Heretofore, the burgeoning worldwide Legal Project Management (LPM) trend has shown what you see when the buyer turns up the heat. It’s safe to say that if more and more clients were not demanding legal services that are on time, on budget, efficiently managed and predictably rendered, we’d still be back in the “good old days.” You know — those happy times when law firms defined the rules of engagement, communicated progress whenever and however they saw fit, and charged pretty much what they wanted.
The GFC – global financial crisis – has changed the power structure and set new rules in play for the legal profession, demanding that budgets be respected, scope-creep minimized and costs relate plausibly to actual value conferred. Unprecedented client pressures are reshaping the legal marketplace and providing a powerful boost for any new discipline that puts a choke hold on runaway legal expenses: Legal project management, legal process improvement, legal process outsourcing, alternative fee arrangements, RFPs that compel a tight rein and closely-monitored financial controls.
New Players, New Pressures
Now Jacqueline Palank reporting in The Wall Street Journal tells us that there’s a new sheriff in town, cracking much the same whip as the clients — but in defense of a different set of economic interests: the various stakeholders in federal bankruptcy proceedings. Yep, the cops have arrived in the form of the Justice Department, the U.S. Bankruptcy Trustees and all the interested players who are impacted by fee-approval requests for $1000 per hour bankruptcy attorneys’ fees. Clifford White, director of the U.S. Trustee Program, has announced proposed changes to fee guidelines that have gone unchanged for 16 years. These will apply to attorney’s fees in Chapter 11 bankruptcies of companies with combined assets and liabilities of $50 million or more. These are designed, Palank writes, to curb the bankruptcy system’s “billing bonanza.”
A Rose by Any Other Name
What does this have to do with Legal Project Management? In addition to demanding rate comparisons between what firms charge for bankruptcy cases and what they charge their solvent clients for other matters, the watchdog [the U.S. Trustee] would also like attorneys to:
draw up budget and staffing plans at the outset of case, outlining the resources expected for everything from litigation to asset sales.
Under the new proposed requirements, “attorneys would have to explain ‘any substantial upward variation’ between the budget and the ultimate fees charged.”
Holy legal efficiency, Batman! Those are exactly the same moving parts that are the basic action steps of LPM:
Diligent planning & budgeting
Astute anticipation of expected events
Vigilant monitoring of actual-versus-budget; and
Greater transparency in all stages of an engagement.
Accountability: Wow, What a Concept
The point to all this is that a whole passel of pushers are shoving the legal profession toward a new period of heightened accountability – particularly with respect to cost factors and budget management. As law firms master LPM and demonstrate greater ability to manage all manner of projects efficiently, they will find an ever-increasing circle of constituents – clients, courts, regulators, vendors – ready to up the ante still further and hold their feet to the fiscal fire.
It is not hyperbole to say that the firms that recognize and embrace this challenge will not only stay ahead of the curve; they will define the curve. It is not simply doom-saying to suggest that those that resist, deny, or fall back on past practices will soon trail the pack. The trend toward efficiency and cost-effectiveness is accelerating. The Wall Street Journal is only the most recent authority to tell us this evident truth.
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