Controlling Costs

Controlling Costs

By Laura Shelby. She is the managing partner of the Century City Los Angeles office of Seyfarth Shaw.

Though companies are finally beginning to rebound from the global market collapse that rocked the U.S. economy, the years of economic uncertainty have transformed the legal services market. In-house legal teams have had to accomplish more with less, and it is incumbent on outside law firms to do so as well. Today, our clients are intensely focused on obtaining improved legal results, aggressive cost management, and more sophisticated reporting to their respective organizations – but with smaller staffs, reduced budgets, and less turnaround time.

Unfortunately, the traditional law firm model has not evolved rapidly enough to meet these challenges. For too long, the standard, old-line approach to business has left law firms fixated on billable hours. To fundamentally change this dynamic, firms must innovate and adapt.

At Seyfarth Shaw, we’ve embraced an approach that combines the core principles of the Six Sigma methodology with robust technology. Developed by Motorola and popularized by General Electric’s then-CEO Jack Welch, this approach standardizes operations by eliminating process errors to increase productivity and quality. How big a difference can that make? For our clients, it’s about strong outcomes and risk reduction, but it’s also meant cost reductions of up to 30 percent for legal services. Adopting and implementing a firmwide management model that spans multiple practice areas may not be workable for every firm, but it does provide a useful framework for improving efficiency and better serving clients. Here are some of the core components.

Embrace project management

Today’s corporate purchasers of legal services want more than just lawyers who serve as trusted advisors. They also want legal project managers and information management professionals who develop data analytics and business solutions to address their legal challenges. Significant efficiencies can be achieved when outside firms focus on project planning, client management, and process.

Our clients have embraced with particular enthusiasm process mapping, an exercise that organizes and streamlines client matters. This is done collaboratively by meeting with clients to talk about their business goals and exactly what steps need to be taken to accomplish those goals. In short, we identify steps that deliver the right business results and identify where we need to modify or re-engineer the process. These steps are then put in writing for all sides to see and edit as the process moves forward.

Project management and process mapping include defining the client’s internal steps in key process areas and incorporating them into an overall plan that clearly defines the roles and responsibilities of client and outside counsel. It works for a variety of legal matters, ranging from single-plaintiff litigation to foreclosure issues to securitizations.

Invest in technology

Clients today have access to an array of complex dashboards, analytics, and metrics that track all aspects of their business, including their legal proceedings and budgets. It’s important for law firms to have their own dashboards or platforms that can support clients’ appetites for analytics as part of corporate America’s “big data” movement.
Utilize new staffing models.
To lower costs, law firms will have to increasingly use different staffing models, electing to contract select forms of substantive legal work – such as immigration, real estate, and brief-writing – to legal process contractors.

Create new ways to develop talent

Law firms must also remain focused on innovative talent-development programs that attract, retain, and maximize their investments in their own attorneys. For example, a couple of years ago Seyfarth launched its first fellows program for our Labor and Employment department, a materially different approach from standard summer clerkships.

This program gives second-year law students an opportunity to develop hands-on skills in employment law that build upon and complement their formal education. It involves a specialized training curriculum that combines substantive labor and employment law, ethics, client service, marketing, legal writing, communications, and finance. It also creates opportunities for clerks to collaborate and strengthen relationships with clients as participants work on active cases and client projects, and to “job shadow” with in-house counsel contacts.

These are just a few examples for law firms interested in reshaping themselves for the future. There are certainly many others to consider, but one thing is clear: Clients have forever changed the way they purchase legal services – and this means a tremendous opportunity for firms everywhere to develop thoughtful and systemic strategies for creating real business value for everyone.