Have you fully worked out which efficiencies best suit your firm and clients?

Other than at the margins, most large law firms have the same preoccupations and one of those at present, I would guess, is the quest for greater efficiency.

In discussing this concept with a group of partners recently, it struck me how many different angles there are to this whole topic and that, although conversations about it start in one place, they can take several different directions and end up in even more different places – one of which, of course, is back at the beginning (which, ironically, may not be all that efficient).

In very broad terms, the efficiency discussion is likely to move between:

• how individual matters are carried out for clients;

• how the firm manages its overall flow of client matters (including the peaks and troughs in demand); and

• how the firm manages its infrastructure and support operations in a way that makes the above possible.

So, in discussing efficiency, we are prompted to look at matter, team and firm levels.

Matter level

At the matter level, various models of efficiency are typically suggested. Within a firm, you will probably hear about the better use of templates, precedents and possibly workflows, the need to push work down the seniority ladder and so on.

Legal industry commentators suggest deconstructing the typical matter process and parcelling discrete tasks out to lower cost resources onshore, offshore, captive, shared or otherwise.

Process improvement experts from the wider world have their defined methodologies, most notably six sigma and its variants. Some attempt have been made to apply them in the legal services industry, which is usually only acceptable to lawyers when the process improvement jargon is recast in terms familiar to regulars in the partners’ dining room.

At a high level of abstraction, I can see how all of these perspectives can be synthesised or at least drawn on to deliver a more efficient (that word again) service to clients. But this is not to understate the change management challenges of applying them in practice on a sufficiently extensive scale to make a real impact. Neither is it to be seduced by generic propositions of particular communities, some of which will work for some firms and some of which in the end may not work for anyone.

It is about the exercise of working out which approaches to efficiency will suit your practice mix, your key clients, your people and your culture... and then making them happen in a way that transforms subtly and locally within the firm at first, but increasingly fundamentally over time as momentum is built and support for more change mobilised.

There is of course a close relationship between the efficient design and delivery of matter processes to success in the highly competitive pricing game. Having a clear understanding of how a transaction type can be delivered efficiently should carry with it a good understanding of what resources will be needed, leading to the double benefit that the matter can be delivered at a cost that is both lower and more certain.

Agreement on the price is of course a separate matter, with the margin being dependent on the difference between the cost (something the firm can control to some extent) and the price (something that is often in the hands of the wider market).

Team level

Let’s suppose – for at least the principal types of matters handled by your firm – that you have created efficient processes for matter delivery. So far, so good, but you still have the problem that some periods will feel like feast and others famine or, more neutrally, that activity levels will most likely vary by several percentage points from month to month. Structuring a firm to cope with that pattern is a different layer of the efficiency discussion, but potentially at least as significant as process reengineering-type approaches.

We have seen firms increase the use of flexible working arrangements in recent years, some flexing large teams through the downturn and enjoying the benefits of retention and improved morale as work levels lifted again. However, most firms still deal with the shorter term problem by having people work long hours during higher workload phases and viewing the lower workload phases as an underutilisation problem.

If we have a rough sense of what typical demand might be in the months ahead and how much it might vary, do we staff for the peaks, the troughs, the mid-point or somewhere else? And how do we deal with the excess or shortfall when it comes better than we have had in the past? These questions are simply expressed, complex to answer but nonetheless a real part of the wider efficiency discussion.

Firm level

My third main perspective on efficiency relates to all the activity that goes on in the firm that is not directly connected with the delivery of specific client matters (from me writing this blog, for instance, to all the time and other resources devoted to new employee induction or compliance auditing).

If around 60 per cent of the people in your firm are fee-earners and they spend 60 per cent of their time on client work, then overall only around a third of the time spent by people in your firm is on the direct delivery of client work. So, it really matters how well the rest of their time is spent. There is arguably at least as much of a case for process improvement on that side of the equation as there is on matter delivery.

Think about the annual appraisal process, the time spent on responding to tender requests, the way in which lateral hire discussions are managed. All of these are (or should be) value-creating uses of time, but possibly having a much greater variety of approaches between different firms and greater potential for streamlining than many matter delivery processes.

Winning models

So, in our industry, all of the above are up for grabs and we will continue to see innovations appearing month by month, some from established firms, other from new entrants to the market. How fast things will change and what the winning models will be are questions no one really knows the answer to.

The more limited question that I personally attempt to focus on is – in light of the bigger picture as we see it (including the above) – what specifically should we be doing as a firm in this current quarter to improve our business? This is perhaps a short-time horizon for a managing partner, but one that has proved effective in making practical changes, with the opportunity for regular course corrections as needed.

As a postscript to the above, I do just acknowledge that it is essentially limited to the way in which people spend their time within a firm. Although that’s the most important part of the efficiency debate, given what we do and how our costs are structured, this is not to ignore the fact that there are other key resources which we must manage effectively and, if possible, more effectively over the years ahead. There are premises, technology projects, supplier management, energy costs and so on – important subjects, but for another post.