Welcome to the first installment in our practical guide to legal project management (LPM) for law firms. As discussed in our introductory article earlier in June, this series will go beyond exploring why firms should be investing in LPM, and instead look at how to implement and scale it.
In this initial article, we will be looking at how to create a scalable LPM process. We will be offering advice on which matters stand to benefit the most, how to motivate partners to involve LPM teams, and which KPIs can be used to determine success. The aim is to define the parameters and processes of LPM in order to create a flexible and robust system.
Which matters are eligible?
Having established an LPM team, the first question to answer is “which matters should they be working on?” At Clocktimizer, we believe that the ideal answer is “all of them”. LPM is an essential way of ensuring your firm delivers matters on budget, in time, and within client expectations. However, for many firms this goal is still unrealistic. So what should firms take into consideration when setting their LPM strategy?
We’ve hosted a lot of webinars tackling this exact problem. Through all of them, the consistent advice has been to identify what ‘value’ or ‘pain point’ you want to prioritise. The most common types of matters most firms focus on fall in one of the following categories:
- High value matters: These matters are too big to fail. They often have numerous moving parts and a large budget attached. However, because of their complexity, a failure to properly manage them is likely to result in write-offs, delays or (even worse) reputational damage
- Fixed fee or high value clients: Firms which have a single budget for a client across all matters can prioritise LPM in order to prevent cost-overrun. For high value clients, LPM ensures matters are delivered as promised, and supports service delivery
- A specific practice group: Some practice groups consistently support more complex matters than others. As a way of managing that complexity, you can choose to impose blanket LPM coverage on all matters from that practice group.
- Matter types which go over budget or have a strict budget: Not all firms have a dedicated pricing team. However, for those that do, attaching an LPM team to a fixed fee is a logical step in sticking to that budget. Further, firms with more sophisticated data analysis can identify matter or activity types which consistently go over budget and attach LPM to them, in order to identify and reduce the factors which lead to those write-offs.
In determining which category of matters your firm should prioritise, we would advise a two step approach. First, it is essential to define what your goals and priorities are regarding LPM. We would advise you look at this from a holistic perspective. Do you want to improve client retention rates? Do you need to reduce write-offs? Do you want to focus on improving a high volume matter type? By including everyone from the CFO, to Senior Partners in this conversation you can make sure you have a wide view on the challenges, and potential wins, that LPM can offer the firm.
The second stage of the approach should then be to prioritise and clearly define your first LPM focus. While it is initially essential to understand the broader goals of the firm, you must then narrow these down into an easily identifiable category (or risk confusion and a lack of adoption). In practice this means assigning LPM to matters from only your top three clients, not your top twenty. Select one matter type for LPM to begin with, not five. By keeping your first focus group small (and easy to remember) lawyers in turn have less to remember, and can be certain about whether or not to involve the LPM team. Simplicity is key when you need to drive adoption.
Tips for streamlining LPM intervention
Having established an easy-to-understand and well communicated focus for your first foray into LPM, the next step is ensuring that those that need LPM, ask for it. Communication is a challenge in any law firm. So much so, that a later article in this series will be covering best practices for communicating LPM internally and externally. The fact remains, that even if you send out emails, organise meetings and host webinars, there are still likely to be some attorneys who need to use LPM and fail to involve them in the process. So how to avoid this challenge?
Stephen Allen, of Elevate shared some wisdom on how to structure LPM teams along practice group lines to overcome this problem. Instead of having a single LPM team, which sits separate to the practising attorneys, consider creating numerous smaller LPM teams or individuals and attaching them to a practice group. In doing so you create a direct link between partners and LPM and ensure that nothing slips through the cracks.
If this scale of LPM staffing is unreasonable, consider automating your system. In previous webinars, we have heard how some firms create a fee cap to trigger LPM teams. In essence, anyone who adds a new matter to the system with a budget above a certain threshold is immediately forwarded to the LPM team for an initial chat. While LPM may not always be essential, having the initial meeting covers the dual purpose of preventing large matters from slipping by, and in raising awareness of the LPM team.
Structuring your LPM workload
Unless you currently work for one of the Global Top 200 firms, it is unlikely that you have multiple LPM teams at your disposal. As such, time and workload management techniques are incredibly important tools in scaling the impact of your project managers. There are numerous approaches which can help but we have identified four key starting points for scalable processes:
- Reduce or automate administration: No one likes repetitive work and humans are far less efficient than computers. If your firm is still using programmes like Excel, and manually assigning hours to matters for analysis then you are seriously reducing the number of matters an LPM can work on. Legal project management tools can automatically categorise narratives and assign them to matters. A combination of dashboards and notifications (again, all of which can be automatically set up) enable tracking of multiple matters simultaneously. So one LPM can manage 10 matters, instead of two.
- Create different ‘flavours’ of LPM: As noted by Royale Price of Greenberg Traurig, “...the key is to assess how much support is needed first. Every matter is different and so is every matter management style.” Sub-categorise your LPM interventions depending on the level of support needed. That way, low impact matters which just require monthly reporting can remain that. Bigger, more complex matters can have more time invested in them, with a bespoke dashboard and process.
- Develop ‘quick insights’: For most LPMs, allocating budgets by phases is the easiest way to keep multiple matters on track. Keeping track of the exact division of hours by activity is time consuming and less scalable. However, using tools to report when a matter phase has used 80% of the budget for only 60% of the activities, is an immediate sign that a matter is not running smoothly. Heading off these problems early reduces overall burden on LPM time.
- Translate learnings into improvements: Your LPM team is unlikely to work perfectly from the get go. Each matter will generate learnings and improvements. Every matter which required active LPM involvement should have a closing session where the practice groups and LPM identify what worked, and what could be done better. This information is likely to streamline LPM efforts and increase adoption among the team. In turn, ensure that these learnings are collected and integrated on a quarterly basis as part of LPM best practices.
The data and insights that matter
The final piece in the puzzle of the scalable LPM process is data. After all, the analysis of data is how LPMs keep track of their matters. At this point, we think it is essential to once again point out that manually categorising your matter data is the single biggest drain on your time. Painfully copying timecard data into Excel is one of the main reasons why our co-founder, Pieter van der Hoeven, was motivated to create Clocktimizer. Secondly, we also want to highlight the importance of critically analysing the quality of your matter data. We dive into more detail about why narratives are more accurate than codes for LPM insights in a different content piece. Needless to say, that with data, garbage in equals garbage out.
But assuming you have good quality data, which is easily analysed with the use of business intelligence tools, what sort of metrics should your LPM team be looking at?
For the majority of LPM we would advise thinking about metrics in three basic categories:
- Metrics which give matter oversight
- Metrics which keep clients informed
- Metrics which offer financial insights
Matter oversight metrics are all about making sure that LPMs have oversight of matter progression. As previously mentioned, it is far faster to break matters down into phases for budget purposes. Assigning budgets or time limits to phases and activities enables reporting on those limits. In a snapshot, an Legal Project Manager can ensure that the matter is not overrunning. Equally important are out of scope notifications. Identifying the work which falls outside of the scope of a matter allows notifications to be set up. These alerts notify an LPM when out of scope activities are logged to a matter. This prevents the work from piling up and only being discovered at billing.
Secondly, LPM teams should have easy access to metrics which they can pass on to clients. With budgets becoming increasingly tough in-house (particularly post pandemic) WIP (work in progress) is an essential metric. Regular reporting of the current amount and cost of work underway on behalf of a client is transparent and allows internal budgets to be managed. The same goes for budget and fixed fee reporting. These reports should be easy to generate and share with clients. In doing so, LPM teams can support client value by maintaining open reporting on the progress of work in hand.
The final category of metrics are those that give insights into the financial success of a matter. Obviously in an ideal world matters would stick to budget, be billed correctly and be profitable for the firm. However, we all know that this is not the reality. Realisation rates are a good indicator of the financial health of a matter. Identifying trends in these rates (say that M&A matters have better realisation rates than Private Equity) gives fuel for improvements. Which matter types, practice groups or seniority levels have the best realisation rates and how can we support those falling behind? This is one of the core remits of an LPM.
Additionally, profitability metrics should be more nuanced than matter level analysis. If your LPM tool also contains data on activities, seniority levels and matter types, then your LPMs should be identifying profitability on these levels too. If you introduce a new due diligence tool, does it increase the profitability of that activity? This level of granularity is the single most effective way of introducing evidence based innovation in LPM.
Next in the series
We hope that this initial installment in our LPM series has laid the foundations for effective LPM processes. By identifying which matters need intervention, setting up clever and integrated teams and then supporting them with a range of data insights, law firms can drive a real return on their LPM investment.
In an upcoming article in the month of July, we will be diving deeper into the data aspect of this tale. Namely, how to go about creating the tech stack upon which your LPM data sits. We will be exploring what you need to think about in terms of data governance, data collection and data analysis. By covering the basics, even those firms still using Excel spreadsheets will have the tools they need to begin the process of data driven LPM.