Over the past months, we've been hosting a number of webinars with widely respected Legal Project Management, Pricing, and C-Suite professionals. While they have shared a whole host of useful insights, one thing that has linked their advice has been the need for communication between the moving parts of a firm. For many law firms, communication vertically already happens. Teams report upwards to CFOs, Heads of Operation, Pricing Directors. However, interdepartmental communication is less frequent.
A lack of communication between pricing and legal project management is a fact of life for many firms. This could be because of a lack of definition to the respective roles. It could be because neither team understands the benefits of cross-discipline communication. We hope that by sharing the advice of our panelists, we can clear some things up. First; why communication between legal project management and pricing creates value. And second; how to establish a system that supports it.
The benefits of legal project management and Pricing communication
We hope that we have reached a stage where most law firms recognise the importance of legal project management and Pricing teams. There are no shortage of financial, client driven and efficiency reasons behind their rise in popularity. When successful they improve everything from a firm's bottom line, to their client retention rates. However, for most firms, these teams operate independently. Pricing teams develop quotes, rates and budgets. Legal project management teams keep the work to that budget or rate, while also managing scope and operations.
This tunnel vision fails to take into account how much useful data each team creates for the other. To build a good fee quote, it is necessary to understand how successful previous quotes were. To drill into the reasons why a matter went over or under budget. This information leads to a more informed fee quote, which reduces matter leakage or write-offs for the firm.
'Our participants indicated that between 5 and 20% of the value of their matters is lost to write-downs or write-offs. As was noted by our panelists, even 5% of a firm's revenue is a huge amount of money to lose unnecessarily. Reducing that to just 3% would vastly increase overall firm profitability.'Matter Leakage Webinar - Clocktimizer
Clearly, good communication between legal project management and Pricing could increase firm turnover by as much as 3% per year.
Pricing can inform legal project management of value
Importantly, communication can have huge benefits in reverse too. Good pricing often reflects value for a client. This can mean working to a very strict budget, or pricing for a specific time frame. It can even be pricing to an outcome. For legal project management, this information can be key to how a matter is handled. If a client's definition of 'value' is never communicated it can mean the service delivery fails to meet expectations. In an uncertain economy (not to mention a pandemic) poor client delivery can mean the difference between keeping and losing a client.
For Anshoo Patel, at Blank Rome, the consistency between pricing and service delivery is so important, it is built in. New matters must have pricing approval. Furthermore, pricing arrangements (and the reasons behind them) are communicated to legal project management teams. This gives legal project management better insights into a course of action where out-of-scope work appears. They can work with the client and pricing teams to develop a new strategy. By working together, the teams can deliver transparency for the client while also respecting different ideas of value.
So how to promote good communication?
First and foremost, it is essential for firms to create a feedback loop. In principle, this means creating a system which shares data between teams. This can be in the form of kick-off and wrap-up meetings. However, this may not be tenable when scaled up. Firms could consider a digitised system to improve data collection. This could be an online form which is filled out, which is then analysed and shared automatically. The benefit of digital feedback is that it can be analysed in a wider sense - creating learnings about the relative success of teams or efficiency measures across the firm itself.
Tools like Clocktimizer can further support this interdisciplinary communication. Sophisticated scoping and budgets can be performed on data collected during the legal project management lifecycle. Pricing teams can compare activities and matters to determine the most accurate pricing model. In turn, this can be automatically turned into a budget. This allows legal project management teams to keep a matter on track as pricing intended. For both, out of scope notifications give insight into how and why unexpected work occurs. This can further inform pricing decisions.
Finally, firms should identify how to incentivise communication and collaboration. The fastest way to promote change, is to reward it. Attaching bonuses to successful Pricing/legal project management collaborations is an easy way to make a difference. This incentivisation works hand in hand with implementation from above. C-Level executives who demonstrate why collaboration makes a difference will likely find that this insight motivates their legal professionals.
Posted in Firm Intelligence,Clocktimizer