LPM

Okay you can keep the ‘Legal’ tag; but it’s just Project Management!

I’ve been ‘white-boarding’ legal matters since my days helping out on front-end major projects back in 1996; so the concept of ‘mapping out’ how a transaction might progress, what may be ‘in scope’ and ‘out of scope’, the approximate amount of time the transaction may take and how we are going to resource it are not new to me. In more recent times (largely following the GFC in 2008) the legal industry has formalised my approach of ’white-boarding’ matters to become Legal Project Management. 

While I was never really that sure over the years how Legal Project Management differed from the more general Project Management, I have been assured – on numerous occasions – that there is a difference. When asked how, the most common response I received was that:-

  • Legal Project Management is the discipline of project managing ‘tacit knowledge’ – as ‘knowledge workers’, while
  • Project Management is the discipline of project managing tangible products, e.g., the construction of a hospital.

And until the last month or so I thought that was a pretty good answer.

So what changed?

Well, in the last month and a bit I have attended a collective 5 day (2 day and then a 3 day) course on Project Management Fundamentals run by PM-Partners Group here in Sydney.

The two day Fundamentals (essentially, theory) session was outstanding and broken-down into the following nine (9) modules:

  1. What makes projects succeed (and by implication, fail)
  2. The essential project management philosophy
  3. The project life cycle
  4. Project planning – project definition and scoping
  5. Project planning – creating the WBS & schedule
  6. Project planning – estimating
  7. Project risk
  8. Project execution & control
  9. Project closure

In turn, if you were on a course where you learnt all about: 

  • scope creep
  • the difference between what a risk is and what an issue is (hint, one has happened and the other hasn’t)
  • how to do a business case and a project plan
  • the triangle of scope, cost, time and quality
  • the four dependency types [finish-start; start-start; finish-finish; and start-finish], and
  • you get to work on creating a Work Breakdown Structure and Estimating (Optimistic, Pessimistic and Most Likely – also looking at the Cone of Uncertainty)

Wouldn’t you think you had been on one of the best Legal Project Management training courses around?

Well, that’s exactly what the two day PM-Partners run Project Management Fundamentals course taught me and I have walked away from that course thinking to myself that you can keep the classify ‘Legal’, at the end of the day it’s project management and it’s this type of project management we need to get better at.

My biggest take-out though?

Understanding the difference between a risk and an issue, because anyone doing pricing should get their head around this because it really is as important (and probably goes hand-in-hand with) as what happens with scope creep [helpful extra tip: want to understand scope creep, look up what happens with the formula: n (n – 1) /2].

Get in touch if you want to hear/find out more, otherwise get yourself on a really good PM Fundamentals course because I can guarantee it will pay for itself!

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The pointlessness of the ‘billable hour’ set out in two charts

Overnight, Australia-time, the Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute, relying on data from Thomson Reuters Peer Monitor, published the findings of its ‘2018 Report on the State of the Legal Market‘. Reviewing the performance of U.S. law firms in 2017, as well as looking at the trends expected in 2018, this annual report is typically the “first” big report publication of the year and so a trendsetter of where we may be going as an industry over the next 12 months.

As has been the case in other years, the first chart I typically like to see in this annual report is the one setting out ‘Collection Realization against Standard Rates by Law Firm Segment‘ – Chart 9 in this year’s publication – to hopefully give me an indication of how an industry that largely relies on increases in hourly rates each year to boost top-line revenue is fairing.

As you can see, yet again the results here can best be described as ‘disappointing’:

Chart 9

AM Law 100 firms are tracking an ever declining realised recoveries of circa 80 cents in the dollar. All others aren’t doing all that much better at circa 85 cents in the dollar.

Either way, those levels of realisation would have most bank managers in a panic. And the reason they don’t comes down to one small issue: in law firms this collection rate – other than telling you that the market doesn’t see your hourly value as highly as you do – is absolutely meaningless.

What it is, is pie in the sky internal budgetary metrics against market reality cash in the bank.

So we turn to my second “go-to” chart: ‘Collection Realization against Worked (Agreed) Rates‘. This year this is represented in Chart 10:

Chart 10

As the name suggests, what this chart is showing us is “Collected v Worked (Agreed)”. I’m   assuming the “agreed” here is upfront, and I’m accepting that the picture is far from perfect, but there is a far better flatline realisation rate here of 90-ish per cent, or 90 cents in the dollar.

So, what’s my take-out from the two charts?

If you want to try and get a better handle on your projected cashflow, no doubt better to have an upfront conversation with your client about how much you are going to be charging them – however that is (fixed fee, hourly rates, etc) – than having an arbitrary, and less and less meaningful, ‘billable hourly rate’.

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Pitching: ‘Show me don’t tell me’ – is video tendering the future?

Happy New Year to all and welcome to 2018!

One of the more interesting articles I read over the holiday period profiled a Dutch company called Pitchsome.

Heard of them?

Maybe, but I doubt many have.

But they may just end up being a catalyst for of one of the biggest changes to the legal industry in 2018 – namely, how we tender for work in the future.

Under the tagline, “Show, Don’t Tell,” Pitchsome’s business model is a simple one: Show me how your product works in a video and don’t write reams and reams of marketing bluff and expect me to read it in order for me find out what you can do for me/help me fix my problem.

Supporting this business model, the article states that:

Cisco’s Visual Networking Index says video will account for 80 percent of all consumer internet traffic by 2019.

And that got me thinking:

80% of all consumer internet traffic by 2019 will be Visual Networking + pretty much 100% of Government and 70+% of ASX Top100 companies have legal panels in place

so, how long will it be before these government departments/agencies and companies decide to replace the long and tedious word/excel document tender responses with video tenders that ask law firms to:

  • profile key team members,
  • white-board how the law firm can assist the client,
  • evidence how Legal Project Management can be used,
  • visually explain the steps in the pricing,
  • have client referee testimonials,
  • have video of the pro-bono and community activities the firm is involved in, and
  • have other examples of how the value adds being offered are being implemented by other clients in the tender’s industry sector?

Will never happen I’m hearing many in Australia reading this say. “It’s not professional”. “It’s nothing short an advert”, etc., etc.

But I’m left feeling: what, just what, would have happen to the industry if those of us who started down this path in 2008 (and those of you who were involved know exactly what I’m talking about) continued the journey?

It very well may have been disruptive. And that word is a real catchphrase at the moment.

So maybe, just maybe, we will be seeing video tendering by the end of 2019 – and that leaves me asking: what are you doing now to make sure you can met this need?

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Is your team Gold-plating its services?

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Earlier today Kiron D. Bondale posted ‘Avoid Gold-plating Through Agile Delivery‘ on the PM Hut site.

There’s a lot to like about Kiron’s post, and many things in it really resonated with me from a business development perspective, but what I really want to share with you though is this brilliant piece of commentary by Kiron:

“As it is with jewelry, on projects gold-plating is all form with no substance. The increase in costs is rarely justified by the value provided by superficial “bling”.

It could be an analyst adding in requirements which they came up with on their own without ensuring that those are actually required, a developer who introduces a code change or feature they believe is useful without checking with others or a quality control specialist who decides to test above and beyond approved test plans.

Don’t get me wrong – the intentions are usually good and I’ve yet to encounter an instance of gold-plating which was done maliciously. But it doesn’t matter – gold-plating is work creep.”

and ask: “Does any of this sound familiar to you?”

Because I’m guessing that if you are being honest with yourself, it does. And trust me, there’s no quicker death nail in a client relationship than scope creep.

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Some reasons why every lawyer should be encouraged to do fee estimates

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Fascinating blog post over on the pmhut.com website recently (30 April 2015) by Terry Bunio, Principal Consultant at Protegra, on “Why I Like Estimates” that should be add to the “must read” list of every lawyer and law firm business developer who hasn’t already read it and adopted its principles.

Some of the things that Terry sets out that really resonated with me in this post included:

  • Estimates make me think through a solution

“When I estimate I am forced to examine project details and technology and think through the deliverables at a detail level and how we would build them. This helps to identify issues early and give the team and client lead time to decide on a resolution. When you discover issues late in the game, your options are limited and client anger usually follows.”

Precisely the same reason why lawyers should be doing cost estimates before agreeing to undertake a matter. It makes you think through what the issue(s) is/are, how you are going to deliver the desired result to the client and what sort of resourcing you’ll need. You should also be able to determine at this time what you cannot deliver to the client.

  • Estimates create a shared understanding

“…the discussions that occur while estimating are invaluable. These discussions create a shared understanding throughout the entire team.”

Terry is absolutely spot on here. It should also allow you to assign what work the firm will do, and what work will be outsourced (to an LPO) or insourced (to the in-house team). It sets out a task management process from the offset and reduces the risk of scope creep or out of service work being done. QED, if you follow this process at the end of the day you are much less likely to have an upset client.

  • Estimates allow Clients to allocate post Minimum Viable Product budget to other initiatives

“Clients are not going to reserve large budgets just in case an Information Technology project needs it. Clients have a very limited budget and there are always more initiatives than budget. Allowing clients just to stop projects at any point does not recognize the lost opportunity cost by not starting additional initiatives that could have placed them ahead of their competitors.

Again Terry is right. While lawyers rarely want to get their hands dirty talking money upfront on a matter, it should be kept in mind that money is a limited resource to your client (as it is to your firm) and every dollar your client spends with you is an opportunity cost to the client’s business – vis-a-vis that dollar being spent elsewhere. It should therefore be incumbent upon you not only to ensure that your client understands how much they will likely be required to pay for the matter but also for you to reduce any likelihood of your firm either having to write down time or simply not be paid for out of scope work done by your team.

In short, as Terry writes: “Estimates matter” and going through a robust matter cost estimate process with your client before any instruction to act on a matter should be recommended and adopted as best practice by all lawyers.