Popular Posts: Jan. 1 to June 30, 2010

July is the perfect time to reflect on the first half of the year. Things have been so busy here that we haven't had as much time to post as we'd like, but one of our second-half goals is to contribute more to Lawdable.

In the meantime, here are the five most viewed Lawdable posts to January to July 2010, in descending order:

#5: Legal Project Management: Fad or Focus? (Barry Willms, April 7)
More discussion on LPM, which points to some recent successes and the necessity for the project manager to have authority and follow several key guideline. This follows other popular posts on LPM from Richard Stout (January, see #3), Dennis McKinnie (June 2009) and Candice Reed (June 2009), among other LPM musings.

#4: E-Discovery Tools: Evaluate, Collaborate and 'Lawyer the Problem' (Barry Willms, May 21)
One of the summaries of a Discovery Symposium 2.0 panel session with Barry, co-author of Lawdable Richard Stout, and Edward Efkeman from FedEx. A synopsis of the process and decisions in-house departments factor regarding technology tools and how they fit with their respective teams and culture.

#3: The Spotlight Shines on Project Management (Richard Stout, Jan. 21)
This post was part of a multi-blog dialogue about whether PMs should be lawyers or non-lawyers as LPM truly cemented itself in the vernacular of the legal profession at the beginning of the year. Richard even suggested that LPM could provide an alternate path to partnership in law firms in the future. There were many great observations on the 3 Geeks and Hildebrandt blogs and plenty of back-and-forth on Twitter.

#2: Q&A With Attorney Chris Cotton: Haiti Update (Jan. 18)
Chris is a real leader within our E-Discovery Division and a trusted tactician and voice on our teams. He has also spent significant time in Haiti, helping build and launch an orphanage through the Hands and Feet Project before he came to Counsel On Call. He was in regular contact with several people on the ground after the earthquake, spoke to the media, coordinated with Tennessee's congressional delegation, and took a few minutes to speak with us about the situation in Jacmel.

#1: Alternative Fee Arrangements Gain Traction (Candice Reed, Feb. 3)
Talk of AFAs was deafening in the early part of the year and has only slightly quieted down in recent weeks, so it's no suprise a post on the subject drew plenty of interest. We also heard a lot about it at Discovery Symposium 2.0 and have written often about the subject on Lawdable. We're confident it will continue to be of interest for the foreseeable future.

 

 

Legal Project Management: Fad or Focus?

Like alternative fee arrangements, Legal Project Management (LPM) has become somewhat of a new fad – or at least a very popular topic to discuss and write about. While it’s still unclear how much attention the broader legal landscape truly gives this discipline (although some are making a noticeable commitment to it), I’m of the opinion that LPM should be a key focus of the legal profession moving forward.

LPM is not only about getting things done cheaper and on time, it’s about using best practices and process to accomplish desired goals and budget predictability. To accomplish this, the project manager (PM) must have authority, as Paul C. Easton states in a recent blog post. It’s key, and not only with the attorney team, but with the different departments and personnel involved in any project. That level of responsibility requires experience and a track record – the ability to develop and oversee processes, meet benchmarks, stay on or below budget, and develop consistency -- and having done it many times over. Simply pushing the task down to the lowest possible billing rate, a practice Easton frowns upon in his post, is counter-productive in most instances.

While we commonly see its use in discovery-related matters today, LPM should be the focus of any-size project requiring coordination of more than one person and there have been many successful PM-led initiatives in other areas of the law. It doesn’t matter the area of law, really, because budgets, organization, timelines, process, quality standards, and repeatability are universally necessary considerations. Each is part of the LPM role, and each can be improved dramatically with a great PM. A PM who understands a client’s bigger picture is even more valuable and can help bring core disciplines from one department to another, building on previously successful practices (e.g. e-discovery to due diligence or employment work).

However, without authority – or at least a seat at the decision-making table -- the PM’s power to generate results is effectively non-existent. Spinning wheels, waiting for sign-off by the higher-ups on everything, direction that differs from previously successful results, and choices that are subject to constant overturning… this breeds confusion, stagnation, indecision, and ultimately higher costs.

If you go the route of project management, don’t go halfway. Make a commitment and give it the resources (and power) it needs to be successful.
 

What Are Your (Legal- and Business-Related) New Year's Resolutions?

OK, this is just a different (some might say lame) way of asking what your goals are in 2010… but ‘tis the season, eh?

There’s never been more at stake in the legal profession than there is now. There’s a palpable sense of change in the air… especially concerning the new legal model of law firms and the impact it will have on the way law is practiced and billed. But I’m not one to wait around for that to truly happen, so why not start moving forward? Here are just a few of the things attorneys have to tackle in 2010:

True cost containment of legal expenses … If you’re one of the thousands of in-house managers who has taken the reigns of your budget, designed new processes, brought more work in-house, cultivated new outside counsel relationships, and engaged alternative legal services providers… well, here’s hoping that you get more sleep in 2010, because you’ve likely been busier than ever. Those who’ve undertaken the commitment to cost containment should be applauded and hopefully the work they’ve done will make life easier down the road. This process will continue to evolve for these good people, and thousands more will start down this path anew in 2010. The point: This is the new way of life for corporate legal departments.
 

Alternative Fee Arrangements … Many of you have spent the last few months working on new billing structures with outside counsel, and many are still in the process. There are scores of conflicting reports about these arrangements, so it will be interesting to see how it plays out. My guess is that we’ll hear plenty about the arrangements that work – after all, law firms have wonderful PR people – and we won’t hear much about the efforts that fail. But here’s the key: AFAs must be mutually beneficial, or they simply won’t work long-term. A certain amount of risk-sharing must take place and there must be value. I think AFAs have the ability to change the age-old approach utilized within law firms – and who handles what -- but a lot of the AFAs in use might really just be window dressing.

The Document/ESI Retention Policy… Interest in the design of document retention policies (or ESI Management Policies, as Barry likes to say) exploded in 2009. There’s just so much data now that companies are overwhelmed, and everyone is leery of 1) the smoking gun e-mail that’s been sitting in someone’s inbox for six years and 2) getting exposed for not implementing a solid policy. There is an obvious marriage between these two fears that in-house lawyers must officiate, and there’s no sign this responsibility will ebb in 2010. The key is in the implementation, and as our wise scribe Barry likes to say: “If you’re not enforcing your ESI policy, you have no ESI policy.”

Consistency, Process Across the EDRM… Everyone is dealing with e-discovery at some level, and many companies already have created some sort of approach to the actual review of documents when litigation hits. At the same time, most have spent their time and resources trying to figure out the document retention policy first before fully diving into project management, software and the attorney review. But this is where real dollars are saved and the spotlight will continue to shine on the processing, review and production of documents and creating a cohesive model encompassing all phases of the discovery process.

Convenience Versus Cost … Ah, the age-old question! Traditionally, when an in-house department has overflow work, it’s sent to outside counsel. Litigation, due diligence, employment work and other heavy lifting might also be completely turned over to the law firm simply because a department doesn’t have the resources. This approach is being evaluated, to say the least. But it doesn’t end there; many in-house departments now seek unit pricing that blends services (software + attorneys) for e-discovery matters because it makes budgeting easier and there is (or should be) some risk-sharing with the partner. The key for those who must closely monitor their legal spend is to understand that some providers don’t exactly assume any risk in this scenario because of the excessive padding they’ve built into their per-unit price. A general rule of thumb: if you can’t buy a super-value meal for the price you’re paying per-document, you’re paying too much.

Of course there are myriad other issues that in-house managers must create goals around in 2010, and we look forward to discussing many of those in the coming months. In the meantime, I hope you have a wonderful and prosperous 2010.

Alternative Fee Arrangements Need Precise Understanding

There’s little question Alternative Fee Arrangements (AFAs) have gained in popularity in recent years, and that interest seems to only be increasing. In a recent survey of in-house attorneys we conducted in Atlanta, 46% of those who planned to implement new strategies in 2010 said they planned to use AFAs. After all, what in-house department wouldn’t want cost certainty in a time when most are being asked to reduce costs?

However, it’s a difficult matter to pin down and price properly. Today’s post from the 3 Geeks and a Law Blog says it very well: you have to understand what goes into your costs before you can manage or reduce them, and thus create a valuable proposition for both you and your clients. And therein lies the rub.

For many matters, there are way too many variables to be able to create a fixed cost forecast that benefits both you and the client. That’s a terrifying predicament for a law firm to be in and roll out on a pricing platform to a client. But is that really the issue? I agree with the 3 Geeks post: many lawyers just don’t understand how these arrangements can (or do) work, and I’d add there’s a question whether they should even be pursued at all if that’s the starting point of the discussion.

I have previously worked on these types of arrangements prior to joining Counsel On Call, in particular, data mapping and record retention projects– two areas in which we had a pretty good understanding of the time it took to create the work product necessary to implement. And ultimately our clients understood and appreciated the certainty of the fixed cost. But the interesting thing was that when we would initially provide the fixed fee amount, our clients would sometimes balk, shocked at the total amount staring them in the face. But then when we broke it down on an hourly rate basis and they realized they were getting a significant discount, they were all for it. (It would often go like this: Us: “The cost is $75,000 for the work on a flat fee basis.” Client: “That much?!??! Are you kidding?” Us: “OK, tell you what, we’ll do it for $250 per hour and it should take at least 300 hours.” Client: “Great! Let’s do that!”)

So for many, certainty outweighs cost, even though they think it’s the opposite. Many law firms cater to that notion, which allows them an easy way out when trying to determine actual costs and value. It’s pretty simple to estimate how long certain projects will take, and then multiply that number by an hourly rate, provide a small discount and come up with an “alternative” fee; but that’s not really very creative and doesn’t truly solve the cost/value challenges the client is facing. In fact, one can argue that deriving a flat fee from this foundation actually de-incentivizes a law firm; it’s going to get paid that amount no matter the quality of the work or how long it takes to complete. That being said, a strong case can be made that AFAs should be incentive-based as a core feature, and we know several clients who are utilizing those types of models. When everyone has a skin in the game, priorities become a lot more transparent. Value is, at a minimum, more apparent in that model.

At Counsel On Call and especially in my role in the E-Discovery Division, it’s pretty simple: We have to understand all of the costs of a typical project and how to make the work product better and operate more efficiently. If we don’t do that, it’s not going to matter how we package our costs because we wouldn’t be providing value to our clients. You have to take care of the former to be able to create options for the latter.

(I'd also be remiss if I didn't at least mention Patrick J. Lamb at Valorem, who posts often on the subject of AFAs.) 
 

Maximize Resources, Achieve 'Value'

You can’t scan a legal rag nowadays without seeing an article predicting the end of the billable hour, or the revamping of the business of the practice of law, or some other projection of how the practice is going to look at the end of this recession. Some insights are better than others, like the recent Law.com article about in-house departments requesting their outside counsel to reduce rates or present an alternative fee arrangement. Patrick Lamb’s commentary on the matter on his blog also really drew my interest – I think he hits the nail on the head.

Undoubtedly there is some room for firms to reduce rates and I believe, in time, the market will bear that out (I love the anecdote from a lawyer who told Susan Hackett at ACC that $700/hour was a “suicide” rate). But what’s more central – and the article skims over this while Patrick calls attention to it – is that hourly rates are really only a small part of the equation and that efficiency and quality are the key elements. I'd add one more factor to this cost-saving/value formula: maximizing resources.

Based on hundreds of conversations I’ve had with in-house attorneys in recent months, there really isn’t as much pushback on the partners’ high hourly rates. Sure, clients would like them to be lower, but they also understand you have to pay for great legal counsel. The real problem is at the associate level, where it’s much tougher in some instances to defend the value received. In many cases they’ve turned to smaller or regional firms to get the rates they seek across all levels.

But where we’re seeing in-house departments achieve budgetary success is in conducting an audit of the work that needs to be done and overlaying that with the available resources. Here’s a rudimentary example of how the process works for a fictional department that has (only) three operational units: litigation, contracts and labor and employment:

Litigation

Old Way
Call outside counsel to handle; review might be outsourced and marked up, then the documents re-reviewed by first-second year associates; law firm controls the entire process

New Way
Call outside counsel and discovery team for a planning session; discovery team controls costs and productivity in a transparent manner, liaises with technology vendors, and works closely with law firm(s); law firm handles strategy; in-house department controls the process

Savings: 30-75% or more, typically in the millions annually

Contracts

Old Way
All matters that can’t be handled in-house are sent to outside counsel, including simple matters, such as routine leases, costs $300+ per hour, 10-15 hours of work per week


New Way

Most complex matters are still handled by outside counsel; routine matters like leases and overflow work handled by experienced contracts attorneys billing less than $100 an hour, supervised by in-house attorney(s)

Savings: $150,000+ per year

Employment

Old Way
Routine and EEO matters and trainings are handled by law firm associates for $400+ per hour; such work is sporadic, but typically averages 10 hours of work per week; monthly trainings are required in different areas of the country


New Way

EEO matters are handled by attorneys with 10+ years of experience for less than $100/hour; trainings are conducted by the same attorney(s), who know the company’s policies well, for the same hourly rate or an agreed-upon flat rate

Savings: $150,000 per year on EEO matters; $35,000-$50,000+ on trainings


So while this is far from a detailed example -- and many in-house teams have more than three operational units -- it provides a glimpse of how many of our clients are approaching their legal work now. There is always going to be a significant amount of work that needs to go to outside counsel; there is always work that will need to be done in-house; and there's a growing recognition of this middle ground of work where costs need to be cut, and that's where a lot of value is being discovered.

It also shows that it doesn’t take wholesale changes or eliminating outside counsel to achieve significant cost savings – just maximizing resources and reaping the resulting value.