By Michael Byrd
As a first-generation “pricing director” in a large international law firm, I spent considerable time answering the question “my client wants an AFA, what should I do?” Within the first year of my tenure, a new topic was added to the agenda: “We need to train all of our lawyers in legal project management.” Soon after, a mandate to implement a tool to develop and monitor matter budgets came down. In that role, I helped develop and deploy a variety of processes, policies, training materials and technology solutions to respond to these requirements and others to address what clients were increasingly demanding of the firm. With benefit of hindsight, I have come to a conclusion about what was basically an effort to help alter the course of a BigLaw ship: While we had definite successes in the various programs we developed, the approach of trying to do everything at once was a challenging one. This has caused me to reflect on what I would do differently were I again building a pricing/legal project management (LPM) program from the ground up?
As with other first-generation pricing directors, I was learning on the go and improvising solutions as few, if any, resources or established programs were available to draw upon, and the initial mandate for the new function was broadly sketched as it was for many firms making their first foray into this space. In reflecting on that initial experience, three overarching principles should be considered throughout the planning and development of a pricing/legal project management program. First, it’s a marathon, not a sprint. Development and implementation of a comprehensive and effective program is a multi-phase, multi-year undertaking. Such a program is actually a series of projects with a common objective: Change the way lawyers price their work and manage the delivery of their services. Continuing the metaphor, the effort may be less a marathon and more of a never-ending relay race where the baton is continually being passed along for the next leg of the race.
Further, it is multi-disciplinary effort. Irrespective of where a pricing/legal project management function sits within the organization (e.g., accounting/finance, marketing/business development or even on its own), it must connect with and draw upon resources and expertise from across the firm, including management, lawyers/practice groups, accounting/finance, technology, marketing/business development and professional development. In other words, Mr./Ms. Pricing Director is not going to be able to succeed in any such undertaking on his or her own.
Finally, integrating such a function into the daily workings of the firm is a change management effort. Considering how working lawyers feel about the impact of change on their day-to-day lawyering, actively managing the impact of new processes and tools while also consciously engaging stakeholders and management throughout all aspects of the development and implementation of a program is critical. Change management activities can take on a variety of flavors based largely on the firm’s culture and management structure. For example, keeping management and other stakeholders apprised and involved throughout the process as well as identifying champions and leveraging their influence to promote early successes with others may be useful tactics.
Keeping these principles in mind, a thorough needs assessment should be conducted and then a long-term plan for addressing those needs developed. This plan should be relevant to the organization, clearly outline short, medium and long-term deliverables and incorporate feedback from management and other stakeholders. It also should be clear about the resources and change management that will be required to accomplish the objectives included in the plan. In addition to documenting the approach, this plan can be used to communicate results on an ongoing basis. It will evolve over time depending on shifting priorities and the availability of resources, so it should be considered a living, breathing document.
An effective program should cover four core areas: data, education, tools and analytics. In assessing these core areas and developing a plan to address, some key questions include:
- Are matters tracked by type of work (i.e., area of law), industry, geography, etc.?
- Is the taxonomy for tracking work by area of law, industry and/or geography sensible, clear and easy-to-use?
- Is there an accepted client-matter profitability methodology?
- Do lawyers currently receive any kind of training on pricing or project management?
- What pricing and/or project management topics are relevant to which audiences within the firm?
- Are there tools such as software or Excel models available to help lawyers build budgets?
- How is actual activity monitored with respect to an individual matter’s budget?
- Does the firm have a culture of business intelligence vs. the traditional “flat” reporting?
- Have benchmarks been established for profitability by practice area or type of work?
The answers to these questions (and many others) will frame the development of the plan and identify the projects to be undertaken in the short, medium and long-term.
While assessing needs and preparing the plan, it is important to identify low-hanging fruit that can be addressed in the short-term while the plan is compiled and vetted with the relevant stakeholders. Getting some early wins while the larger program gets underway will help build credibility, which is particularly crucial if the primary pricing resource is new to the firm. Examples might include development of a concise training module explaining the basics of legal pricing with clear visual aids or a dynamic tool to assist lawyers in identifying valid pricing options based on a few simple inputs. The needs assessment may identify a particular practice area that has an immediate need for pricing templates, or a client for which there is a particular issue needing analysis and support.
Returning to the question of what I would do differently — I would be ever mindful of the three principles discussed above: (1) it is a marathon, not a sprint; (2) it is a multi-disciplinary effort; and (3) it is primarily a change management effort. In addition, I would take a careful inventory of the landscape and develop a comprehensive plan to address needs or gaps in data, education, tools and analytics. Finally, I would look for some “quick wins” to demonstrate expertise and utility while also building credibility for the overall program.
One final point to consider at all stages in the program: Communication, primarily as a component of the change management principle. Do not assume that the wide variety of stakeholders understand or are even aware of the activities underway (let alone the successes) and use appropriate and targeted communications to keep them informed. The plan is a useful foundation as the basis for this kind of communication plan.
The precise nature of any program will be customized for the environment in which it operates, but starting with a solid foundation and overarching principles will help pave the way for progress.
Michael Byrd has 20 years of experience in finance, operations and strategy in the legal industry including 10 years in various roles at Baker & McKenzie and three years as Mayer Brown’s first pricing director.