blackstroke

01/09/2017

Imagine your law firm runs like a well-oiled machine. Similar types of matters can be churned out, one after another, each executed at the highest possible quality. For you personally, this means fewer crises and late nights at work.

One strategy to achieve the predictable delivery of legal services is through the implementation of organizational best practice.

Key Performance Indicators (KPIs) are an important tool for measuring and managing many businesses, and increasingly for managing law firms, but in our view they are a subset of the bigger picture represented by the concept of “best practice”.

Management systems based on KPIs measure outcomes, while best practice is the management of inputs. Managers using KPIs are like doctors treating diseases, while best practice is like preventative medicine, diet and exercise. Both are required for optimum health.

Like many widely used business terms, “best practice” has become a tired phrase with many shades of meaning, and is often confused with “Quality”. However, for all but a tiny minority of law firms, possessing repeatable best practices is critical to long-term survival and growth.

Therefore while financial hygiene and KPIs are basic tools for building a successful law firm, they do not go far enough. If best practice is not adopted, the symptoms discussed in Step 2 below are almost inevitable.

Law firms actively engaged in generating repeatable best practices encounter numerous obstacles on the way to a profitable and valuable firm; but if it was easy everyone would already have done it. There are good reasons we are not all as fit and healthy as we should be. Diet and exercise are hard, but without them we would not produce as much or live as long. The most effective managers are the personal trainers, the coaches of their businesses.

The challenges typically centre on three core areas: process, people, and technology.

Process. The first challenge to developing best practices is the absence of matter template submission, collection and refinement processes. This process is simply not part of the traditional law firm culture. When firms were small (pre-1980), and margins were wide, (pre-1990), this did not matter. Now, most law firms are so busy acting for clients that they do not have time to fully implement repeatable processes. What results is an ad hoc execution process, and consequently, inconsistent creation of best practices. Firms that successfully develop and utilize best practice have clearly defined processes in which everyone in the firm actively participates. And surprisingly they seem to have more time.

People. The second challenge to creating an efficient law firm powered by repeatedly refined best practices is the prevailing culture of the firm itself. Best practices can only come from the people who possess the relevant legal knowledge and actually manage the matters. A firm that has the right lawyers and a culture that is rooted in developing and working from best practice can quickly gain a competitive edge.

Technology. The third challenge is obtaining the tools that enable staff to participate in the development and refinement of systems and provide the necessary process automation. .

The bulk of a typical firm’s legal, matter and business knowledge resides in the minds of its lawyers and support staff. When an individual leaves, the best practices also leave, and the firm struggles to replace the lost expertise.

Given these challenges, what can law firms do to leverage the greatest possible value from the know-how they sell? How can best practices be submitted, refined, and re- used in a repeatable and readily accessible manner?

The five steps outlined below will help law firms start building a best practice methodology. As in most phased implementation programs, small steps must be taken to build the overall systematic approach to best practice development. Waiting is not the answer - the time to begin is now.

THE 5 STEPS TO A PROFITABLE LEGAL SERVICE BUSINESS

DEVELOP A BEST PRACTICE TEMPLATE COLLECTION AND REFINEMENT PROCESS

The best practice template collection and refinement process must be designed and clearly communicated before a firm can begin to build best practices. The starting point is simple: new matters. As a new matter begins, the overall legal team leader needs to identify the key contributor for each phase. These individuals are charged with collecting the key deliverables that exceeded a client’s expectation or greatly improved the carriage of the matter.

Think of a matter as a project. The end of each phase is a good place for this contribution to start so that other workgroups can quickly benefit from key knowledge gained during the project delivery, or in smaller firms the key person or workgroup can more readily re-use and refine their written processes.

Next, refine the contributions. Someone needs to “templatize” the documents so that they can be re-used. Template building does not require large amounts of dedicated resources if the right approach is taken. People who are not being fully utilized on matters or the person who is submitting the document, can be encouraged to refine the new best practice before submission.

Supervised junior staff can be used. They are frequently inexpensive but time consuming to manage, enthusiastic but poorly directed. Engaging junior staff in the leg-work of implementing systems helps solve these issues. With some basic training in the tools used for template development and a little guidance along the way, juniors are quite capable of identifying and documenting processing and then submitting their efforts for review. As with all staff, the right juniors need to be selected for this process.

Nor do content creators need to be restricted to matter types. HR, PR, IT, and finance processes can all be templatized and treated as projects subject to improvement by refinement.

After creating these templates, it is critical to begin sharing them with other teams - which leads to the re-use of the templates in new projects. Thus, the continuous cycle begins. As templates are re-used, they will be improved as a result of the new lessons learned.

This process produces services that are predictable and profitable. When an organization earns a reputation for delivering on their claims and meeting both internal and external deadlines, more business inevitability follows. A firm’s reputation increases with predictability, as does its profitability.
We have seen this process carried out at Slater & Gordon, with the result that they can process PI matters profitably under circumstances where other firms lose money: they are now getting referrals from firms that once did PI work in-house, from firms that were once their competitors.

In our view, law firms require specific software tools to go further than KPIs, to adopt best practice. Good software does this by automating the work you do, by making it easy to ‘templatize’ matters and by transparently recording the KPIs needed for management, without extra effort by your staff.
In contrast, firms excessively focused on KPIs put too much emphasis on measuring and managing Time & Billing, to the detriment of much else. The measurements become an increasing burden on professional and support staff, decreasing productivity and reducing willingness to participate in ‘yet another burden’; knowledge management or best practice.

It follows that firms that have invested heavily on Time & Billing marketed as KPI systems have paid too much for too little, and are probably crippling their culture – particular as they then must strive to generate the returns to pay for the big technology investments.

Encouraging best practice participation leads us to the second step.

FOSTER THE RIGHT CULTURE IN IMPLEMENTING A BEST PRACTICES APPROACH

There are four types of organizations that can be developed, based on a cultural model with the dimensions of participation and business results.

Low Participation and Low Results

Low participation and low results will lead to failure. An organization in this category will usually experience high turnover, poor service, and little growth. Partners and staff will leave because they are not contributing productively to the success of the firm; clients will not retain this organization’s services because their reputation is poor; and the firm’s future is dim because new clients are rare or expensive. The symptoms are inter-related.

High Participation and Low Results

High participation and low results will lead to frustration. Staff want to help, and are trying to help, but no one is listening to the contributions being made. The ideas are good and the developing best practices are valuable. However, the systems are not in place to use the best practices submitted. Accordingly, staff turnover continues; matters are handled inconsistently; best practices are not evolving and the overall growth of the firm will stall.

Low Participation and High Results

Low participation and high results will inevitably lead to solo efforts. Partners could look at this firm and think, “What is the problem? Positive results are happening, something must be working.” The problem is that individuals are single-handedly saving matters from disaster, and few best practice approaches are being built.

With this approach, the firm can never grow beyond a limited number of clients and matters; it becomes too dependent on individual rather than on a team. When the individual leaves, the skills also leave, and the firm does not have anything to apply to the new matters. Instead, they will look for the next guru to pull another heroic effort. The bottom line is that the low participation/high results model will not scale and will lead to an unhealthy culture that delivers mediocre service and flat growth.

High Participation and High Results

High participation and high results will lead to a robust, growing best practice community. The knowledge holders are happily contributing best practices and the organization has processes in place to capture, refine, share, and re-use what has been contributed. The people are enlightened because they enjoy learning and participating. The clients are happy because there matters are being managed to a consistently high quality.

Consequently, the firm is growing because their reputation is solid and their services can be delivered predictably and profitably.

MEASURE WHAT YOU WANT TO CREATE

The best way to accomplish what you desire is to measure what is important to your firm. Measurements are the best communication tool. In creating best practices and building the right type of culture to encourage contribution, KPIs are the place to begin. Some examples include:

  • Cycle time of starting similar type matters: The cycle of time that exists between the day a matter was opened and the time when the first letter was written, proceedings were issued or a bill was dispatched.
  • Cycle time of completing similar matters.
  • Client satisfaction: Is client satisfaction, as the results of services delivered, flat, decreasing or increasing for similar matter types.
  • Turnover: Are people leaving your firm at a higher or lower rate than the average for your practice areas? Why are they leaving
  • Profitability: How profitable are similar matter types over time?
  • Number of similar matters that are fixed bid: Are you comfortable tendering a fixed bid based upon the knowledge you have learned from other matters? Measure the actual per matter costs in fixed bids to determine if the best practices are effective.
  • Recognition: When is the last time you recognized a team of people who contributed to the growth of the firm by sharing their knowledge for future matters?

Communicate the measurements to the whole firm. Metrics will motivate and underline the importance of what you are trying to build. If you can automate the communication of metrics via a firm wide Intranet or even publish carefully selected information on your Extranet or public website, so much the better. Even your communication projects have become best practice.

This brings us to the fourth point.

IMPLEMENT TECHNOLOGY THAT FACILITATES THE CREATION AND SHARING OF BEST PRACTICES

Technology should enable, not hinder, best practice workflow and the reuse of best practice templates. A centralized knowledge management system should be used to support the best practices program. Since the number one reason knowledge management solutions fail is difficulty of use, ease of use should be the number one priority.

A technology system that is too burdensome will result in a weary group of lawyers and paralegals who are drowned under a Niagara of information. Selecting the right technology comes down to the ability to easily use the system within your matter management processes, and not adding additional steps to your processes because of inflexibility in the technology workflow. In practice this requires a software system that works the way you work.

ESTABLISH THE BEST PRACTICE MISSION AND OBJECTIVES FOR YOUR ORGANIZATION

With the previous four steps in mind, it is important to set the mission and objectives of creating repeatable best practice approaches to managing matters and projects. The mission and objectives will provide the overall framework in which to build your firm’s reputation. Everyone in the organization needs to understand the framework in which the best practices work will be completed, To avoid confusion, each of the following areas should he addressed in the framework:

  • Processes: What is the purpose of the processes that are being built? Why are the processes important? How do they fit into the organizational strategy?
  • People: What is the meaning of the work environment that is being established? How does it define the business that is being built?
  • Measurements: Do the measurements link to the objectives? Are there measurements for each objective
  • Technology: What is the technology designed to support?

The framework - mission and objectives - provides the context that pulls everything together to ensure that your organization is pursuing a complete best practice strategy. Balancing client expectations with employee and business expectations will be necessary. Within the context of client needs, develop objectives that will excite and involve your people, while setting clear business objectives as to why creating this service delivery approach is critical.

One method to establish the overall framework is to sit down and write a story about your firm and how you want it to be viewed internally and externally. In each of the steps, an outline begins. The processes that are put in place are the chapters in the story - they decide what happens in what sequence. The culture that is built brings in the characters that bring it to life. Who will make it happen? Where will it happen?

The measurements will determine how the story is delivered. And, the technology will be the stage on which the story is delivered and recorded. Write the story and then begin putting the pieces in place and take an active part in it. To begin, answer the following question: What story do you want to tell to your people, your clients, and your industry? In the words of the venerable David Maister – what do you want to be famous for?

SUMMARY

Operating through a best practice approach is critical to developing repeatable and profitable services. With predictable projects, less time will be spent solving problems and more time can be allocated to identifying ways to take the organization to the next level.

To help identify the potential for increased productivity, profitability and customer satisfaction at your law firm, IMG is always available to conduct workshops with partners, lawyers, support staff and administrative staff on an informal or formal basis.