ILTA KM

By Gordon Vala-Webb, Principal at Building Smarter Organizations

Part two of a series about practical and novel innovations for law firms and legal departments.

There has been much ballyhoo regarding the use of LPM approaches – both the legal project and the legal process management varieties – in law firms and legal departments. Unfortunately, while some successes with both forms of LPM have occurred, neither approach has really lived up to the hype.

This is ironic given that, like Moliere’s M. Jourdain who was “speaking prose without knowing it,” most lawyers intuitively have been using some form of their own (light-weight) project and process management. However, when firms or departments formally implement either kind of LPM, it tends not to work for two reasons:

1. the majority of lawyers’ work varies too much – both in the nature of the work itself and the day-to-day (minute-by-minute) priorities, and
2. both formal project and process management run strongly against the grain for most lawyers who are typically task-oriented (“I don’t want to plan, I want to do.”) and value their autonomy (“Don’t fence me in.”); the result is strong (passive or not so passive) resistance when leadership attempts to apply LPM.

However, law firms and legal departments feel the pressure to be more efficient and effective and desperately seek ways to manage and improve legal work.  An alternative that I call “lean matter management” (LMM) does this by solving two fundamental problems that make firms and departments inefficient:

• The work itself is invisible (unlike, for example, manufacturing widgets), making it difficult to
  • co-ordinate who works on what (especially as priorities constantly change) and
  • identify how the way the work is done could be improved (because inefficiencies and gaps are hidden).
• The workers – primarily lawyers – inefficiently switch between too many different pieces of work (this switching-cost problem is a little understood, but substantial drain on legal productivity).

Also called kanban,  LMM comes from the lean (Toyota) production approach, but applied to legal work. The recipe for simple LMM is as follows:

• Start with the “to do” lists lawyers already keep (either in their heads – the risk of error boggles the mind! – or in a notebook or electronic device).
• Take each “to do” for a matter and place it on a shared board under one of three columns indicating status, namely To Do, Doing, and Done.
• As work progresses, tasks move across the columns (consider adding another column titled “Waiting” for work that has been sent for client for review).

This can be done on a physical board, with each item of work – and the name of the person responsible for the task – on a separate Post-It (see image) or using software (many free or relatively inexpensive kanban software tools are available – Trello is any easy one to try).

With an LMM board, the work is visible and everyone immediately sees who is working on what, what has been completed, and what remains to be done. You can add information to the work items by, for instance:

• colour coding for priority (for example, using red for high priority items),
• including due dates (many software tools allow the board to be viewed as a calendar),
• categorizing tasks (to allow for filtering by certain types of work, such as pleadings on a particular issue), and
• using size (for example, small, medium, and large boxes) to indicate hours or complexity of work.

For larger matters, team meetings could focus on reviewing the board to co-ordinate work, identify where work might be stuck, and look for opportunities to do the work more efficiently or distribute it more evenly. You could even share a (perhaps restricted) view of the board with clients to provide up-to-the-minute information on the work you are doing on the matter.

Critical to the LMM/kanban approach is understanding that adding more work to a lawyer (or other team member) who is already fully committed to other work has four negative consequences:

• A backlog of work waiting for that person develops.
• Time is wasted as that person switches among the larger set of tasks now assigned (because reorienting deep attention on a task takes several minutes each time; so, the more tasks, the more time wasted).
• The heavily tasked person becomes stressed worrying about all of the balls in the air.
• Stress increases the possibility of errors.

The LMM solution for this is to limit the work-in-progress that each individual involved in the matter has at any given time (for instance, each person can have no more than a set number of hours of work in the “doing” column at any time). Placing limits forces individuals, the team, and leader to rebalance work and priorities realistically in the moment. The alternative is to pile the work on, have people work inefficiently, and be faced with some crisis as the deadline approaches.

Using software – with people and teams across multiple matters or projects – allows a team, firm, or law department to review work on a matter (or set of matters) for opportunities to improve the sequence and kinds of tasks, reuse a board for the next similar matter, balance workloads across a team or firm, and easily keep clients (whether internal or external) up-to-date on the status of work. You can also apply kanban to legal processes (for example, foreclosures) by setting each step in the process up as a column on a kanban board.

Applying our “practical and novel” test (from part one of this series), lean matter management rates as follows:

LMM is a practical and novel innovation for law firms and departments.

By Gordon Vala-Webb, Principal at Building Smarter Organizations

It used to be that law firms simply looked at each other and made sure that they were neither too far ahead nor too far behind their pack of similar firms. In that world, anyone bringing an idea to firm leadership was immediately asked, “Who else is doing it?” Novel ideas were immediately suspect. Innovation was, in short, a dirty word. And, since law departments tend to be made up of law firm refugees and have far fewer resources, they too had little inclination and capacity to consider markedly new approaches (however desperate or overwhelmed they might feel).

However, law firms and in-house legal departments (now that many are keeping the work they once sent to outside counsel) are facing pressure to be faster, better, and cheaper. Sometimes that pressure can be intense – when, for instance, a firm’s revenues drop or a corporation applies restraints; sometimes the pressure is constant – more like boiling a frog. Either way, many managing partners and GCs are now looking for practical innovation that they can implement immediately.

Those leaders should also be looking for novelty, although that word may feel unsettling to them. Competition between firms is increasingly intensifying and competition between companies is already fierce. So, if everyone else is doing something, not much is to be gained by also doing it (unless that thing has become table stakes – in which case, doing that thing becomes necessary to stay in the game, but provides no basis for winning). In a series of posts about legal innovations that are both practical and novel (see my initial list), I will cover a wide range of approaches from practice efficiency to enhanced business development that may or may not require technology.

But what is novel? And what is practical? What test should be applied before bringing an idea forward? I suggest that ideally an idea should:

• apply equally well to law firms and law departments,
• not yet widely used (10% or fewer) by law firms or law departments – though possibly (or frequently) used outside of legal,
• be currently available,
• have some track record of positive business results (something leading, but not bleeding edge), evidenced by
  • improved efficiency,
  • reduced risk,
  • increased (internal or external) client satisfaction, or
  • attracting new work (or, for law departments, expanding the department’s mandate),
• be easy for most lawyers to adopt most of the time (the tool or technique must build on or extend what most lawyers already do, rather than require them to do something entirely different),
• can be started at relatively low cost (say, with a handful of lawyers in the pilot), and
• be cost-effective when fully launched.

Let me know what you think of this proposed test for ideas and my initial list of novel and practical innovations – click here to review and rate the items on the list using the test. Also, let me know of any other ideas that should be tested and explored in this series. Together we can find identify the top ten innovations for law firms and law departments – and remove innovation from the naughty-words list.

Guest post by Scott Rosenberg, Esq., CPA, Solution Group Leader – Corporate Legal Services, and Dan Safran, Executive Vice President – Management Consulting and Legal Solutions, Project Leadership Associates

As consultants to law firms and corporate law departments, our clients frequently ask us two questions: “What can we do to innovate our processes?” and “What process innovation ideas are other people in the legal market implementing?” This post provides a good start for answering those questions.

First, one needs to decide what is meant by “innovation.” Like legal knowledge management, different law firms and departments interpret innovation differently. For this post, we settled on Wikipedia’s definition of innovation as, “the application of better solutions that meet new requirements, unarticulated needs, or existing market needs… accomplished through more effective processes that are readily available to markets.” (http://en.wikipedia.org/wiki/Innovation).

Next, one needs to choose where to start…but, how do you identify which areas to focus on and what criteria do you use to set priorities? We recommend the following criteria for selecting areas ripe for process change:

• Must be highly relevant to issues the General Counsel or Managing Partner is facing
• Results in the form of cost savings or practice efficiencies must be readily apparent
• Solutions must be readily obtainable
• Solutions should be transformative

The next thing to keep in mind is that innovation serves a business purpose only when it yields value. When we think of process innovation as creating value, we think in terms of the following four strategies:

• increasing revenues and profits by, for instance, creating new or revitalizing existing services or driving new and improved profits,
• decreasing operating costs by, for instance, modifying the business model or process architecture,
• reducing net investment by, for instance, modifying the business model or service composition, and
• improving value by, for instance, creating new or extending existing advantages or disrupting rivals.

Of these, we find decreasing costs of highest value to law departments, while both cost reduction and revenue enhancement generally are equally compelling for most law firms.

Innovation is a relatively new concept for the legal industry, coming when the market experienced a fundamental shift in purchasing behavior a few years ago as corporate law departments usurped the driver’s seat in their relationships with law firms. Forcing outside counsel to compete through rigorous RFP processes, in-house counsel now call the shots in setting fees for legal services. Law departments have huge pressure to minimize and more accurately predict costs; in turn, law firms are getting squeezed on rates, margins, hiring, and lawyer retention.

The following true story illustrates just how much the market has changed. In a meeting with the Managing Partner of a 500-lawyer firm several years ago, we were introducing the concept of business process automation to the firm at the request of the firm’s COO, CIO, and CKO. In the middle of the discussion, the Managing Partner interrupted to ask, “Excuse me. Are you serious? You want our firm to spend money to innovate and apply efficiencies to our internal processes? Why in the world would we do that…we will only reduce the number of billable hours to our clients! What are you thinking?!” Wow, have things changed! Gone are the 7&7 years (seven straight years of law firm rates increasing an average of seven percent).

So now we have a definition of innovation, the value proposition, and characteristics for selecting potential areas for innovation. With this in mind, one might be wondering how to tell if something is truly innovative. And, if everyone is looking at the same things, how does anything innovative arise? For that matter, how can one ever quantify the impact of innovation?

To better understand the impact of innovation, we have tried to articulate real life examples of process changes that are truly innovative, particularly in terms of revenue and cost-related process improvements.
Starting with the cost-side of process innovation, we have defined three categories of change relevant to corporate law departments and law firms. We will discuss each one of these innovation categories and provide an example of each.

One cost-focused area of process innovation is how corporate law departments are beginning to reduce the number of law firms to achieve economies of scale.

The diagram above outlines the process innovation opportunity, its relevance and application, followed by some ideas on how and when to move forward.

While the corporate law department practice of reducing the number of legal service providers they engage may not seem particularly innovative, the processes that some law departments have implemented and adopted, are. Mapping requirements around the relationships the law department actually needs (and modifying them as the needs change), as well as monitoring and giving feedback to the firms are examples of two simple but innovative processes that some law departments have adopted.

We recently delivered an engagement for a large financial institution with a very large corporate legal department. That institution was focused on reducing its provider list. It had been through the process of reducing the number of firms on its law firm panel list. Though the convergence itself led to some minor cost reductions, the corporation was not really achieving the value it had imagined. The law department had also defined and implemented a process for analyzing its satisfaction with outside counsel. However, when we reviewed the law firm evaluations, it was striking that almost all on the panel list received only an average rating. Issues included poor service, internal firm miscommunication, imperfect lawyer assignments, duplication of effort, and multiple internal law firm reviews cycles. What became clear was that culling the list of firms and grading their performance did little to truly affect results.

So, we shared some ideas for communication and collaboration that could be viewed as innovative. Not complicated or bleeding edge, but definitely effective. The department now works with a short list of law firms and sits with each to review its scores and discuss where delivery has fallen short. Expectations are set and confirmed. Both sides come to the table with concrete ideas for how to better communicate and collaborate. Matter budgeting, early case assessment, and post-closing review are included in the workflow. This process is resulting in huge improvements in delivery, satisfaction, and efficiency.

Innovation need not be complex or costly. This corporation took what might seem to be an obvious route, but one few law departments have historically had the structure, process orientation, direction, stamina, or desire to take on to forge closer relationships with their providers. This is a true win-win.

We hope this initial example offers a taste of innovation in the legal setting. While we offer an example above, please watch for our follow-on blog posting that offers other examples of innovation in both law firms and corporate legal departments.

Guest post by Chris Green and Megan Jenkins, DLA Piper

In part one, we observed how more and more clients are explicitly requesting value-added services (VAS) in pitch invitations and relationship reviews.  In this second post, we explore one firm’s strategy.

With the traditional legal model under threat, meeting client demands for cost-effective legal services is challenging, to say the least.  At the root, what clients really want is good value – they want to know they have bought a little something more than legal advice.  The good news is that law firms can give good value to clients through extra services that somewhat offset the cost of legal services.

DLA Piper Case Study

At DLA Piper, we have made VAS a key part of our client relationships.  With dedicated client support functions in both KM and Marketing, we apply our international expertise to developing extra services that solve real business issues.  Granted, as a global firm we have a full array of legal and business expertise and resources to draw on in designing and delivering VAS, but many of the services we will look at in this post can be adapted by smaller firms.

DLA Piper offers a range of online tools that help a business reduce risks, enhance collaboration, check cross-border legal issues, improve efficiency, and save money.  These tools include deal rooms clients can share with third parties, webinar recordings, and interactive resources on key business themes like outsourcing. 

One of our goals is to help the clients we work with look good when they are working with their own colleagues by making them aware of potential legal issues that affect their business.  So, we offer an extensive program of training and events to give our clients the latest knowledge and help them demonstrably add value to their enterprises.  In response to client feedback, we provide these programs in user-friendly, flexible formats, such as webinars.  We also provide timely know-how through bulletins, blogs, and hotlines. 

A Win-WIN Situation

With some key clients, we provide secondments and consultancy from various support teams, including KM.  Our larger clients struggle with many of the business challenges we face, for example managing teams in multiple locations and sharing information effectively. Because in-house lawyers’ knowledge needs are quite similar to those of a firm’s lawyers, law firms can offer products and services that directly address in-house counsel’s concerns.  Although some in-house legal teams are close in size to law firms, these teams typically get far less tailored support from their company given that they are not the focus of the clients’ business.

DLA Piper’s WIN (What In-house lawyers Need) program, which recently earned us the Financial Times Most Innovative Law Firms in Client Service Award, combines a series of events, checklists, online tools, and forums offering knowledge, support, and networking to address the technical, commercial, and personal challenges of practicing law in-house.  Feedback from our clients has been excellent and many are now directly involved in developing the program to keep it relevant to them.

We continually review client needs and feedback, as well as monitor trends in the legal press and client requests, when tweaking existing and developing new tools and services.  For instance, when our clients asked for more flexible training programs, we created a webinar service that pulls together recordings of DLA Piper’s experts across the globe. 

Selling VAS

Yet, our services matter only if our clients know about them and promotion needs to come primarily from the lawyers who work with our clients.  Our lawyers can effectively promote our VAS to clients only if they become fully aware of and understand those services. Our Using Value Added Services to Solve Client Problems blog introduces and promotes best use of our client support services, such as VAS and account management.  To encourage repeat visits, KM and Marketing commit to posting new content every two weeks.  We encourage guest bloggers from other client support teams, including the wider KM team, Marketing’s client services and pitch teams, client account managers, partners, and IT’s client technology services team.  Sharing examples of client support and feedback sparks ideas to help others build relationships with clients and breaks the broad range of VAS into manageable chunks for our busy colleagues to digest.

Making it easy for client partners to promote VAS and give clients relevant information is vital, so we have developed client-friendly introductions and email templates advising clients of frequently used services. This not only streamlines the process, but also ensures delivery of consistent messages.  We create lists of cross-practice training topics and help client teams package these into bespoke training for clients.  An internal collection of DLA Piper client training materials is maintained so new tailored training materials for clients can be produced quickly and easily.

Along with our blog, the firm intranet contains comprehensive information on all of our VAS, prominently displayed within the intranet’s client section.  We also maintain and regularly update a VAS client brochure and accompanying internal guidance notes.

KM’s Crucial Role

The KM team understands what our colleagues need to improve their client relationships and offers solutions to suit them.  KM works with Marketing and client relationship teams within the business to ensure that each client gets the most appropriate services.  To continue providing a range of options, we try to fill more knowledge gaps by tapping into our geographic reach and involving legal and other professional experts. 

To support individual client needs, we work closely with client relationship partners and marketing account managers.  We engage with sector and client marketing teams to ensure we offer the best service to our key clients.  Naturally, we work closely with IT to build out technology solutions, such as deal rooms and collaboration tools, for our clients; KM also benefits from IT’s marrying our system with our clients’ IT to provide coherent service.

The wider KM community within the firm alerts us to both client needs and ad hoc services that have cropped up that we could in turn offer to other clients.  Professional support lawyers and research experts understand the current legal issues in their practice areas and help marketing repackage the information for client consumption.

Unexpected Benefits

Offering clients robust VAS brings many unexpected, intangible benefits. Developing VAS fosters new international and cross-team working relationships, both internally and with clients.  Clients enjoy being involved in pilots and shaping future resources and services.  People from different groups, sectors, and countries can be brought together, often for the first time, through VAS projects. Moreover, client-facing knowledge tools can supplement internal know-how, making internal collaboration more efficient.

The relatively small client KM team’s knowledge, though concentrated, is shared with client teams who are starting to develop their client relationships more intensively.  Every client relationship develops over time and being able to say that, “Other clients in this sector use these services” can quicken the pace.  Collaborating with clients on their needs is particularly powerful and allows us to devote our resources to developing new and valuable services together.

Client KM is now a standard part of pitches and we regularly recommend suitable services to client teams.  We find that if a client relationship starts well, it generally develops well and this has a direct impact on the bottom line.

A variation on these two posts originally appeared in Legal Knowledge Management: Insight and Practice, Ark Group/Managing Partner, 2013.

 Guest post by Chris Green and Megan Jenkins, DLA Piper

As law firms increasingly recognize that what their clients buy is their firm’s knowledge, legal knowledge management (KM) is becoming more client-facing.  Firms now see a very close link between the knowledge the firm relies on and their clients’ desire for value added services (VAS). Since clients tend to have fewer internal legal resources to draw on, sharing the firm’s know-how with clients can be a big win for a firm.  For many years, savvy firms have given clients extras in the form of legal updates and training programs; today firms are becoming more creative and generous with the services they give for free to the extent that clients have come to expect these perks as standard.  Evidence of the growing trend for bigger and better VAS abounds in the legal press, conferences, and the range and sophistication of client requests in RFPs and relationship reviews.

 Understanding What Gives

In an industry built on selling knowledge, giving knowledge away for free may seem counter-intuitive.  So, how did this notion of VAS arise and take root?  It likely started with business clients’ need for their legal advisers to be more like business partners who can help with strategic as well as legal decisions. Law firms quickly realized that to do this well, they would need a rich and deep understanding of their clients’ business needs, an understanding richer than possible in relationships where clients are  instructing different lawyers on each transaction with the firm.  Clients are more likely to share key strategic information with advisers they trust and building trust takes time and investment. Clients play their part through panel appointments that give firms access to the broader context that fosters solid relationships. Likewise, law firms must grasp every opportunity to learn more about their clients’ businesses and VAS create opportunities to sit and talk without the meter running; they encourage clients to share their wider business focus and plans without fear of racking up a hefty bill.

 Timing Is Everything

 Typically, clients bring work to a firm when faced with a legal problem.  Unfortunately, by that point, it may be too late to craft the best outcome for the longer-term business strategy. To be effective business advisers, firms need to keep their clients’ business goals top of mind and proactively pre-empt legal problems to help the business progress.  More often than not, this requires taking action well before legal issues crystalize. Business decisions are made for commercial reasons by directors and executives concerned about whether a change or investment is right for their business at that time.  VAS, such as access to a law firm’s online tools, can help clients analyse their business options before they even think of involving lawyers directly.  Clients have long recognised value in being able to pick their lawyers brains on small issues free-of-charge; being able to similarly discuss longer term, strategic issues with their lawyers could prove vital to the clients’ business health. 

Getting an Edge 

Law firms constantly struggle with how to best differentiate themselves from other firms.  Lawyers who understand their clients’ businesses in depth are better equipped to ask the right questions and demonstrate how their services fill gaps in ways competitors cannot.  Marketing efforts tailored to the client’s individual or business sector priorities speak volumes.  A firm’s long list of services and sheer size no longer impress today’s sophisticated clients; rather, they want to see how the firm’s services are built on knowledge and experience with the client’s business and industry. 

Most firms offer a range of VAS, some of which have existed for decades (legal updates, training, and secondments, for instance) and some more recent additions (online tools, blogs, apps, and consultancy, to name a few).  New ideas crop up frequently, especially with technology making it easier to deliver free legal and commercial services to both potential and existing clients.  All of these extra services open new opportunities for law firms to start a dialogue with clients and help them solve more business problems.  By filling a know-how, resource, or service gap in this way, firms demonstrate their broader expertise and differentiate themselves. 

A good range of VAS includes a mix of legal information and tools designed to help clients make business decisions and solve practical issues. These services also help law firms meet their clients’ challenge to streamline and enhance our interactions with them. For example, clients who first complete a structured online checklist are more likely to better instruct the lawyers working on a new deal for them, thereby increasing efficiency, effectiveness, and profitability.  

Benefits far exceed cost 

Tailoring the kinds of VAS offered to each client’s particular circumstances creates a bespoke offering for the client and ensures that the law firm spends its own resources on services that genuinely benefit each client.  Developing and sharing VAS also helps colleagues understand each other’s business and expertise, which in turn increases cross-selling as colleagues gain confidence in introducing each other to the firm’s clients. Vital to any firm’s business, active cross-selling is harder to achieve the larger a firm grows.

These benefits are critical in today’s challenging legal market where firms are competing to increase market share and create lasting client relationships in the face of shrinking demand.  All firms wants repeat clients who seek their services on a full range of legal issues.  A good roster of VAS helps firms continually demonstrate their business acumen and commerciality to business clients.  

In part two, we will look at how one firm has used a VAS strategy to differentiate itself in the market for legal services.  A variation on these two posts originally appeared in Legal Knowledge Management: Insight and Practice, Ark Group/Managing Partner, 2013).

 Guest Post by Gordon Vala-Webb, National Director of Innovation and Information, McMillan LLP

Lawyers like to think that the law is different, their work is different, and even their personality type is different from everyone else’s (see Dr. Larry Richard’s work on this last point). Back in 2006, David Maister, the grand-daddy of modern thinkers on all types of professional service firms, said, “After spending 25 years saying that all professions are similar and can learn from each other, I’m now ready to make a concession: Law firms are different.”

After all, can anyone really imagine Shakespeare, in Henry VI, having one of his characters say “The first thing we do is kill all the accountants”?

But accountants and lawyers (and other partnership-based professional service firms), now more than ever, have much more in common than you might think; and this raises significant implications for law-firm KM work. Having led KM efforts in a large accounting firm (PwC, previously PricewaterhouseCoopers – Canada) and having since left the dark side to work in a law firm, I think I can offer some useful advice and perspective.

The combination of a competitive market, professional services (based on a mix of technical excellence, external oversight, trust, and broader business knowledge), and partnership-owned business model, drives substantial similarities across all professional services firms.  From the KM vantage point, the essential similarity is the need to reuse work product (sometimes cleansed and reworked), locate experts (as in, “Does anyone know about…”), and have high-level conversations quickly and efficiently (to, for instance, get answers or explore an idea).

Two fundamental differences have distinguished law firms from other professional service firms.  First, those other firms tend to be much larger than firms and this remains largely true.  Second, and more importantly, other professional service firms have been engaged in a fight for market share for much longer than most corporate law firms have.  Now law firms – that formerly just shared the ever expanding pie of market growth – are facing intense competition for work (starting in 2008 in the US and since 2012 in Canada).

Larger size coupled with more intense competition has driven non-law professional service firms to:

• invest earlier and more heavily in KM-related projects (for example, expertise-location, search engines, and intranets);
• focus KM efforts on supporting marketing and business development outcomes (for instance, client account dashboards joining financial, business development, and client news together and RFP-production through standardized resume and boiler-plate libraries);
• drive efficiencies in those KM operations (through outsourcing certain basic functions, using contingent on-call contractors, and developing value-contribution measures, to name a few);
• link business processes with content stores (to reuse content or guidance) and groups or communities of practice (for continuous improvement);
• explore emerging areas of KM, like enterprise social networking platforms (note that every major consulting and accounting firm has launched a platform – or plans to very soon – while most law firms have yet to move beyond experimentation);
• provide tools and capabilities that support their professionals in finding and filtering news efficiently and effectively (through news aggregators or filters), and
• deliver a richer mobile experience.

So, assuming the experience in other professional service firms is something to go by, what does the future hold for KM people within law firms?  We will need people who can implement and support enterprise social networking suites.  We will need to build much tighter relationships with both Marketing and Business Development,  as well as Professional Development and Training.  More KM people will be either outsourced or contingent on-call contractors (for instance, for certain forms of legal research).  Firms will directly employ fewer KM leaders as organizations look to combine for economies of scale or strategic advantage.  And, in-house KM people will be more business savvy and technically expert in KM and less likely to be former lawyers.

Yes, law firms are different; but, whereas that difference used to be akin to apples and oranges, it is now much more akin to McIntosh and Red Delicious.