Photocred: Mark J P
Originally published in The Legal Intelligencer, April 21, 2017 (subscription required)
The past several years have seen a remarkable rise in demand for pricing and project management professionals at law firms. Consultants, businesses and entire conferences, such as The Legal Marketing Association's P3, have evolved to tackle the challenges evoked by increased rate pressure and client demand for efficiencies. For some firms approaching the concept of efficient service delivery holistically, the results can be impressive. Yet for others the improvements are isolated, limited or nonexistent—phenomenal in one practice and dismal in another. Conventional wisdom cites the billable hour or lawyers' inherent reluctance to change as the primary obstacles. But what if the proposed solution—the need for systematic project management and process improvement—is simply solving a misdiagnosed problem?
Reframing the Problem
In an article in the January/February issue of Harvard Business Review titled, "Are We Solving the Right Problem," innovation researcher Thomas Wedell-Wedellsborg explores how reframing problems can help organizations achieve the best possible solution. Wedell-Wedellsborg points out professionals, when posed with a challenge, devote the bulk of their time and energy to devising solutions. Leaders consider various courses of action, debate the relative merits and drawbacks of each and venture forth. Yet the identified problem frequently belies one or more root problem. It is these root problems that, if not explored and defined, can at best lead to a less effective or costlier solution and, at worst, give rise to a solution that has no impact whatsoever on the original challenge.
Let's take, for example, one of the more common complaints in today's law firms—the perceived inability for younger attorneys to generate enough business. Often, a firm's efforts to improve young lawyer performance draw on a combination of business development skills training and coaching and encouragement by experienced rainmakers to "just get out there and build relationships." The investment is placed squarely on improving the attorneys. The attorneys, however, are rarely the crux of the issue.
The associated causes of low origination will vary from firm to firm. From a big picture perspective, of course, is lower demand and increased competition today versus 10 years ago. On a micro-level, factors may include later retirement ages, hoarding of work, cultural barriers, low lawyer engagement, lack of flexibility in working environment, poor use of technology, and, quite often, compensation systems that reward behaviors at odds with the very origination efforts the firm is seeking to encourage. The only way to truly know what to fix—and how to fix it—is to first take time to reframe the problem.
Coming back to the original theory regarding pricing and project management, law firms must ask themselves what is the problem they are aiming to solve. Is it truly about more efficient processes that require fewer hours to deliver; or does the issue go deeper than that?
P3: Where It All Began
The craze around pricing, project management and process improvement (or P3, for short) originated with client demands for greater value, a dramatic slow down in the rate of growth in legal spending, and the introduction of procurement professionals into the buying process. P3 seemed an obvious solution; and when executed it has positive results and often helps to enhance law firm financials and performance. Yet deeper examination of the trends spurring P3 adoption reveals problems that encompass more than just efficiency. It is about flat growth; and it is about value—the importance, worth or usefulness of something, according to the Google definition. In plain words, clients no longer see the bulk of their legal services as important/worthy/useful as they did previously. No amount of project management is going to alter this shift in perspective – at least not by itself and in a meaningful, sustainable way.
Similarly, the entire premise of the P3 movement is predicated on the assumption that lawyers are inefficient. While this assumption may have legs, it is solving this inefficiency through process improvement, not through the underlying motivators: the billable hour and, relatedly, the compensation systems that reward these hours. Please don't misunderstand; well-orchestrated P3 programs can yield results, and many can help to surface other problems, yet are we circling around the true problem?
One approach to reframe the problem—and get a glimpse into potential solutions—can be found in the behaviors of clients themselves. Trends indicate an increase in the involvement of procurement professionals, a rise in preferred counsel panels and the addition of legal operations management roles. Perhaps most importantly has been a dedicated, market-leading investment in technology and collaboration tools both for clients and by clients. As of July 2016, the legal tech industry had garnered $739M in aggregate funding since 2011 according to CB Insights, and by the end of 2016 $155M had been invested in 67 deals. Also in 2016: GE developed a Yelp-like app for lawyers; AIG commenced a data-driven legal operations business; and JP Morgan Chase launched an internal contract review technology tool they predict will replace 360,000 hours of work annually.
In other words, while lawyers are learning to better manage their caseload for higher profit margins and potentially lower overall costs, clients and entrepreneurs are crafting solutions to drive value—to make legal more important, worthy and useful. While P3 can have a place in helping law firms achieve streamlined workflows, better manage client demand for AFAs and enhance profitability, the bigger question remains: Are we solving the right problem?