The clear differences in working practices between traditional law firms and alternative legal providers are starting to disappear, a study out today (5 February) by Jomati Consultants has found, with a notable upsurge in the adoption of legal project management (LPM) and process improvement techniques, despite continuing fee earner resistance.
The extensive report, called ‘Re-engineering legal services: how traditional law firms are – finally – learning to embrace alternative working practices’, finds that there are three areas in which law firms are increasingly adopting working practices more typically associated with new legal market entrants: the establishment of low cost centres (LCCs), which operate in a manner similar to legal process outsourcers; the adoption of LPM and process improvement which – in turn – offer clients greater price certainty; and the development of law firm-owned contract lawyer services, which closely resemble those already offered by established alternative providers.
With regard to LPM, law firms are largely building their capability behind the scenes and the report says: “While the LPM concept occasionally enters the profession’s consciousness as a result of reports in the legal press and specific law firm marketing initiatives, evidence of this below-the-radar phenomena is more typically hidden away in job adverts placed by law firms and legal recruitment agencies, which are now actively seeking LPM specialists.”
LPM, which at its simplest treats each legal matter as a project to be broken down into phases and individual tasks and given a budget, is still being met with “a mixture of incomprehension, suspicion or hostility”, the Jomati report finds, with legal project managers faced with the reaction: “What I do isn’t a project – why do you call it a project?”
LPM is usually either support team-led or fee earner-led, with most firms interviewed by Jomati having opted for the former, which typically requires a substantial investment in personnel over a short period of time.
In deciding whether LPM should be support team-led or fee earner-led, a firm’s underlying technology and billing infrastructure are relevant factors and the report says: “Because LPM is currently in its infancy, some firms admit that their LPM functions are effectively managed using off-the-shelf software solution, such as Microsoft Project or Excel. And, given many lawyers “allergy” to using such software, dedicated legal project managers use these solutions on their behalf. By contrast, other firms have shown a greater willingness to allow their lawyers to take day-to-day charge of their LPM initiatives – partly because the firms’ technology infrastructure enables its fee earners to run every aspect of the project, from initial scoping to conclusion, largely unaided.”
LPM practitioners interviewed in the Jomati report warned against over complicating any IT-led solution, which can risk alienating partners. Commenting on the findings, Jomati principal Tony Williams, who before founding Jomati was worldwide managing partner of Andersen Legal and before that managing partner of Clifford Chance, told Legal IT Insider: “The most interesting thing about legal project management was that people working in the area had to not blind partners with science.
“The more complicated and jargon-filled you make it, the more lawyers are likely to say ‘this doesn’t apply to us.’”
In order to achieve buy-in from fee earners firms have used both a grass roots approach, where buy-in is driven by word of mouth, and a mandatory approach, where fee-earners are given little choice but to use LPM methodology.
Despite LPM providing an ideal framework for post-project reviews, which then feeds into future process mapping, this does not always happen routinely, the study found. Process mapping is well accepted outside of the legal sector but still greeted with scepticism by fee earners, who are often quick to point out why it won’t work. The Jomati report says: “Firstly, with the right software, a process map can be transformed into a draft project plan for a new, similar, matter at the “click of a button” – thereby making the whole project planning process quicker and more straightforward than starting each new matter from scratch. Secondly, process mapping can also facilitate process improvement. Once a matter has been mapped, its individual elements can be reordered or re-engineered, in order to improve the way they are handled.”
The impact of successful LPM is that work is allocated on the most cost-effective basis rather than fee earner preference, robustly priced and more appropriately staffed. Williams told Legal IT Insider: “Law firms are essentially frightened of LPM – if they reduce costs they will need to find more work.”
When it comes to setting up a LCC, meanwhile, while many of the world’s largest legal process outsourcers have offices in low cost locations around the world, the last two years have seen a trend towards law firms opening their own LCCs. During that time at least 11 LCCs have been launched, mostly US and UK headquartered law firms, including Allen & Overy, Herbert Smith Freehills and Baker & McKenzie in Belfast, with Freshfields Bruckhaus Deringer and Latham & Watkins have opted for Manchester.
While Asia was the location of choice for LCC pioneers, the trend is now to ‘nearshore’ rather than ‘offshore’.
According to law firms, the trend is being driven by client demand, particularly the need to show innovation and cost cutting in requests for proposals to win a place on a client’s panel. However, the report finds that “there is reasonable strong evidence to suggest that many in-house lawyers have little interest in the finer details of the law firm LCC proposition, and therefore cannot be expected to act as cheer leaders for such innovations.”
While setting up a LCC typically requires significant effort the report, which examines in some detail the logistical considerations and different delivery mechanisms, concludes “..there is a real danger that firms who do not explore their LCC options will become progressively less cost competitive.”
And looking in some detail at the rise of the contract lawyer and the various contract lawyer services (CLS) launched to date by conventional law firms, the report concludes: “After a slow start, the UK legal profession has begun to embrace the CLS concept with some enthusiasm. It remains to be seen whether contract lawyering will become a viable proposition for a larger number of law firms and contract lawyers alike going forward, given that – by its very nature – the demand for contract legal services is unpredictable. Nevertheless, it is just possible that law firms may have stumbled on a way of working that suits them, their clients and their own personnel, some of whom are in search of a better work-life balance.”
Commenting on the report’s wider findings, Williams said: “After a slow start, there’s now a real sense of momentum among traditional law firms to update many of their long-standing working practices. Of course, the challenges of doing so should not be underestimated. Unlike legal sector start-ups, established law firms don’t have the luxury of starting with a blank sheet of paper when deciding how they should operate, going forward. Instead, they must deliver – often significant – operational change while also keeping their existing clients and fee earners happy.”
LPM will be discussed in detail at Legal Leaders IT in Gleneagles, led by Herbert Smith Freehills head of legal project management Cathy Mattis, who joined with a LPM from Berwin Leighton Paisner last year, and Belfast head Lisa McLaughlin.