Friday, March 26, 2010

Law Firm (R)Evolution & Gaps

Earlier this week Georgetown Law School held a symposium on the on-going law firm evolution. Much reporting has been done on this focusing on different issues and components of the presentations (See Lance Godard's collection). Perhaps the most valuable and insightful information coming out of the conference was from the exchanges of dialogue between participants. There were many themes that emerged over the two days but one stood out more than any others - collaboration. There still exists a “gap” between in-house counsel and their outside counsel that is prohibiting robust and meaningful collaboration that would benefit both parties.

This gap can be best said to have three components or flavors. There can be a Knowledge Gap, a Trust Gap, and a Risk Sharing Gap. All of these gaps were touched upon at some point throughout the conference. It was noted time and again that as much as things are changing in the legal marketplace there still is an apparent lack of collaboration occurring that better aligns the interest of outside counsel with their client. Given that the traditional interests of both parties have been stated to be misaligned or in conflict it is easy to see that it may be difficult to readjust and recalibrate accordingly. What was most apparent was that both parties understood and appreciated the other’s position – for instance it is clear that most in-house counsel understand and wish for law firms to be profitable. So the issue in not necessarily in the ends but rather, in the means. In house still needs solid representation along with trusted advice and counsel, but the way in which in-house is getting this is changing and what they look for outside counsel for is changing as well.

Three Gaps.

Knowledge Gap: Lacking of knowledge about the business of the client. This gap can exist as to both outside counsel and in-house counsel. It is obvious to see where outside counsel may have limited exposure and insight into the actual business of its client because it is indeed “outside” counsel. This is not to say that this is acceptable and sustainable perspective. Perhaps more compelling and disconcerting is where in-house lacks the knowledge of their client. Paraphrasing Mark Chandler “as part of the GC office - knowing your way around the business/company and its people/processes is critical.” If in-house is not successful in gaining the knowledge of its client how can it expect outside counsel to do so? Further this knowledge of how the company runs from operations, to sales, to R&D, etc. is critical to providing proactive advice and counsel. Too often both in-house and outside counsel are brought into a matter that has already become critical rather than having been involved earlier perhaps thwarting any major issue. Proactive versus reactive.

Trust Gap: Lacking the insight into incentives and methodologies in how each party is conducting its work. For instance, in-house is reluctant to trust outside counsel in terms of how it is providing its services and what they are charging for it. This goes back to the traditional misalignment of interests – in-house knows that outside bills by the hour in most instances and there is almost no real incentive to dispose of a matter quickly and cheaply. Further, outside counsel is spare with its trust of in-house when in-house selects other firms or suppliers to work with. Leah Cooper provided a great example of this when she stated that too many times outside counsel acted as though the choices she made as part of Rio Tinto’s in-house team in selecting vendors were suspect and came from an ill-advised process. She continued to say that this notion that outside counsel carried regarding working with any other vendors or suppliers often frustrated the purpose of the project and led to too much time wasted in getting outside counsel to work effectively with the other suppliers. This lack of trust of both parties leads to much waste and frustration.

Risk Sharing Gap: Lacking the ability or willingness to properly and fairly allocate risk. Jeff Carr and Tom Yannucci had an animated exchange on the opening evening of the conference. Carr was making the point that outside counsel needs to take a more active role in the risk sharing of the matters they participate in. This was geared towards fees meaning that outside counsel should not look to just bill by the hour in instances they have plenty of experience and knowledge on. They should be willing to devise a system of billing that takes into account their prior experiences and shift some of the risk of success or failure onto their billing schemes. As Carr put it – as a GC representing only one client he does not gain the breadth and depth of experience that law firms do in representing hundreds of clients. A matter that may appear to be unique to Carr may in fact be run of the mill or at least more familiar to his outside counsel. This being the case, outside counsel should have a better handle on what these matters typically cost and what the best manner is to proceed in. Yet not only do outside counsel typically fail to offer any such guidance but more sadly they often fail to even measure or capture any such data that would be useful for such purposes. If outside counsel had a better understanding of costs and strategy they would be better able to provide in-house with a budget. Further, they could then work to devise a billing mechanism that rewards success – success as defined jointly by in-house and outside counsel. Thus sharing both the risks and rewards is more easily achieved.

Filling any portion of the gaps should allow for more effective and collaborative work between in-house and outside counsel. It is clear that as William Perlstein of Wilmer Hale put it, in-house needs to take up the challenge of managing more both in terms of their client and in actual legal matters. It is no longer acceptable to be in the GC’s office and never reach into your own client to learn and always reaching to the phone to have outside counsel take care of everything. Also, outside counsel have to move beyond focusing on their clients in terms of matters and cases. They need to view their client more organically, getting to learn the nuances of their businesses and people. As both Chandler and Perlstein emphasized – both in-house and outside counsel need to “know their client well.” The client is the company and both in-house and outside counsel need to serve it actively and knowledgeably.

Wednesday, March 24, 2010

Wordle for the Georgetown Law Firm Evolution conf.

This is drawn from the actual tweeting from the conference. Taking Lance Godard's (@lancegodard)"What the Hashtag?" page and striping out as many names of tweeps and presenters as I could here is the Wordle for the conference.

Wordle: Law Firm Evolution

Tuesday, March 16, 2010

Resource Management within Legal Project Managment

Today we see increasing numbers of law firms and in-house counsel investing in project performance and project management (PM) tools. While this is still a nascent development for the legal markets it may seem premature to point out some its failures. It is necessary however in order to ensure proper growth of this area and to continue to strengthen “buy in” from the stakeholders – for one failed project is not just a single failure but also serves as reason not to deploy PM methodologies at all in the risk averse culture of a legal practice.

Here I focus on the one failure that most often sinks the entire project management effort and in most cases the actual performance of the project as well (on-time, on- budget, results, and quality). This failure centers on the ability to have the right people at the right time at the right place. Sounds simple but it is not. Another way of wording this concept is “Resource Management.” Here the resource is people.

In today’s legal landscape the human capital component of our work is dramatically changing. Considering such things as outsourcing, off-shoring, near-shoring, and captives as well as new roles and positions within departments (discovery manager/counsel, project manager, strategic development) the spectrum of labor skills and locations has become more complex. Projects are typically not initiated, managed and executed from within one office or location. The Project team can consist of internal personnel (lawyers, non-lawyers, business executives, and support staff) as well as external personnel (experts, consultants, co-counsel, vendor partners and others). A project manager may be managing a team consisting of folks in different time zones, with varying backgrounds, and with varying degrees of exposure to PM. Managing not only the project but these resources is vital. Thus, properly articulating and documenting a resource management methodology along with the associated PM processes will allow for more consistent long term benefits of the overall PM implementation.

So what is resource management in terms of legal PM? The easiest way to think about this is yet another comparison to the manufacturing world. Decades ago the manufacturing process was relatively simple – a factory made a product on-site – bringing all the needed parts and labor to the factory’s central location. As the need to produce more products for less cost increased, the industry realized that it had to learn how to eliminate costs associated with storing inventory and under-utilized labor during down cycles as well as how to respond to peaks in demand that otherwise would be lost opportunity. The industry looked to alternative methods that allowed for a decentralized approach - having certain components manufactured elsewhere and then shipped to the main factory for product assembly and completion. This ultimately led to “just in time” practices whereby a company is able to control its supply chain with such a degree of accuracy that often times dozens, if not hundreds, of individual components arrive to an assembly location “just in time” (meaning no warehousing needed) for production. Further, the supply chain is diverse enough to compensate for supply shortage and spikes in demand.

History is repeating itself within today’s legal services market. Competition is fierce, margins are tight, and the traditional business model of the law firm is being questioned. The competitive pressure to produce quality for less is a reality that firms face every day. Couple this with the increased competition from non-traditional entities (such as MDPs and LPOs along with soon-to-be annexed businesses under the UK’s Legal Services Act) and firms are facing a challenging and complex operating environment. The stakes for deploying effective management tools have risen.

Resource management can be seen as part of the initiation and/or planning phase of a project (See http://en.wikipedia.org/wiki/Project_Management_Triangle) or it can be an organizational approach to controlling costs and working more efficiently. Regardless of scale, RM constitutes 5 basic elements.

1. Identification: prior to any project it is necessary to identify the bevy of skills needed in order to perform and complete the project. These can be subject matter skills (such as tax expertise or foreign language) or operational skills (such as technology knowledge or process mapping). Though it should be a goal to outline all of the skills needed prior to project initiation, the skills needed may change throughout the project and/or certain new needs will emerge or others will become unnecessary.

2. Audit: Once identified the next step is to thoroughly examine your organization beginning with your immediate sphere of influence. This may depend on the hierarchy of your company and your placement within it, your physical location, peer group, etc. Once your immediate sphere is examined next look beyond to discover any other resources that may exist in your company but you may not have immediate access to.

Next look to outside groups and persons for the skills needed. Perhaps you are working with an outsourcer or a subject matter expert. If your project already involves these types of groups it is easy to skip this part and take it as a given that they will offer someone with the requisite skills. Nevertheless it is highly recommended that each potential member of the project team from outside groups be vetted. Beyond that, if you have visibility further into the outside groups, use it. Look to see if perhaps there is someone else who may be stronger or more “on point” for your needs that is not currently slated to work on your project – try to get them.

3. Access: Discovering what you need and where it is is one thing. Determining whether or not you can actually use a resource is entirely different. This is where compete analysis is vital. It must be determined whether or not a specific resource can be devoted to the project and what the “politics” will be if they are not in your immediate sphere of influence. It can easily frustrate the purpose of the project when a resource thought to be accessible is later - once the project has begun – not accessible.

4. Utilization: For each resource, what will be the productivity required and is this the best use of the resource’s time? As to productivity, will the resource need to commit 10 hours per week or per month? Is there more than one resource available? What are their varying degrees of competence and cost – meaning if one is more expensive but can get more done in less time versus a less costly resource but who is also less productive (e.g. senior partner versus 1st year associate). Depending on the scope and schedule of your project you may want one over the other.

Regarding “best use” of time – this is something that others may need to provide information on –including the resource itself. There may be other needs for a specific resource that outweigh your project’s need. It may be a loss to the organization to pull this resource from other more pertinent matters to commit any time to your project.

Finally under utilization, it is vital to properly scope and measure as best as possible the “optimum” utilization for each resource. This should be communicated to and agreed upon with the resource prior to engaging that person. And of course this must be measured to track performance and adjust for any deviation – whether the project direction changed and thus a new allocation of time is needed or the resource is not fully utilized for some other reason. Idle time of any resource is waste (cost) and will ultimately impact the project’s performance and success.

5. Control & Direction: Finally to what extent are you able to control the resource commitment and performance on the project? This is often an issue when a project manager needs a resource that is more senior to them – in a law firm setting think of a project manager trying to control a senior partner. This can be a challenge to any project and thus needs to be considered early on. There may be a resource that is perfect for your needs but in the end you may not have any ability to control them. If this is the case you may need to look elsewhere or more narrowly define the scope of work you need from the resource. If you fear you cannot control the resource – instead of looking to them to fulfill 100 hours on the project maybe you can define the most critical area they are need and attempt to secure only 5 hours.

Performing this analysis and conducting each step will help ensure that not only you have the right people and the right time in the right place but it will also set expectations of all team members. The more complex a project and the more member of the team, the more important this becomes.

Wednesday, March 10, 2010

The "work" of In-house Counsel


Rees Morrison’s recent post about how most in-house counsel neither manage nor lead others - they simply “work” – truly got me thinking.  The obvious question that came to my mind was “what are they working on?”  I agree to some extent that in-house counsel typically do not carry large numbers of direct reports and but for the General Counsel herself, most in-house would not ordinarily see opportunities to lead really anything or anybody.  Putting the daily work aside along with the effort associated with managing outside counsel is there nothing left for in-house to work on if they have no direct reports and no leadership opportunities.  Are they locked in a world where managing and leading are unnecessary traits and skills?  Is simply “working” enough for in-house to do?  I have stated for some time that in-house not only has abundant opportunities to lead and manage others (in ways other professionals do not) but also that they have an obligation to do so.  Focusing on work at hand is not enough regardless of the size of the law department or the client/company. 
In working with in-house counsel over the years I have had that good fortune to meet and learn from some remarkable folks who viewed their in-house role as much more than simply doing their work.  Or rather they viewed their work in terms other than performing legal duties and managing counsel.  Often these individuals were active within the business itself, serving as solutions architects for different business groups facing unique challenges.  On occasion I was able to speak with the business stakeholders that the in-house worked with and for about the particular lawyer.  I would be told that this person “really understands our business,” “he looks for a way to get things done rather than telling us how not to do something,” “it feels like they are part of this team; active and engaged; not someone we have to go find in another part of the building and ask for a time to see us,” and so on.
While working and collaborating with in-house teams over the years I have made note of certain qualities and characteristics that appeared to be highly valuable and also led to a much more rewarding tenure for some.  Below are some things to consider and questions to ask for any in-house member who solely focuses on doing the typical work or for the person who is looking to grow beyond that role:
1.        How closely aligned are you with the business units you support and interact with?
a.       Can you name the major competitors of your company?
b.      What are the key market forces currently impacting the business?
c.       What are the ancillary market components/participants impacting business?
d.      What are the major opportunities for your client in the market?
e.      What are the major threats for your client in the market?
f.        Do you know the strongest/weakest part of your client’s business and product/service?
g.       Are there new entrants on the horizon?

2.       How familiar are you with the different roles within your organization? Do you understand the challenges faced by:
a.       HR
b.      CFO & Financial team
c.       Sales & Marketing
d.      Operations
e.      CIO & IT
f.        Facilities
g.       R&D
h.      Production

3.       How comfortable are you with the business practices and processes of the organization?
a.       Compliance and Governance
b.      Vendor selection
c.       Supply Chain Management
d.      Labor relations
e.      Insurance and Risk Management
f.        RFP and Bid proposal
g.       Multi-jurisdictional transactions
h.      Environmental practices

4.       If you lost your job tomorrow, who would hire you and why?
a.       How are your communication skills? When was the last time they were tested?
b.      Do you have a foundation in proactive solutions and activity?
c.       How robust is your professional network? Who knows and how do they know you?
d.      Could you land your client yourself if you were not in-house but rather outside counsel?
This is not meant to be an exhaustive list rather it is meant to illustrate the abundance of areas in which in-house could focus and strengthen their overall value to their client – creating scenarios in which they will lead and manage.  Also I am not the first to suggest that in-house needs to operate more business-minded folks and less legal minded.  Overall there are plenty of opportunities to lead and manage for the in-house counsel willing to do so in any type of organization.  These opportunities may not be apparent at first but they are certainly there – one may just have to work to uncover them.
Note: This list can be used by outside counsel as well to determine where they stand on adding more value to their clients.