- The reality of Legal Project Management is often far different than the promise. Here’s why.
Truth be told, the burgeoning discipline of Legal Project Management (LPM) is producing uneven results, with some gratifying and well-publicized hits…but also quite a few misses. Met with enormous enthusiasm—especially from clients—when it first hit the legal front pages during the global financial crisis, many LPM initiatives, often extremely expensive ones, have failed to get legs and win acceptance from practicing lawyers, and failed to evolve into a repertoire of best practices accepted across the length and breadth of the legal profession. In essence, they failed to deliver.
Some of the implementation problems are technical, focusing on the complexities of developing and implementing new systems, software, and technology. Some are motivational, meaning that LPM has encountered a lot of resistance from lawyers who resent being compelled to master a whole new learning curve, add additional administrative demands to their time management, and significantly change how they practice law. But we believe the most fundamental problem is structural, that is, the result of a fundamental economic misalignment between what corporate clients want and what law firms want.
The explosive evolution of LPM has been a fundamentally client-driven phenomenon. At the outset, most clients probably weren’t familiar with the term, and most probably were not familiar with the systems, technologies, and best practices of this new discipline. However, when facing intense budgetary pressures courtesy of the global financial crisis, leaders of corporate legal departments began making it abundantly clear that they wanted what LPM’s proponents claimed it provided: greater consistency; greater control; better predictability; better client-law firm communication and collaboration; fewer nasty surprises; and, above all, greater efficiency.
Ah, but there’s the rub. In the context of legal economics, efficiency is a weasel word, suggesting streamlined and happily humming systems, an attractive cost-benefit ratio, motivated performers, and universal agreement that something desirable is going on. In fact, however, the word has a fundamentally different meaning for legal service vendors and legal service buyers.
To general counsel, efficiency simply means lower costs and everything that contributes to that. To law firms, it means consistently high and sustainable profitability. We have found that these two definitions can be hard to reconcile unless the parties really get straight with each other.
Corporate legal departments are cost centers, which means that anything that contributes to lower costs is a per se good, whether that be via lower rates and fee discounts, project-fee pricing, or, above all, fewer hours billed to the client. Accordingly, annual hourly rate increases have become anathema, as has allowing firms to charge the client for low-value hours provided by inexperienced associates or charging for unnecessary research.
Predictably, law firms are not delighted with this definition of efficiency.
Law firms, on the other hand, are profit centers. They are in business to make as much money as possible, and efficiency—which is to say, profitability—equates to charging the highest rates the client will accept and urging firm lawyers to bill and realize as many hours as possible. Therefore, any internal discipline that encourages lawyers to bill fewer hours creates an inherent tension between the interests of the client and those of the law firm.
Unfortunately, what we have discovered—in firms big and small—is a good deal of “as if” LPM, that is, firms pitching the benefits of LPM without really altering their actual mode of service delivery. In a number of contentious situations, firms touted and promised state-of-the-art LPM, only to fail to deliver. In several high-profile train wrecks, clients completely cut outside law firms adrift or directed new work elsewhere.
In our experience, this basic misalignment of objectives can be ameliorated if both law firm and client place enormous emphasis on properly scoping engagements at the outset of the engagement (to avoid surplusage and wasted effort). The best results stem from law firms and clients collaborating on the development of LPM policies and procedures, with both parties buying into and employing a shared model of project efficiency, with clearly articulated budgets, standards, and timeframes.
Even firms committed to excellent LPM implementation have been bewildered by an exploding marketplace offering a bewildering variety of “state of the art” LPM products and processes, with scores of internal and external providers all trying to develop a better mousetrap and achieve LPM market dominance. We have been party to the development of a number of these LPM “technologies,” both by internal IT and project management staff and external vendors, and we have often been impressed by their apparent excellent design and sophistication. We have seen—and have test flown—a variety of LPM “solutions” that not only control the planning, action steps, costs, and actual-to-budget performance of specific engagements but also employ magnificent dashboards to integrate a variety of other administrative weights and measures—all with an eye toward making the average billing lawyer’s life faster, easier, more manageable and more consistent.
The problem is that, by and large, the whiz-bang systems have failed to get traction. Dazzling in their depth and breadth when demoed by experienced IT experts, many “LPM tools” have experienced poor acceptance from lawyers who find them time-consuming, frustrating, overly complex, constraining, and even insulting. One partner echoed what many others have expressed: “The learning curve is steep, I have to learn a whole new language, and the rigidity of all the forms and templates saps my time. If anything requires more than two keystrokes, I’m not going to use it.”
Perhaps worse, even tech-savvy younger lawyers who can master the use of high-tech LPM tools have an incentive not to use them to track their project activity and trim their billable hours in the interests of “efficiency.” Many report being caught in a vicious double-bind: the client wants them to “work smarter, not longer” and to bill fewer hours, while their firm wants them to maximize their billable hours to meet billable targets and support profitability. This bind resolves itself only if the firm has a copious supply of new work to fill up all the hours the worker bees “save” by streamlining their work habits, adhering to project budgets, and reducing the hours billed to a given client.
The result is that today many associates are bummed out and frightened. They do not know how they will achieve their annual billable hours goals. As one associate told us, “Our amazing LPM tools tell me just exactly how badly I’m doing. The hurrieder I go, the behinder I get.”
All these challenges notwithstanding, LPM continues to be a significant feature in the legal landscape. And yes, there certainly are firms where LPM growing pains have given way to adoption and acceptance.
Surprisingly, often this has been in settings where LPM implementation was not technology-dependent. We have seen LPM embraced enthusiastically and implemented effectively where LPM roll-out and training focused as much on how people do things as on sophisticated LPM infrastructure.
Basically, and regardless of its support platform or complexity of the firm’s LPM protocols, LPM has five components:
Teams achieve these objectives in many ways, and firms considering LPM initiatives must appreciate that LPM is scalable ‒ in complexity, orthodoxy, and cost. There is not a single formula for best practices, merely a set of criteria for best outcomes. One size does not and should not fit all, and the quantity of dollars invested in LPM does not automatically translate into lawyer buy-in or improved lawyer performance, much less client satisfaction.