Why isn't legal project management working?
The Problem
All the firms I work with are wrestling with the challenge of making profit from fixed fees. The problem is compounded because often the firm is being asked to pitch without being able to fully scope the work because the client says "the other firms I have spoken to are happy to work with the information given".
Where a firm has excess capacity - and most firms do - the temptation to continually drop price is almost irresistible, the argument being that any profit is better than people sitting around idle. This would be an acceptable strategy if the high-profit clients could be isolated from the low profit ones, but they can't. The profit malaise seeps through the firm, polluting as it goes.
The Solution
Just as King Canute failed to prevent the tide advancing, no firm can prevent the fixed fee tide. So firms have to address the question "How do we make profit from the fees offered?" The simplistic solution is to incur less cost in undertaking the work. Profit = Income-Expenditure. But how can firms achieve this? The answer is Legal Project Management.
Legal Project Management
Legal Project Management can be defined as project management made fit for purpose in for legal environment. Firms who have hired fully accredited and trained industry-hardened project managers have found that the disciplines that they bring – system, processes, procedures, flow charts, numbers and standard reports – are hard to integrate into the legal culture. The project managers are often bemused and frustrated, and the lawyers unyeilding. Why is that? The problems stem from both partner practice and firm structure:
- Partners do the work and run the work. The cardinal rule of project management is that the project manager does not do the work – they look ahead, planning the next move. If a project manager is focusing on “now” it is analogous to a racing driver watching the dials rather than the road ahead. Yet in a law firm the partner running the matter is usually also heavily involved in doing it.
- Partners prefer law to management. Project Management is traditional management on steroids, so few partners have the skills, knowledge or attitude to undertake the role of project manager, even if they had the time. Which they say they don’t.
- Firms reward the wrong things. Firms routinely reward partners for getting work & doing work, not delivering profit. The natural pressure is therefore to maximise personal chargeable hours before passing work to others – like a reservoir. An efficient project, conversely, is one where the work is done at the most junior level possible whilst meeting the client requirement.
- Firms do not have the systems to produce project reports. Firms systems are designed to record and charge time, not manage projects. A project manager needs to know things such as %completion, expected completion date, revenue forecasts for sub-matters, risk plans and communication processes. Without this information the project is not being project managed in the traditional sense.
- Firms are poorly staffed. Much of a project is not law. Perhaps 30% is admin. Trainees are routinely used for this work, yet it could be done better and cheaper by people who worked standard processes and did not change job every 6 months. Firms may see this work as valuable experience for the trainees, but the client would benefit from more non-legal input.
Overcoming these hurdles is not simple, or every firm would have already done so. The decision is is “Do we make partners legal project managers, or do we train and equip project managers to work with partners in the legal environment? Both scenarios require the reward systems and reporting processes within the firm to be overhauled.
So which would be easier?