Mark Greenhouse of Levantar shares his thoughts on the application of lean in the legal sector, highlighting the challenges law firms meet, and the opportunities.
Back in 2009, we at Levantar would visit networking events and hear about Tesco Law, the then impending change to legal firms that would allow external investment.
The legal profession seemed to think that retailers like Tesco were their major threat and that they would take legal services and “pile’em high and sell ‘em cheap”. We lean practitioners, however, knew that high volume, low cost wasn’t the only strategy employed by retailers. Continuous improvement had played a major part.
Publicly available research within the legal sector in 2010 revealed that customers had problems with service:
- 30% of the deliveries are late or took longer than expected;
- 25% are surprised (negatively) by the costs;
- 28% suffer mistakes;
- 27% weren’t informed of progress.
A quarter to a third of customers suffered a level of service we wouldn’t have found acceptable elsewhere. Some experienced a combination of the above issues.
These were the views of inexperienced people, people who didn’t transact regularly within the industry. What happened when they researched those who purchased services regularly?
More than 60% of general (in-house) counsel claimed costs were too high, 60% claimed that the suppliers failed to look for ways to reduce costs, and 99.5% wanted responsiveness from suppliers.
This seemed to be a sector that could learn a lot from lean.
Fast forward four years and the threats to the legal sector
- house purchases, which collapsed in 2008, have yet to recover;
- the Jackson Reforms, designed to speed up litigation and limit the revenues that can be generated, are being implemented;
- in-house legal teams are asking for improvements to supply;
- the lack of transaction activity in the economy is a real issue for many in the legal sector; fewer companies or assets being bought or sold means less work to go around.
Is lean applicable to the legal sector, then?
In the May edition of Lean Management Journal, there are two firms that have found lean thinking to be a suitable change methodology. There are also in-house examples out there, from BT and Maersk, to name but two.
Both Seyfarth Shaw and Higgs&Sons are at different points in their lean journeys, though there appears to be an underlying message there. Lean management in law firms is often about:
- the softer elements of lean; it isn’t just about the technical improvement tools;
- control is important, as people will revert back to their prior methods.
Taking the “process improvement” element of lean first, here is an insight from the managing partner of one firm I have worked with: “Yes, we have processes. It’s just that everyone has
their own version.”
This is a frequent occurring in law firms. People carry out the same service but do so in different ways: this can be the case when lawyers are located on the same bank of desks, in the same office, across different offices or in different cities.
This happens even when firms have invested in workflow processing technologies, case management and document management systems. Taking this as a clue, I realised that change management is not seen right through to completion and sustained.
Previous process improvements that we’ve seen can be thought of as
changing the tools for recording the progress of legal work without changing the content or method.
Staff often retains the ability to craft new documents for every case or to use its own precedents without any requirement to submit them for checking or to ensure consistency across the business.
As more and more law firms look to mergers and acquisitions as a way to overcome the current challenges, even more opportunities arise for the work to be carried out under the same brand but in different ways. The customer is sold one service but could receive any of its several “versions”.
Resource balancing is a real challenge for many law firms. Reward systems often operate on rewards for the individual who brings in the work. As the work progresses the same individual is responsible for the delivery, meaning there often is little incentive to get others with similar skills and experiences involved.
The impact of this is an imbalance in workloads. You can find legal staff working long hours, even weekends, while their colleagues in the same firm, with the same skills experiences but lighter workloads, have no incentive to help out. Is this in the best interest of the client, the firm or the individual?
A heavy caseload will also prevent a successful lawyer from sharing
learning or insights. There’s not enough time.
This lack of balancing may be responsible for a culture where senior qualified legal staff retains work that can be completed by others, both internal and external to the firm, people who may not be legally
qualified but nonetheless can help in increasing throughput.
With regards to respect for people, we shouldn’t forget that legal firms often follow a strict hierarchy, which makes it difficult for people to come forward with ideas for improvements in the first instance. It is also rare to find firms that have tried improvement programmes. It can be common to find many staff with no knowledge of the current levels of work in their department, the targets, and the KPIs.
The lean practitioner is often the first person to bring KPIs to the table for all to see, the first to ask staff for their input as to how the work should be completed.
Patience is key here and a practitioner should look for those who want to share their ideas and input but are restrained by their place in the hierarchy.
What have we learnt, so far?
1) Lean is applicable to legal firms and departments where there is an
interest, which is more important than turnover, number of employees, services offered etc. There is no part of the sector that is more interested in this than another;
2) The desire for lean has to come from senior partners, as most staff members are focused on their own performance, rather than that of the business;
3) The desire to find out more is driven by different factors for different legal services providers; for some timeliness is an issue, for others cost of services or the amount of WIP (work in progress) are.
4) As lean practitioners, we have to be collectively on our guard against tool-based implementations. It’s all too common to come across people claiming that lean is just a branch of project management, a set of tools that can be applied with no focus on culture;
5) As with any new sector, language is key. Talk about wasted efforts in terms of manufacturing waste and people will
switch off. Waste may be familiar, the specific examples may not be;
6) Legal departments and law firms have seen lean in action within their clients’ operations, so they know it works. They are beginning to learn about the examples in their own sector.