The quarterly publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/11430
Legal Project Management The legal profession is unique among industries in its limited use of, and indeed, its early-stage rudimentary understanding of, project management. This weakness is largely derived from the hourly billing model and the sellers’ market. Law firms simply didn’t have the incentives or business pressures to embrace rigorous project management fundamentals. But the outcome of this failing is the very factor that corporate legal most rails against –– unpredictable costs. Identify the Right Client Types Pricing AFAs takes significant time to develop, document and communicate. A critical step, therefore, is defining the firm’s target client profile. While traditional relationship- and network-building remain critical to establishing, communicating, gaining and maintaining client trust, they are insufficient practices in identifying specific clients matching the firm’s desired AFA profile. An analysis of client profiles, desirable clients and appropriate matter types determines your firm’s opportunity to capitalize on AFAs. Pricing a Mutually Beneficial AFA Develop AFAs using technology that allows for clearly defined profitability parameters. For example, give lawyers the capability to craft a budget in line with profitability guidelines developed for AFAs and the firm, including developing the staffing mix and leverage ratio to guarantee a profitable outcome. Monitor and Measure AFAs Communicate the Win-Win AFA Value to Clients While in-house counsel are on record encouraging AFAs, many are reluctant to implement the concept out of fear of the unknown or because they have difficulty evaluating an AFA against a traditional hourly billing proposal. In order to win a client’s trust and ensure that their partnership delivers higher value, the onus is on law firms to communicate both the value of AFAs to their clients, as well as their own preparedness for implementing them. Today, many partners cite the common wisdom that clients talk the talk in wanting AFAs but don’t walk the walk. Indeed, firms can’t convince clients to use an AFA because the firms have no real experience with them. But firms can’t gain that experience until they have a willing client. One critical step is providing the partner charged with overseeing the matter or portfolio of matters early warning of issues and impending new requirements. Lawyers leading matter teams require high-level, timely updates about the health of their matters and the ability to examine them to determine and evaluate impending problems. Inside the firm it is essential to monitor profitability throughout the matter and the portfolio lifecycle. Individual AFAs should be reviewed for profitability and successful achievement of qualitative goals. Benchmark for Future AFAs Each successful AFA matter or portfolio of matters provides knowledge –– a benchmark and a cost reference –– for other lawyers preparing the next AFAs. Your firm’s ability to increasingly capitalize on AFAs is likely to depend more on this component than any other. Lawyer Evaluations and Compensation The trend towards AFAs will likely change your evaluation and compensation models. While appearing moderately profitable using traditional measurements, AFAs can in reality be even more profitable than hourly models when planned and managed correctly. ILTA Alan Nathanson, a Hildebrandt Baker Robbins consultant, co-leads (with Nathan Bowie) Thomson Reuters ENGAGE (www.thomsonreutersengage.com), an Engagement Planning and Management (EPM) solution that enables firms to successfully plan, monitor and deliver successful AFAs. He can be reached at anathanson@hbrconsulting.com. Peer to Peer the quarterly magazine of ILTA 13