As the billable hour (as a fee structure) weakens and clients continue to demand value-based pricing, legal project management (LPM) appears to be sparking the interest of many law firms. They see LPM as a way of ensuring accurate cost budgeting and profitable pricing. Elementary to developing profitable pricing is the complete understanding of service delivery processes and the cost of service production; and LPM provides processes that apply project management techniques and skills to legal matters.
However, you can derive more far reaching benefits of LPM if you combine it with process improvement and business intelligence. That is when the discipline will give you competitive advantage.
With cost budgeting complete, you must then also have processes in place to ensure that the work secured is delivered to plan and within budget. This requires making modifications and improvements along the way to meet your service and profitability goals. LPM combined with business intelligence facilitates this.
Simultaneously, you must undertake perpetual process improvements too in the way your firm executes matters and tasks. Incremental enhancements to the way you disburse services is key to continuously optimising profit, creating new efficiencies, and enhancing productivity and effectiveness. LPM enables a retrospective analysis of matters to ascertain things like why matters were profitable (or unprofitable), what processes and strategies caused the outcomes and why, and so on. In the long run, you will find that your firm delivers better managed projects, higher profits and even encourages and nurtures customer loyalty.
All this requires integrated business and technological capabilities – multiple, disjointed systems are unable to gather and assimilate actionable data to facilitate optimisation of resources, cost control and business efficiency. Hence, the need for enterprise resource management (ERP) systems in legal. For instance, LexisOne combines budgeting, resource allocation and matter management, to allow you to break down assignments/matters into smaller tasks for more accurate budgeting, scheduling and staffing. It also offers work breakdown structures to track budgets and actuals down to specific phases and tasks within a matter, and can alert a user when actuals near the budget. On top of this, by utilising the in-built business intelligence functionality, you can analyse the matters to match up the cost allocated to each phase task versus the invoiced amount – including margins to calculate profit for each stage of a matter.
Furthermore, with LexisOne, you can align fee structures with the revenue and profitability objectives of your firm, alongside the long term strategic goals. This is because the system ties in everything from finance, human resources and time recording to expenses, procurement and business intelligence.
Fundamentally, LPM makes continuous improvement routine, which contributes to competitive advantage. Its adoption offers a clear message to clients – their interests are at the heart of your business, which in turn inspires customer confidence.