One of the most disappointing aspects of conferences and publications about LPM is the lack of concrete information explaining to lawyers how to accurately price, budget, monitor, and map the services they provide.
On several occasions, following particularly impressive presentations on how LPM is being introduced at their firms, I asked the speakers about budgets and pricing, only to be told: “Oh we aren’t there yet,” or “That’s a hornets’ nest we don’t want to poke.” Whether these answers truly reflect the situation at the firm in question or whether the speakers are protecting their trade secrets for more client-focused venues, openly poking that hornets’ nest is the only chance LPM has of effecting any change.
At its most effective, LPM is IKEA applied to law. A file, like a piece of furniture, is broken down into stages and tasks and then assigned, priced, and delivered to meet client expectations regarding schedule, budget, and quality.
The challenges that confront any proponent of such an approach are numerous. The largest is probably psychological. As lawyers, we are convinced that everything we do is unique and difficultly quantifiable. While this still holds true of certain practices, Mark Robertson and James Calloway, in Winning Alternatives to the Billable Hour: Strategies that Work, estimate that 60 per cent of the legal market is comprised of commodity work.
The minute we are invited to respond to a call for proposals, the message the client is sending is that any number of firms can provide a service they deem acceptable (if not interchangeable). It is up to the firm to convince the client why it should be retained — in essence, how our bookcases are any different in terms of price, quality, treatment of the environment, or any other topic a firm is called to describe, from those of its competitors.
Another challenge is a practical one: how do we provide an accurate budget to a client?
While certain clients are still content to receive an estimate that is based on an amount somewhere in between a maximum and a minimum price with a 15- to 20-per-cent buffer, increasingly many demand exact costing as well as precise descriptions of the services they are to receive. Some clients even refuse to pay by the hour.
The solution to this is not complicated, but it involves breaking down a mandate into various steps and assigning codes to each when entering time on a file. Although it requires a little more administrative work, this cost-accounting approach to time entry has at least two advantages. To begin with, it enables us to know exactly what a certain task costs. It also lets us respond with greater confidence to requests for alternative fees.
While much is made of alternative fees, there is still no market to gauge an acceptable fee. Breaking our services down into tasks allows us to know what it costs us to produce this service and, by extension, what fee can be attributed to it.
In response to those who view the above as heresy, arguing that each file is different, I respond — only slightly tongue in cheek — that so is each bookcase. It is true that a variety of unpredictable events may affect the ultimate cost of a service to a client, but these events do not render a file requiring a specific type of service that different from another file requiring the same services.
For example, each share-purchase transaction requires due diligence, negotiations, a share-purchase agreement, as well as myriad other documents that don’t change substantially between files. If they did we would not be able to use precedents the way we do.
But the debate over to what extent a legal file resembles a bookcase is ultimately irrelevant to the client who is only asking that it be priced more like one. This is why if LPM is to effect the change its proponents say it can, it would do well to shift its focus from work-breakdown structures and client-communication plans (things most lawyers do anyway) to address the thornier issues of pricing, budgeting, and expense monitoring. Until it does so, LPM will remain largely irrelevant to clients and consequently untouched by lawyers.
Danielle Olofsson is a knowledge management lawyer at Fraser Milner Casgrain LLP in Montreal.