundation has been established, Clark is coaching more lawyers himself.

Whether a firm decides to build the foundation for its initiatives with external consultants, internal staff, or a combination of the two, it is important to begin reaping the benefits of LPM as soon as possible. As long as other firms continue to improve, the LPM bar will keep going up. As the chair of one AmLaw 200 firm we interviewed for our book Client Value and Law Firm Profitability (p. 171) said:

LPM is an evolving process. I don’t think there’s ever going to be a point at which you can say: “Now I’ve arrived.”

Firms can increase client satisfaction and profitability by following the principles outlined here. According to COO Michelle Weber, the most significant insight from their client satisfaction interviews is that:

Every client eats up LPM – better communication and budgets provide validation from the client perspective.

And based on their experience over the last several years, Weber believes that LPM is not just an interesting option for most law firms, but it is an absolute necessity:

If you fail to use LPM in the current environment, you will lose clients.

 

A pdf of the complete case study can be downloaded from our web page.

April 18, 2018

A model for LPM success:  The case of Bilzin Sumberg (Part 4 of 5)

By Tim Batdorf and Jim Hassett

Improved communication 

According to managing partners and other law firm leaders in our research on Client Value and Law Firm Profitability (p. 97), the second most critical short-term LPM issue (after defining scope) was “Manage client communications and expectations” (38%).

Managing partner elect Al Dotson explained how this applies at Bilzin Sumberg:

Early communication with the client is absolutely essential for us to mutually understand what the expectations are.  In addition, I routinely set up non-billable team meetings to ascertain the status of the work at any given stage, to avoid duplication of effort, to identify issues sooner rather than later, and to communicate quickly with the client if there are any issues.

According to partner Carter McDowell:

The primary benefit of this communication for clients is that it helps them understand the process in an organized fashion, as opposed to just a ten minute discussion of how do we go through this process and what the requirements are.  Clear agreement on project plans has also enabled us on more than one occasion to go back to the client and say, “Here’s a hearing that we hadn’t anticipated, so we updated the budget to include that process.” 

Similarly, Suzanne Amaducci-Adams reported that:

Communication serves as a tool to educate clients.  Some clients underestimate cost because they think you are “just closing a loan,” and they don’t realize you have to draft corporate resolutions, write three or four different opinion letters, and more. But once they see it broken down, then many are more willing to pay a fair fee.

In the Spring of 2013, COO Michelle Weber reviewed the final reports from 26 partners who had completed their first round of LPM coaching with LegalBizDev.  She said: “If I were to distill the entire program into one highlight, one thing that everyone learned and changed, it was improved communication. It sounds so simple, but improving communication with clients and within the firm is very hard, and we still have a lot of work to do.”  

Bilzin Sumberg’s approach to LPM

A full account of Bilzin Sumberg’s LPM initiatives could be the topic for an entire book.  This table provides a high level overview of the firm’s approach.

2011

  • Managing partner John Sumberg and COO Michelle Weber attend several conferences, and become convinced that Bilzin Sumberg would benefit by becoming a national leader in LPM.  
  • In November 2011, LegalBizDev is hired to coach three key lawyers to begin to create the firm’s first LPM champions.

2012-2014

  • At the firm’s annual retreat in March 2012, these three LPM champions described their “quick wins” from coaching and encouraged lawyers who were interested to take the same LPM coaching program.
  • In May 2013, 26 lawyers completed coaching (representing more than half of the firm’s 51 partners).
  • Bilzin Sumberg’s LPM committee is formed.
  • Internal LPM staffing is strengthened when Paul VanderMeer is promoted to the new position of Chief Knowledge Officer.

2014-2017

  • Bilzin Sumberg’s LPM committee meets regularly with practice group leaders to monitor and encourage the use of LPM.
  • Practice group leaders build regular discussions of LPM successes and best practices into their meetings.
  • To simplify and improve reporting on project finances and progress, Bilzin Sumberg purchases Prosperoware’s Umbria software.
  • To improve LPM just-in-time training, the firm purchases LegalBizDev’s digital fifth edition of Legal Project Management Quick Reference Guide.
  • In October 2017, a panel discussion is held for the entire firm, in which eight partners who have become LPM champions describe its benefits.
  • Nine more lawyers begin LegalBizDev coaching.

2018 and beyond

  • Bilzin Sumberg commits to continue to support and enhance its leadership position through additional LPM initiatives.

 

Throughout this process, the firm has built its approach around the five recommendations explained in our white paper “The Keys to LPM Success”

  1. Focus on changing behavior and solving problems – As seen in the examples throughout our previous posts, right from the start Bilzin Sumberg’s coaching and internal support programs have focused not on abstract principles but on how to help each lawyer solve the problems that they want to solve.  COO Michelle Weber summed up the advantage of this approach: “This is one of the parts of the program that I appreciated the most: Lawyers don’t have to change their world. They just have to change what they do a little bit.”
  2. Aim for quick wins to create internal champions – The first quick wins were reported by the three senior partners who spoke at the March 2012 retreat (Al Dotson, Jon Chassen and Mitch Widom).  Twenty-three additional partners gradually signed up for coaching based on what they heard, and most of them became champions as well. 
  3. Publicize successes within the firm – Practice group leaders have been encouraged to include LPM in their regular meetings to publicize successes.  On a firm-wide basis, LPM has been discussed at most major firm events in this period (including the 2012 retreat and the 2017 panel described in this series).  Bilzin Sumberg is constantly looking for new ways to get the word out, and they recently began circulating “LPM Tips of the Month” memos, which call attention to key LPM issues and the online tools and templates that can help partners address these issues.
  4. Use just-in-time training materials – This is the “secret sauce” for the program, and it is described in detail below.
  5. Take action now and follow up relentlessly – When clients are asking for change, delay is the enemy.  Senior managers and champions must never lose sight of the fact that LPM will continue to evolve as the legal marketplace changes.

Just-in-time training materials

Just-in-time training provides learners with exactly the information they need, precisely when  they need it.  In most professions, this has become the standard way to teach new skills. For example, when lawyers need to use an unfamiliar feature of Microsoft Word, very few would consider taking a class or looking it up in a book.  Instead, they simply look up the information they need in online help files.

Since the start of the LPM initiatives described in this series of posts, LegalBizDev coaching has been structured around the tools and templates which appear in the fourth edition of our Legal Project Management Quick Reference Guide.   For the past several years, Bilzin Sumberg has provided a copy of this book to each new lawyer who joined the firm.  

In 2017, the fifth edition of these LPM tools became available in digital form.  This edition allows lawyers to access these tools from anywhere, whenever they need to, and the tools are immediately available to every lawyer in the firm.  Moreover, new tools can be easily added as they become available, and firms can customize key tools to their unique needs and procedures.  

Bilzin Sumberg was one of the first firms to purchase a license to these materials.   The online version of the tools was formally introduced at Bilzin Sumberg during the October 2017 panel discussion described above.  Going forward, LPM staff, practice group leaders and others will use these new digital tools to efficiently provide lawyers with more help more quickly.  

For more details about these digital tools, you can attend a panel discussion entitled, “How LPM Directors Can Increase Their Impact with Just-In-Time Tools and Templates,” at the Legal Marketing Associations’s P3 practice innovation conference in Chicago in May, 2018.  LegalBizDev CEO Tim Batdorf will facilitate this discussion with Scott Wagner of Bilzin Sumberg and Dave Clark, the LPM partner described in our case study of Lathrop Gage.   Audience members will also be encouraged to discuss any custom tools or templates their firms have developed, and how best to implement an online LPM tool library to ensure lawyer usage.

 

A pdf of the complete case study can be downloaded from our web page. 

April 04, 2018

A model for LPM success: The case of Bilzin Sumberg (Part 3 of 5)

By Tim Batdorf and Jim Hassett

This post in our series examines Bilzin Sumberg’s success meeting two top client needs as revealed in surveys conducted by Altman Weil and LegalBizDev: The need for improved non-hourly based pricing structures (i.e., alternative fee arrangements) and improved definitions of scope.

Improved AFAs

In an era when some clients are increasingly asking for non-hourly alternative fee arrangements (AFAs), firms that are able to accurately predict budgets and stick to them will be in a much stronger position than their competitors.

Litigation partner Jose Ferrer offered an example from one long-term client that was concerned with runaway litigation costs. When a new case was opened, Ferrer asked the client very directly “How much do you think the value of this litigation is?” The client gave a number, and Ferrer went to Bilzin Sumberg’s financial analyst to review past tasks and spending for the client to see if they could develop a high-value solution that fit within that budget. They dug deep into the details of what was required and what wasn’t. Then they created a task plan and budget for each phase, based on the billing rates of the lawyers who would work on the case, and the number of hours expected. Then Ferrer went back to the client and proposed a detailed task plan that fit within their requested budget:

We’re going to handle the case in three phases. In the pleadings phase, we’re going to address motions to dismiss. Then we’re going to have a discovery phase, and a trial phase. Our budget specifically excludes certain steps which we feel are not required in this case. We’re not going to include motions to strike pleadings or motions for sanctions. And we’re not going to do motions for summary judgement because they’re rarely granted in the county where this case is pending.

They then offered a capped fee for each phase, with a total cost that matched the client’s original assessment of the value of the case. Bilzin Sumberg got the business, and then:

We limited the task phases in our budgeting software to just three. If you go in to put in your time, there’s pleadings, discovery, and trial. You can’t pick anything else, because that’s how we’re tracking it.

The case is still in progress. To date, the client is happy and Bilzin Sumberg has completed the work within budget.

In another example, Jay Sakalo, the Business Finance & Restructuring and Corporate Practice Group Leader, described a fixed price bid to review 30 to 50 potential deals a year for another long-term client.

We recognized that on some of these flat fees we would win, and on some of them we would lose.

This was a new type of work for this client, so it was difficult to come up with a solid number for the first few deals, but the total revenue potential justified taking some risk, so the firm came up with a fee per deal.

We agreed with the client that after the first eight reviews, we would revisit the fee, because we didn’t know if the requirements would turn out to be wildly different from what we expected.

The first eight cases were reasonably close to the budget, so Bilzin Sumberg stuck by its original bid. The work on this substantial AFA project is now in its fourth year, and it has created both a highly satisfied client and substantial revenue for the firm. Due to the constant tracking of estimated vs actual costs, the client recently approved an increase in the fixed fee per review without any hesitation.


Improved definitions of scope

The next LPM benefit was rated #1 in one of our studies. When we asked managing partners and other leaders from 50 of the AmLaw 200 to identify the most critical short-term LPM issues at their firm, the top answer given (by 50% of respondents) was “Set objectives and define scope.”

In the last few years, Bilzin Sumberg has made substantial progress in this area. As Al Dotson said:

Before I started on our firm’s LPM initiative, I approached new client engagements with a simple thought: “You, the client, have engaged me. My hourly rate is X.” That was the end of the discussion. Now I approach new engagements more in terms of developing a mutual understanding with the client about the services we will provide, the time it will take, the team required, the budget, and the relevant reporting milestones.

Detailed planning is the key to accurate estimates, and such planning also has many other benefits. Carter McDowell, who works with Dotson, noted that:

Defining scope is particularly important in dealing with new clients who haven’t been through the process, because I can hand them a document that they can walk through for themselves. And, as a result, clients will sometimes say, “Now I understand why it’s going to cost that much, or what the range is and what the effort is.”

The real estate practice group has developed a similar process. According to Suzanne Amaducci-Adams, before they applied LPM, the group typically wasted a lot of time developing time consuming “back of the envelope” estimates, which were not always accurate. These days, they have developed checklists of the key issues for their most common types of deals, and a cost range for each. When a new deal comes in, they print out a one-page list of issues that affect scope, and the responsible attorney crosses out the issues that don’t apply. A surprisingly accurate bid can be created from this simple list. As Amaducci-Adams notes:

We now have a list of all the components that go into a loan deal. And then, when we go to quote a fee for the loan, we put a range for each element. For example, the term sheet should cost A, the loan agreement should cost B, and the ancillary document should cost C. Does the client have a cash management system? Then there is an additional cost. Are we doing the org docs? That, too, will lead to requiring additional time... The system is not perfect. But you get a much better idea of all the things that go into the transaction up front when you’re quoting a fee.

Some Bilzin Sumberg lawyers have gone a step further and require team members to use a special task code for any work that falls outside the scope as defined in the engagement letter. Having a system that requires lawyers to classify some hours as “out of scope” creates an enormous benefit, simply by requiring lawyers to be clear about what tasks are in scope, and what tasks are not. This also serves as a flag if a change process is in place to negotiate changes in scope.


A pdf of the complete case study can be downloaded from our web page.

March 21, 2018

A model for LPM success:  The case of Bilzin Sumberg (Part 2 of 5)

By Tim Batdorf and Jim Hassett


The benefits of LPM discussed in this post and the next illustrate how LPM can help lawyers better meet the needs of clients.  In its 2017 Chief Legal Officers (CLO) Survey  (p. 37), Altman Weil provided 280 CLOs with a list of ten possible service improvements and asked them to “please select … [the improvements] that you would most like to see from your outside counsel.”  The top three needs were: 

  1. Greater cost reduction (51%)
  2. Improved budget forecasting (46%)
  3. Non-hourly based pricing structures (39%)

Meeting client needs for cost reduction 

When clients ask for lower costs, the first thing many lawyers think of offering is a discount on their hourly rates.  This may be necessary in some cases, but it should be the last thing lawyers consider, not the first.  Lower hourly rates lead to lower realization and profitability.  (Unfortunately, many lawyers do not understand that a 10% discount on a particular matter may cut profits by 20% or 50% or more, depending on the firm’s economics.  Very few lawyers know the exact implications of a particular discount at their firm, as discussed at length in Chapter 3 of our book Client Value and Law Firm Profitability.)   

A much better approach is to use LPM to improve planning and management.  At Bilzin Sumberg, most significant matters now start with the responsible partner specifying a complete list of major steps in the process (a matter plan), and then estimating the cost for each step.  Once this budget is in place, tracking systems compare actual costs to budgeted costs as the matter proceeds.  Then, if actual costs are higher than planned, the partner can work with the client to manage and reduce future costs.

To ensure consistency of data and to provide additional “eyes on the target,” Bilzin Sumberg now has a centralized process supported by finance staff who input information into their budgeting software. LPM staff then provide partners with “ticklers” when certain milestones are reached.

In many cases, this analysis is based on lawyers tracking the work they do by means of task codes.  As the number of lawyers using these task codes has grown, information about the true costs of past matters, by task and phase, has become more accurate.  This enables lawyers to produce better budgets in the first place and to determine which steps can be accomplished at a lower cost without affecting quality.  

For example, litigation partner Jose Ferrer noted:

If you see that in the past 30 days you have used only the discovery task codes, it forces you to think, “Did this discovery add or detract from your progress in the case?”

Litigation partner Scott Wagner added that this type of planning and tracking can also reduce costs right from the start:

Perhaps instead of two associates assigned to a task, you may find that you need just one, or you might conclude that a partner could complete a task for a lower total cost even if his or her hourly rate is much higher. 

Wagner went on to describe how this type of planning and tracking applied to one matter:

We had spent a lot more money on discovery than we had planned. When I went back to look at it, I realized that we had budgeted ten hours for meet and confers in this phase, which at the time seemed like a very reasonable estimate. But we had actually spent over 100 hours on meet and confers. The truth was, it was time that was very well spent, and we were able to accomplish a lot with it. But I never envisioned that the meet and confers would be as extensive as they were. 

Real estate practice group leader Suzanne Amaducci-Adams commented that: 

Although our practices are completely different, “meet and confer” was the exact same hole we had in our budget on all of our initial loans budgets.

While some issues were similar across practice groups, in other cases different practice groups required different approaches to LPM and different solutions.  Consider, for example, the idea of having all partners begin with the same standard forms for routine matters.   

At Bilzin Sumberg, this has been quite effective in the corporate practice, where many lawyers work with similar sales and financing transactions every day.  By adopting a standard set of forms and agreements as their starting point, they have been able to reduce costs and avoid “reinventing the wheel.”  Bilzin Sumberg is in the process of redeveloping its intranet site so that each department has its own home page, which includes approved standard forms.

Within the real estate group, however, the idea of standard forms has proven more useful to some lawyers than others.  Lawyers who focus on Commercial Mortgage Backed Securities have developed a very solid set of starting forms.  But other lawyers in real estate, like partner Adam Lustig, more often represent borrowers than lenders.  His practice does not require a standard set of starting documents:

These documents are usually drafted by banks.  So the idea of starting from forms isn’t all that useful to me. More often than not, I’m the one reviewing and responding to documents prepared by opposing counsel. 

In this case, the LPM initiative led in a different direction.  As Amaducci-Adams explained:

We came up with the idea of checklists and issues lists.  For example, when you review a borrower’s contract, what are the 50 or more things you need to know? We developed a borrower’s issue list so none of the key issues would fall through the cracks. Then we started adding in the best language we had seen for certain provisions.  Our borrower issues list worked so well that we started breaking it down for different types of loans.  For example, there are unique issues with construction loans, leasing, hotel management agreements, franchise agreements and more.  So we gradually rolled out issues lists for each major category.

The lists not only led to lower costs, Amaducci-Adams explained, but: 

They became helpful in quality assurance. When we had an associate who reviewed a set of loan documents for us, they had to refer back to our list, and they had to confirm that every single thing in there either did not apply or was already in the documents. So our work product became better.


Meeting client needs for predictable budgets 

The same matter planning process that yields lower costs also leads to more predictable budgets and fewer client surprises.

According to litigation partner Scott Wagner:

The conventional wisdom is that budgeting is not possible in litigation. But based on my LPM coaching and subsequent discussions with my colleagues, we have found that you can indeed come up with a budget that is useful to your client and can lay out all the contingencies to know what a particular litigation will likely cost.  The result is that we became much better at giving both clients and the internal team a more realistic estimate of what a case will cost.

This type of budgeting has become a standard operating procedure for Wagner, who offered the following example:  

A few weeks ago, a long-term client described a new case and asked for “an idea of what this is going to cost.” I said, I really need to go back and sit down and look at the numbers. And he really, really pushed. I said, let me go back and sit down and figure this out.  I saw two immediate benefits.  First, when clients realize that you’ve given some thought to it, they take your estimate a lot more seriously, and that can lead to a detailed discussion.  If clients are going to push back on cost, it is much better to do this in an informed negotiation before the work begins than at the end of the matter when the client gets a surprise in the bill.  Second, you just do a lot better job. If you do off-the-cuff estimates, you always forget to include something. 

Carter McDowell, a partner in the Land Development & Government Relations Practice Group, reported a similar experience:  

For us, it began when one large client asked us to produce a budget for the upcoming year. This request forced us to sit down and take each of the hearings we were going to have and to break down each of the component parts of how we went about processing an application to get to hearing, who we met with – neighbors, staff, board members, etc. – and to assign essentially ranges of time for each of those. That gave us a framework that we’ve subsequently used to talk to other clients about the process that we go through to process an application.  It’s broken down in writing, in chart form, with hourly projections for each of the tasks. 

Meeting clients’ needs for predictable budgets can also lead to new business.  Al Dotson described a recent matter in which a large international client asked for an estimate:

We took a look at the sheet that we have been keeping and updating on an annual basis that brings forward all of our matters using today’s rates, and the manner which we staffed it, to give them a range of what we thought this would cost.  They got the legal spend approved, and we came within pennies, literally pennies, of the budget that we set for them without writing off a single dime of time. And that was simply because we actively use our task codes, apply the historical information we have, and then manage the process carefully.

 

A pdf of the complete case study can be downloaded from our web page. 

March 07, 2018

A model for LPM success:  The case of Bilzin Sumberg (Part 1 of 5)

By Tim Batdorf and Jim Hassett

Executive summary

This series of posts describes the process that Bilzin Sumberg has used to implement LPM over the past few years, and provides examples of the benefits they have achieved in six major areas:

  1. Increased new business and profitability
  2. Meeting client needs for cost reduction
  3. Meeting client needs for predictable budgets
  4. Improved AFAs
  5. Improved definitions of scope
  6. Improved communication

As this series will make clear, Bilzin Sumberg has had many successes in changing the way they practice law to better meet client needs, and their LPM initiative has paid for itself several times over.  But their work is not done.

The final post in the series describes implications for other law firms based on Bilzin Sumberg’s experience with LPM.  Some of the tactics Bilzin Sumberg found to be effective are quite simple to implement.  For example, in the early stages of implementation there was some lawyer resistance to the term “legal project management.”  By changing the terminology, using a less intimidating term like "efficiency" as opposed to “legal project management,” Bilzin Sumberg was able to overcome lawyer pushback and develop broader buy-in. 

Other Bilzin Sumberg strategies required more effort, such as unrelenting support from senior management, bringing in external consultants, and a gradual increase of internal LPM staff. 

Nobody at Bilzin Sumberg – or any other law firm we’ve talked to – has ever said LPM is easy.  But they do say that well-planned LPM investments will pay off for their firm and their clients.  Greater efficiency and predictability is an absolute necessity for law firms wanting to survive and prosper in an increasingly competitive legal marketplace.


Introduction

Lawyers often ask us to name law firms that serve as models for cost-effectively implementing legal project management (LPM).  

Our first public answer to this question appeared in this blog in 2013,  when we wrote “no law firm on the planet has achieved more [LPM] behavior change, more quickly or more efficiently” than Bilzin Sumberg, a Miami-based law firm with more than 100 lawyers.  Now, five years later, this series of posts will explain how the unrelenting support and follow-up by Bilzin Sumberg’s management has enabled it to hold the number one spot, and to achieve substantial benefits both for clients and for the firm.

Some firms are sure to disagree with this assessment, and a few may lay claim to the title for themselves.  It is certainly true that some groups at other firms have made greater progress in particular sub-areas of LPM, such as process improvement, pricing, and knowledge management.  But based on our research and consulting with hundreds of firms, we believe that no other firm has achieved greater LPM progress and experienced greater benefits across the board.  And the reason is simple: Bilzin Sumberg has produced more behavior change amongst its lawyers than any other firm.

Last fall, our CEO Tim Batdorf facilitated a 90-minute panel discussion at Bilzin Sumberg, in which eight of the firm’s leading LPM champions described what they had achieved to date, and what they had planned for the future.  Every lawyer in the firm was invited, and the discussion also provided a brief overview of two new LPM resources that Bilzin Sumberg recently adopted:  the digiral tools and templates in the fifth edition of our Legal Project Management Quick Reference Guide, and Prosperoware’s Umbria software to improve budgeting, tracking, and more.

The first speaker was the firm’s managing partner elect Al Dotson, who spoke about the benefits already experienced through the firm's adoption of LPM as well as the expected benefits with future progress. When Dotson held his first LPM meetings with each practice group leader:  

Every practice group said LPM didn’t apply to them. Every practice group said that they were unique. Every practice group said they could not use LPM. Every single one.

In the final section of these posts – “Implications for other firms” – we will explain that this sort of initial resistance is almost universal.  To overcome this resistance, in our experience, the support of key leaders is an absolute prerequisite for success.  

In some cases, we have worked with firms that made significant LPM progress when they were led by a partner who strongly believed in it.  But then the leader left, and the initiative fizzled as new management stressed new priorities.

At Bilzin Sumberg, Dotson, along with managing partner John Sumberg and COO Michelle Weber, have persisted in gently prodding partners to see how LPM could help them, following the five key approaches explained in our white paper “The Keys to LPM Success.” 

  1. Focus on changing behavior and solving problems
  2. Aim for quick wins to create internal champions
  3. Publicize successes within the firm
  4. Use just-in-time training materials
  5. Take action now and follow up relentlessly

Although these approaches are important for success, LPM is not a “one-size-fits-all,” well-defined linear process or a simple set of steps.  It is a mindset which must be constantly reinforced.  And the behaviors that lawyers change as a result of this new mindset evolve over time in response to changes in the legal marketplace.  

As Bilzin Sumberg COO Michelle Weber summed it up: “LPM is not a silver bullet.  It is an ongoing and continual process of gradually modifying behavior, with little moments of clarity.  To create LPM acceptance in a law firm culture, you have to keep reinforcing it.”


LPM Benefits

Increased new business and profitability 

To evaluate any LPM initiative, it makes sense to start by going directly to the bottom line, to see whether LPM has increased new business and/or improved profitability.  

At the panel discussion last fall, Al Dotson, Bilzin Sumberg’s managing partner elect and head of the firm’s Land Development & Government Relations Practice Group, began the discussion by saying:

I have successfully used legal project management to generate business many times.

In a previous LPM panel discussion – held to kick off their firm-wide LPM initiative in 2012 – Dotson described how one of his clients was so impressed by the legal project plan he had produced in his coaching that the client awarded Bilzin Sumberg a significant amount of new work.

This success encouraged other partners to volunteer for coaching, which in turn has led to many other examples of new business which can be directly attributed to LPM.  To cite just one example from the 2017 panel, real estate chair Jim Shindell described how a new client needing a series of condominium construction loans had first heard of Bilzin Sumberg:   

We had just saved another client with that same bank a ton of money with the speed and efficiency in which we were able to do the deal.

The new client then hired Bilzin Sumberg because of their proven efficiency on this same subject matter with the exact same lender.

Proof of new business from LPM is relatively easy to find, but exact figures for how much the LPM initiative has increased realization and profitability is harder to come by.  Like most firms, Bilzin Sumberg does not publicize its exact realization or profitability figures.  But there can be no doubt that many of the changes described in this series have increased both figures.  As COO Michelle Weber summed it up:

As a result of LPM, we have definitely decreased write-offs and reduced the number of times we need to go back to clients to discuss budget changes.

February 21, 2018

How to improve feedback to legal team members (Part 2 of 2)

By Gary Richards

In addition to the five guidelines for effective feedback listed in Part 1 of this series, consider these additional suggestions.

  1. Clearly define the expectation gap. The person receiving your corrective feedback must clearly understand the difference between what you expected and what they did: 
                      Blog_0221_graphic

    Until this gap is obvious to the recipient, the likelihood is slim of their committing to change in the future. The purpose of corrective feedback is to define this gap with them, and to arrange their help and commitment to ‘close this gap’ in the future. Use a specific example to illustrate.

  1. Focus on the future, not the past. Once you have identified the performance gap to a team member and they understand it, move on with “so in the future…” describing how to meet your expectations next time. Focusing on the past can cause the recipient to defend what they did since it can’t be changed. Instead, focus on the future, which they can influence by changing.
  1. Be descriptive, not judgmental and avoid words that may trigger defensiveness, as shown in the table below  
Avoid Words that Trigger Defensiveness
DON'T USE DO USE
  1. “YOU”…

… With a past or present problem.

Example: You assigned the wrong task code to this task…

(Look out for “we” if it really means “You”,

Example: We’ve got to be more careful…”
  1. “I” …to describe the problem/expectation gap:
Example:  I would expect code L140 to be used for this task, not L320 because…   
  1. Judgmental words: late, wrong, professional, cooperative, lazy, disorganized.
Example:  You assigned the wrong code-and we need to be more professional
  1. Describe the situation instead.
Example: When L140 is used for this task instead of L320, the client may get the wrong idea of our work.
  1. Control Words: must, should, ought, policy
Example: You must use the firm’s guidelines and definitions for these codes.
  1. Describe instead...let them put a label on it
Example:  Using the firm’s guidelines and definitions for these codes will help with accuracy until they become available from memory.
  1. “Why”…

…when trying to learn the reason for another’s behavior that you want changed.

Example: Why don’t you use the firm’s guidelines to avoid miscoding?
  1. “How or What”
Example: What makes it hard to select the correct task code? 
  1. Be specific, using a recent specific example of what you want changed: i.e., the outcome now occurring vs the exact outcome you desire instead. In other words, specify the gap with examples.
  1. Listen very carefully during the feedback conversation. Stop and ask for the recipient’s take on what you’re saying. This not only helps you get feedback on how the conversation is going, but it helps make sure it IS a conversation, not a monologue.

To prepare to give corrective feedback, consider using the script below to guide your phrasing:

  1. Say “I need your help regarding task descriptions and task code assignments. I have been reviewing the codes for work done on XYZ case…
  2. “When I see Code L140 Document/file management assigned to this time entry (show the task description assigned in the example) instead of code L320 Document production to that task…” Here you are describing the undesired result clearly, not criticizing the recipient.
  3. “…the problem is that can confuse the client when they review our bills. Keep in mind our definitions in this guide you received during code training…”(Show guide to the recipient, and explain why L320 is the correct code)
  4. “In the future, how about your reviewing these guidelines before assigning codes.” Or “How would you suggest that this coding can be accurate in the future?”
  5. Getting the recipient to interact may help uncover the reasons that they didn’t do what you expected, such as:
    • They think they are doing it
    • There is no negative consequence to them for poor performance
    • They don’t know how to do it
    • They don’t know why they should do it
    • They are punished for doing what they are supposed to do
  6. If a future solution comes from the recipient him/herself, the team member is much less likely to be defensive, and instead is apt to be more constructive and creative in discussing and implementing improvement.
  7. "Thanks for this conversation…I look forward to accurate codes next time.” Inviting the recipient to visualize how this change will look in the future increases the likelihood of correct codes.
  8. “And don’t hesitate to contact me if you have a question about how a task is to be labeled per our guidelines.” Offering to help shows that you will support their effort to reach a better outcome.

In summary, your objective in giving corrective feedback is to provide guidance by supplying information in a useful manner, to guide someone back on track toward successful performance.

Remember that people need feedback. If someone makes a mistake, it must be corrected or the behavior may continue and irreparable harm could occur.

Knowing how to give corrective feedback effectively can be the difference between having a motivated team and a team that feels misunderstood, unappreciated, and unmotivated.

This information is being adapted for our online LPM tools and templates.

February 07, 2018

How to improve feedback to legal team members (Part 1 of 2)

By Gary Richards


Whenever you manage a legal team – whether it includes partners, associates, paralegals, or others – you may occasionally need to provide feedback on team members’ work. Getting work done successfully by others is a key skill needed for the work to be done completed properly, on time and within budget.

Inevitably, there will be times when competent and dependable team members will not meet your expectations, overlook an issue, or miss a deadline. The best way to respond to this is to provide corrective feedback: information about how behavior is perceived by, and is affecting, others. It is meant to lead to positive change. With it, you call their attention to what you expected versus what they delivered, and ask them to fix it now and improve next time. That way they learn, and you have helped them improve.

But, being human, it may be tempting for you to avoid the potential tension or conflict possible when you point out how another person can improve. You don’t want to seem picky or risk demoralizing another team member, and in some cases your current relationships with the other team members could be a complicating factor, particularly if they are senior to you. And no matter how sincere your intent is to help, it's easy for the recipient to feel personally attacked. This is compounded when you have some power over the recipient. Be sure to convey the message that you appreciate the good work they usually do, and approve of their basic attitude and skills.

When you see a need to correct someone, it is tempting either to:

  • Avoid the confrontation. Instead of saying anything directly to them, it may seem ‘easier’ to:
    • fix it yourself,
    • avoid assigning them to the next case, or
    • try to raise the issue with the full team so as not to seem to be ‘pointing fingers’

--OR--

  • Confront them immediately. After all, they should know better already, and there are quality standards to uphold. If they can’t stand the heat, they should get out of the kitchen!

Neither of those approaches is as effective as giving skillful corrective feedback so that they improve results next time and remain motivated, by following these guidelines:

  1. Understand the purpose of feedback: to provide guidance by supplying information in a useful manner, either to: 
    1. Support effective behavior by indicating when things are going in the right direction (praise or acknowledgement)
    2. Correct problem behavior/performance (corrective feedback) to get the recipient back on track toward successful performance
  1. Your corrective feedback will be more effective if you have also in the past given praise and acknowledgement of the recipient’s successes/good work. That way, the recipient trusts the fact that you have noticed their successes as well as their performance gaps.
  1. Own the problem, as in “I need your help…” not as in “You have a problem.They don’t have a problem--they thought it was a good job! Your problem is that your expectations weren’t met. Accordingly, you need their help.
  1. Use a face-to-face conversation to give the feedback, instead of phone or email. Being able to see each other’s body language and facial expressions facilitates understanding, and makes the encounter more personal. When giving one-on-one feedback you must be aware of the possible and actual reactions of the recipient, and to be careful with the setting and your phrasing in order to have it accepted and acted on.
  1. Give the feedback one-to-one in private, not in public or during a team meeting. With third parties involved, mixed messages and a lack of accountability are likely results. Instead, a private conversation protects the recipient from losing face with others present. Conversing in private avoids the recipient feeling “punished in front of others.”

    Keep in mind that corrective feedback given by email is equivalent to ‘public’ criticism since it can be ‘copied/passed around’ to third parties. Email is also generally much less useful than face-to-face feedback, because it lacks the immediacy of being presented directly by the provider, with the opportunity to explain or enlarge on it so that it's clearly understood. Impersonal feedback like email also generally feels much more like a personal attack, and is therefore less likely to be effective.

Additional guidelines will appear in Part 2 of this series.

This information is being adapted for our online LPM tools and templates.

January 24, 2018

The Top Three Facts Law Firm Leaders Need to Know About LPM

By Jim Hassett and Tim Batdorf

Law firm leaders who are interested in legal project management (LPM) should begin by focusing on these three central facts:

1. Clients want LPM

Any law firm that has responded to an RFP in the last few years knows that client requests for LPM are growing rapidly.

Survey after survey has shown that legal clients are seeking greater efficiency from firms.  For example, in its 2017 Chief Legal Officers (CLO) Survey (p. 37) , Altman Weil provided 280 CLOs with a list of ten possible service improvements, and asked “please select … [the improvements] that you would most like to see from your outside counsel.”  The top three things clients want were all closely related to LPM:

  1. Greater cost reduction (51%)
  2. Improved budget forecasting (46%)
  3. Non-hourly based pricing structures (39%)

Even when clients fail to ask for LPM by name, the results that clients are looking for definitely fall under the term, including minimizing surprises and improving communication.

If you believe that your clients are different and that they care only about legal quality and not about cost, consider yourself very lucky. But you’d better be right, because you may be at risk of losing these clients to competitors who focus on improving service with LPM.

2. Experts disagree about the best way to implement or even define LPM

There is widespread agreement that clients want LPM and that it can pay off for firms by protecting business and increasing realization and profitability. But the field is so new that experts still disagree about exactly how it should be defined. These arguments have slowed LPM’s progress, as seen in this quote from an AmLaw 200 firm leader from one recent survey:

We were just at a board meeting last week where we were talking about whether we should do formalized project management training. My answer to that is obviously yes, we absolutely should. But first we need to agree on what legal project management is. (p. 89)

Here is the definition we’ve used for years:  LPM increases client satisfaction and firm profitability by applying proven techniques to improve the management of legal matters.  Note that this is a broad definition that embraces a very wide range of management techniques, including pricing, communication, process improvement, and much more.  

By our definition, any lawyer who has ever planned a budget or managed a team has served as a legal project manager. But what was “good project management” for lawyers a few years ago is no longer good enough. Clients are now choosing law firms based on their ability to apply a more systematic and disciplined approach that delivers more value more quickly.

We argue that LPM revolves around improvements in eight key areas:

  1. Set objectives and define scope
  2. Identify and schedule activities
  3. Assign tasks and manage the team
  4. Plan and manage the budget
  5. Assess risks to the budget and schedule
  6. Manage quality
  7. Manage client communication and expectations
  8. Negotiate changes of scope

The key to success is to find the “low-hanging fruit”: The management tactics that are most likely to help each individual to increase value and/or profitability.

As Barbara Boake and Rick Kathuria summed it up in their book Project Management for Lawyers (p. 14): “project management is a tool box—choose only what you need to most effectively manage [each] project.”  

This pragmatic approach is closely related to the Agile approach to project management, an iterative process that focuses on key issues, one at a time, in their order of importance.In an article entitled “Agile: A Non-traditional Approach to Legal Project Management,” Kim Craig, then SeyfarthLean’s  global director of legal process improvement, and Jenny Lee, a senior project manager with Seyfarth, explained why Agile is particularly relevant to the legal profession

Traditional project management focuses on robust, comprehensive, mandatory project documentation with lengthy project charters, detailed project plans, complex status reports and rigorous, formal change control logs… [But] the world of legal service delivery is fast-paced and unpredictable. In legal matters, we cannot possibly know everything that will be involved with litigation at the outset. Developing an overall strategy is generally common practice, but detailed, cradle-to-grave planning is impossible.

Agile contrasts with the more traditional approach to project management which holds that every project should start with a well-defined plan.  Only after that is complete and approved do you begin working your way to the end, one sequential step at a time.

The traditional approach is also known as the “waterfall” approach because progress is seen as flowing steadily from the top to the bottom (as in a waterfall).  It typically sees projects in terms of five key phases or steps such as:

  • Analysis
  • Design
  • Implementation
  • Testing
  • Evaluation

In some cases, firms have hired LPM Directors based on their “waterfall” project management experience in construction, government contracting, and other areas where traditional techniques are used, and Agile techniques are not.  This has led to many stories of LPM Directors who could not or would not adapt to a legal environment, and who ended up working with the very small group of partners that were interested in project charters, Gantt charts, and tools like Microsoft Project software.

So, if anyone tells you that LPM is defined by five steps such as analysis, design, implementation, testing and evaluation, you should be aware that they are describing the traditional waterfall approach, not the Agile approach which we believe applies better to lawyers. As the old cliché says, you won’t get a second chance to make a first impression, and attempts to apply the traditional waterfall approach have set back the cause of LPM at many firms.

Another challenge in implementation caused by the controversy over definitions can be seen in the relative resources firms have devoted to two key questions addressed by LPM:

  1. Pricing: How do I bid high enough to make an acceptable profit, but low enough to get new work?
  2. Managing: After I set a price how do I manage the work to assure client satisfaction and a reasonable profit?

In a study based on interviews with 15 LPM directors we found that almost all of firms’ emphasis has been placed on the first question – pricing – rather than the second – management (p. 292).  We believe this is a mistake.  As we wrote in that study:

In this era of dog-eat-dog competition, firms sometimes have little control over pricing. But once the price is set they CAN control how the work is done. So why do so many firms concentrate on pricing before internal management… [Frankly], it’s a whole lot easier to get lawyers to agree to a budget than it is to get them to live within it… LPM directors need to help lawyers change their behavior, which is a [much more difficult] challenge. (p. 298)

Interestingly, since completing that study we have talked to clients who have performed their own internal proprietary “gap analyses” to determine how to improve LPM, and reached this same conclusion:  they need more emphasis on changing lawyers’ behavior.  Of course, the financial side of setting budgets is important. But if lawyers did a better job of living within those budgets, and communicating with clients, the impact on the bottom line would be faster and more significant.

3. LPM is hard. Success requires long-term management support

In our LPM work with hundreds of law firms, we’ve seen the importance of follow-up over and over again.  In every single case where we have seen a firm make significant LPM progress, it was led by influential partners or members of the executive committee who were strong believers.  In fact, in a few cases, we’ve seen LPM programs make an enormous amount of progress when they were led by a powerful internal champion, and then slow to a crawl when that decision-maker left the firm.

In our view, no law firm on the planet has achieved more LPM behavior change more quickly or more efficiently than Bilzin Sumberg, a Miami firm with about 100 lawyers.

Bilzin started several years ago with individual coaching for key partners aimed at creating quick wins.  Based on their success increasing client satisfaction and new business, these partners became LPM champions who spread best practices throughout the firm.  Practice group leaders are now required to report regularly to an LPM committee and to the managing partner about how they are applying LPM and what works best.

Many firms have individual lawyers or practice groups that are quite advanced in LPM, but in our opinion not a single law firm in the world can yet say that LPM has truly taken hold across the entire firm. LPM aims to change habits that have been reinforced over decades, and to help firms constantly adjust to evolving client demands.

As Bilzin Sumberg Executive Director Michelle Weber summed it up, “Applying LPM is a continual ongoing process.  It’s all about modifying behavior one small step at a time.”  

For a pdf of this post, plus additional related information, download our white paper The Keys to LPM success

January 10, 2018

Litigation AFAs (Part 3 of 3) 

By Greg Lantier, Natalie Hanlon Leh, and Mindy Sooter, WilmerHale

 

Five Questions Outside Lawyers Should Ask Themselves Before Submitting an AFA

In this third article in the series about AFAs, we discuss five questions that outside lawyers should be able to answer for themselves before submitting an AFA proposal for a litigation matter to a client.

  1. Why Am I Proposing an AFA for This Litigation Matter?

First, outside counsel should ask herself why she is proposing an AFA for this matter.  To be sure, AFAs are often beneficial—providing clients with predictability in litigation costs and simplifying the billing for outside counsel—but they are not without risk.  For example, if assumptions underlying the AFA were not accurate, or if these assumptions change over time, the original AFA proposal may likewise be off base.

Thus, outside counsel should be able to articulate the reason for proposing an AFA as a pricing alternative.  One common reason is client preference.  Some clients, including many public companies, value stability and predictability in litigation costs, and seek to avoid unexpectedly high monthly bills.  Other clients may prefer AFAs with success premiums to ensure that outside counsel has “skin in the game.”  But if the client has not requested an AFA, this might not be a good case to propose one.  Indeed, some clients prefer hourly-based billing.  And some cases may be unusual or unpredictable enough to make an AFA inappropriate.

In short, outside counsel should discuss the AFA approach with the client, understand the client’s preferences and concerns, and structure the proposal to address those needs.  While some clients are eager for AFA proposals, not all cases and clients are good fits for AFAs.  If the client has not requested an AFA or the case is unusually difficult to budget with accuracy, this might not be the case to propose an AFA. 

  1. How Long Do I Expect This Matter to Last?

Second, outside counsel should ask herself how long she expects this matter to last.  Outside counsel often has a sense of when or if a case might settle, depending, for example, on the litigation history of the opposing party and its counsel, and on the client’s historic preference for settlement versus trial.

Cases that are expected to settle almost immediately would probably not warrant an AFA.  Cases expected to last longer, but to settle before trial, could be good candidates for AFAs.  In those cases, AFAs provide predictability to clients without significant risk of diverging from the original budget estimate.  Likewise, AFAs in cases likely to proceed to trial are often beneficial to the client, providing the desired predictability and stability of fees throughout the case.  Those cases, however, present greater risk to outside counsel because over time, the budget assumptions underlying an AFA—formulated before litigation began—are more likely to prove inaccurate. 

For all AFA cases, and especially cases expected to “go the distance” to trial, outside counsel and her client should discuss and document the original budget assumptions as well as the circumstances under which the AFA may be modified if the litigation diverges from those original assumptions.  This will ensure that the AFA remains realistic and beneficial not only to the client but also to outside counsel.

  1. Would This AFA Be an Appropriate Template for This Client?

Next, outside counsel should ask herself whether this proposal is a sustainable model for future matters with this client. Often AFAs are presented in response to requests for proposals.  These are competitive bids, and, especially if this is an opportunity to work with a client for the first time, outside counsel might be tempted to present a low offer to beat out the competition.

If outside counsel hopes to build a lasting relationship with this client, however, it is important that the proposed AFA reflect a realistic case budget.  Certainly, the AFA should reflect any discount the firm is willing to offer to obtain this matter, but it should not be unsustainably low.  This proposal is likely to become a standard to which future proposals are compared.  If the original AFA is unsustainably low, the client will be shocked when the firm presents a more realistic budget next time. 

Thus, instead of presenting an unrealistically low proposal, outside counsel should talk through the AFA with the client to ensure that they are both working under similar budget and case assumptions.  That common understanding, leading to a realistic AFA, will build trust needed for future engagements, and be more likely to lead to a long-term relationship.

  1. Am I Confident the Client Will Make Adjustments if Circumstances Change?

Outside counsel should also ask herself how confident she is that the client will be reasonable in making adjustments to the AFA necessitated by changes in litigation circumstances.  Unfortunately, litigation is not always predictable.  A plaintiff may add claims or parties, and new issues may arise.  If these circumstances were not accounted for in the original case budget, it may be necessary to alter the AFA.  And if outside counsel is not confident that the client will cooperate in reasonably modifying the AFA, then an AFA may not be appropriate in this case. 

To determine a client’s willingness to reconsider an outdated AFA, outside counsel should have a frank discussion with the client before litigation begins about the circumstances under which the AFA may be modified.  Certainly, the outside firm should bear responsibility for meeting the original budget under the original assumptions.  But if those assumptions change, for example if the plaintiff adds new claims, there should be a mechanism by which the client and outside counsel negotiate a modified AFA.  If the client is not willing to include any such mechanism, or if outside counsel senses that the client will be unreasonably inflexible, an AFA pricing structure might not be the best approach.

  1. How Will I Train the Team to Work Within the Budget?

Finally, outside counsel should ask herself whether she has a plan for building a team that will work within the budget.  A good AFA is typically derived from an estimated case budget, calculated from the estimated number of hours to perform each litigation task. 

To ensure success of the AFA, therefore, outside counsel should have a plan for building a team that can work within the budget.  The plan should include training the team members about the budgets for each task, providing the team with tools for tracking their actual time spent and comparing it to the time allotted, and providing additional resources or skills to team members that have difficulty staying within budget.  Counsel must also ensure there are tools to track the overall team’s progress as compared to the budget.  These tools require mechanisms to track and report the hours expended versus hours budgeted. 

Without a plan for building a team that can work within the budget and for tracking that progress, an AFA becomes difficult to manage and the risk of departing from the AFA increases significantly.  Putting the necessary tools in place and training the team on the budget are essential prerequisites to entering into an AFA.

The authors are partners in WilmerHale’s Litigation/Controversy Department and IP Litigation Practice. This is Part 3 in a series of three related articles that have been adapted from Law 360 for the fifth edition of the Legal Project Management Quick Reference Guide.  The Guide also includes three additional articles on this topic by the same authors.