Alternate Fee Agreements Meet Process Improvement

Following my post on Alternative Fee Agreements for law firms and their clients I had one of those days where I wished I had never heard of the phrase. I was sitting in the middle of a flat fee project. Had I priced by the billable hour, I would be rich and retired today. Instead, my hourly rate is clocking just above minimum wage and it’s not finished yet. That’s just how it goes sometimes, I guess.

Of course I was discouraged. Of course I started beating myself up for not having managed my time better. I kept thinking over and over wondering what went wrong and how could I have stopped the runaway train? There really was nothing unusual about the project, a pretty straightforward engagement that I’ve done successfully many times over, which is why I priced it the way I did. Still, things got out of hand. Some things that happened were out of my control but there were also things within my control and I was starting to get really angry…then I had the opportunity to speak on the telephone the next morning with Laura Colcord, the lead instructor for Legal Sales and Services Organization’s Legal Lean Six Sigma training program focused on process improvement for law firms. Yup, that was it…somewhere the LawGravity process broke down and the process needed improvement…

Laura is presenting a pre-conference workshop at Raindance next week. She told me that she and the team at LSSO has translated every six sigma concept, methodology and tool into an easy to understand and practical guide specific to the legal industry. I was pretty impressed. I thought Six Sigma was for car manufacturers…isn’t it that management strategy used to improve the quality of their products?

Indeed. She explained that essentially, Six Sigma process improvement identifies mistakes, defects, waste and seeks to reduce them as well as minimize variability in repetitive processes. When the automobile industry needed to reinvent itself they employed Six Sigma. Today these concepts, methodologies and tools are finding application in other businesses, including professional services firms; law firms, in particular, who in the past two years have been dealing with a lot of change. She was reminded of a quote that resonates:

“If the rate of external change exceeds the rate of internal change the end is in sight.” Jack Welch.

Well,  I think we have enough evidence to recognize that law firms can no longer just sit on their laurels, they need to keep ahead of the change. One place change is taking effect is in the pricing and delivery of services, thus the whole discussion of Alternative Fee Agreements. Laura suggested that by improving certain processes involved in doing repetitive tasks and managing certain types of cases, there is benefit for the client and for the law firm in light of these new fee agreements. It involves a combination of pulling together timing, knowledge and expertise into a repeatable process to maximize the probable outcome.

For example, if a law firm uses an alternative fee agreement and they spend too much time on it they are not going to make a profit. [Ask me, I know!] Therefore, they need to break down predictable tasks and allocate them to the correct level of talent. When you can staff the work appropriately, the high paid brain power will be engaged only for the high value portion of the work, making the whole arrangement satisfactory for the client and profitable for the law firm. Sigma methodologies focus on looking at how people work and finding ways to improve them–eliminating the need for a clean sheet of paper every time something needs to get done. The organization asks: what is the best way we know how to do this? This applies to more than just how a law firm structures case management.

Beth Cuzzone, a founding member of LSSO and Director of Marketing at Goulston Storrs, speaking on a panel at the 2010 Marketing Partner Forum gave a number of examples how process improvement can be applied to administrative tasks in accounting, IT and marketing, and other client facing experiences, such as the intake process or even what happens when they visit the law firm’s physical location. Almost anything that has a repetitive element can be improved through the concepts, methodologies, and tools of Legal Lean Six Sigma as long as the quality of the outcome is satisfactory to the client.

By the end of my conversation with Laura, things became clear….surely I need to improve some processes at LawGravity. We’re a young business, and growing. Just took off the training wheels, have a couple scrapped knees to show for it, but all the same, ready to get back on the bike, keep peddling forward and with some process improvement we’ll be better prepared to maximize the probable outcome, stay profitable and continue to make the quality of the outcome satisfactory to the client.

Legal Lean Six Sigma offers a private label training experience as well as a twice yearly open enrollment two day course and an annual introductory level training during the pre-conference session of Raindance. More information can be found here….

I’ll be reporting live from Raindance next Wednesday and Thursday here on VMO and Twitter (Follow #RD10). Hope you’ll check in on all the action….

Jayne Navarre

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