Nearly three years ago, after sensing that clients’ expectations were shifting, with growing numbers becoming far “less patient” with the profession’s billable hour model, McCarthy Tétrault LLP began an unlikely undertaking for a law firm — and started evaluating the use of a discipline that has long been a staple in engineering and information technology to manage budgets and resources.
“We’re highlighting our new brand, our visual identity,” said Richard Higa, the chair of the McCarthy Tétrault’s project management committee. “We think it’s important in our brand to get the message to the market that project management and cost management is something that we’re highly focused on – and we want to be the market leader. We think it’s going to provide us with a competitive edge.”
They may just be onto something. There is an “early window of opportunity,” suggests legal consultant Pamela Woldow, for law firms to “really build” on market share with current and potential clients because few firms in Canada and the United States have implemented legal project management. But that aperture is beginning to close as a growing number of law firms are beginning to express an interest in project management.
“In the last six months things have changed dramatically,” said Woldow, general counsel with consulting firm Edge International. “Six months ago they would approach me and say we heard about this thing – can you tell me about it. Now when I’m being approached, they’re saying we’re ready to go forward so let’s talk about which approach would work best for our firm’s culture,” added Woldow, who has earned recognition for her in legal project management, alternative fee arrangements, and requests-for-proposals.
Though there is “certainly a resistance to change – and with good reason because for the last 15 years law firms have been pretty much been able to quote a rate before doing the work,” Woldow points out that cost-conscious clients are imposing new standards of accountability and thriftiness. While clients began demanding for greater accountability and more predictability in terms of potential outcomes and fees before the devastating recession struck in 2008, the financial meltdown led to a fundamental shift in the relationship between counsel and client and spurred the growth of alternative fee arrangements to the detriment of the profession’s prized billable hour model. The economic downturn also kick-started McCarthy Tétrault to accelerate the development of its own legal project management program, particularly because the discipline is a system designed to help manage alternative fee arrangements, says Barbara Boake, a partner in McCarthy‘s bankruptcy and restructuring group in Toronto.
“Clients naturally want expert legal advice but they also want us to demonstrate we can deliver those services cost-effectively, with a predictable and realistic budget,” said Boake, one of the “thought leaders” who played a lead role in the law firm’s project management initiative. “We see project management as a tool for lawyers to use, to be able to meet what we consider the reasonable expectations of our clients so that we can deliver our services on time, on budget.”
Dialogue Project Management, as McCarthy has called its program, is based on the general principles of the Project Management Institute (PMI). The firm, spent more than 18 months developing its program in-house, with the assistance of Rick Kathuria, a software engineer and a certified PMI project management professional, who designed proprietary tools and a software package based on Microsoft’s Excel spreadsheet program. The software program includes customized work plan templates, developed after examining past cases the firm handled, and a firm-wide database of professionals which hosts information ranging from expertise to billing rates of the law firm’s 650 lawyers – all of which is essential information to fill in the work plan and provide cost estimates. As well, the firm developed estimating tools and best practices to help forge realistic budgets.
But without an effective training program, all would be for naught, notes Boake. As a result, the firm also designed its own in-house training program, which includes an initial two-hour training that teaches lawyers project management fundamentals while giving them a demonstration of how the software and tools work. That is followed up by a more intensive training session that may involve lawyers using case studies to fine tune their skills.
After the software package, tools and training program was created, the law firm tested it for a “good part of last year,” said Boake. “The pilots were important for us in order to find out what the lawyers found useful and what they didn’t,” remarked Boake, who added that the software program and tools are continuously being upgraded, always bearing in mind simplicity and use of ease. “These tools are only going to work if lawyers use them.”
But that can be a challenge. Traditionally lawyers have not been very disciplined at using the budgeting or tracking tools at their disposal, according to legal consultants. Legal consultant Tim Leishman, a former partner with Torys LLP, says that the “biggest challenge” lawyers face is creating budgets and tracking their work against their budgets. With a growing number of law firms, particularly in the U.S., generating an increasing proportion of their revenues from alternative fee arrangements, there is “more pressure on law firms” to figure out how to do their work cost-effectively.
“There’s a number of firms that are introducing budgeting tools,” observed Leishman, the managing director of legal consultancy Firm Leader. “A lot of the existing tools already give lawyers the ability to enter time, with task codes but it’s just not something that most lawyers do on a regular basis.”
Discipline and steady client communication is vital, says Higa of McCarthy. Project management tools “are just like any other tool,” and unless they are being used “properly” they are not going to be effective.
“You have to be very methodical about doing your budget up front, and then you have to be very disciplined about communicating changes in your assumptions or changes in your work order to the client – and keeping them updated on a consistent basis because it doesn’t do any good to do an estimate and put it in the drawer only find out you’re over budget at the end. So it’s not just the tools themselves.”
But changing the legal culture will take time, especially since the law profession has been slow to embrace legal project management, says both Boake and Higa. Change, notes Higa, can’t be forced on partners. It has to be gradually phased in.
“All we’re trying to do is formalize the process, standardize the process and provide some useful tools to help lawyers become better project managers,” said Higa, adding that increasing numbers of requests-for-proposals are asking for law firms to discuss their project management capabilities. “At some point it’ll be like any other tool. Many law firms will start to embrace project management, and then it’s going to be a question of who is doing it the best.”
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