Staying the course

Let’s be honest. Ten years ago ‘lawyer’ and ‘efficient’ were two words that you could pretty much guarantee would never be found in the same sentence.

In 2002, law firms were enjoying a period of prosperity and growth that would continue for another five years. But 2008 brought the beginning of a perfect storm to UK law firms; one that still rages today, caused by the combination of a severe economic downturn, the Legal Services Act and the increasing impact of the internet.

Steep drop

Now, the world is a much tougher place for law firms. Private client departments have been particularly impacted by the economic downturn. There has been a steep drop in residential property transactions. And new entrants have emerged: traditional ‘bricks and mortar’ competitors enabled by ABS (for example, Cooperative Legal Services), and internet-based competitors providing intermediated brands and web services for wills, probate, divorce and other high-volume legal transactions.

Clients are more price conscious, reduced business levels have resulted in ‘low-ball’ pricing and the new entrants operate at lower costs. The net result is that those private client departments that do not start focusing on efficiency either have a dream client list of price insensitive HNWIs or have their heads in the sand and their firm will be one of many that will be swept away over the next few years.

So how do law firms dramatically improve their efficiency? The legal sector benefits from being able to ?learn from other business sectors that have been applying business improvement for decades. Key practices include ‘business process re-engineering’, which delivers step-change improvement based on process transformation, and ‘lean thinking’, which drives waste elimination.

Since 2005, we have developed an improvement approach that brings together proven methods in a way that is optimised for law firms. We call it ‘smarter working’ and it comprises six key elements.

One of our earliest projects in private client was to re-engineer the probate service for a mid-sized UK law firm in early 2007. The firm’s profitability in probate had been reduced through increased competition and the firm also had difficulty in recruiting new private client lawyers.

A probate core team of senior associates, led by the private client partner, was established to transform this service. We used collaborative workshops to review existing methods and design new approaches.

Smarter working

The principles of ‘smarter working’ were applied as follows:

1. Client-centred value. The team interviewed past users of the probate service in the firm and also examined client feedback. Key client requirements were for a defined price, a speedy process, clear communication and accuracy.

2. Disaggregate and de-waste. Together with other fee earners and support staff, the team ‘mapped’ the existing probate process and quantified key metrics such as cost make-up and process time. The team used this to highlight the key causes of waste and poor client service such as errors, delays and inconsistencies between teams. This work formed the diagnosis stage of the re-engineering process. The net result of this stage was a common view of the process shared by the three team leaders and an acceptance of the need for change.

3. Standardise and right-skill. In the redesign stage, the team designed the new probate process and organisation. This was done by challenging current thinking and applying lean thinking. Key elements of the new probate process were:

• a streamlined standardised process defined as the ‘one best way’ to perform probate;

• an improved pricing system based on key cost drivers;

• a probate operating procedure (POP) together with standard documents and templates, documenting the process and used for training;

• a ‘right-skilling’ to move the work to the lowest level that could ensure required quality. This meant a major increase in the use of paralegals trained and working to the POP;

• a new team-based structure with paralegals headed by a lawyer covering 80 per cent of probates and the more complex 20 per cent supported by senior private client lawyers; and

• the new process was piloted in one team and then rolled out across all the teams.

4. E-working. This work prepared ?the way for the later implementation of case management and document management systems, but initially there was no additional use ?of technology.

5. Systematic innovation. ?A preliminary continuous improvement process was defined to measure the performance of the process and identify and implement improvements. However, this did not get off the ground.

6. New metrics. A new metric was defined to show ‘probate progress’ to ensure that no probate ‘slipped under the radar’ and resulted in delays and client dissatisfaction.

Engineering process

There were a number of major ?benefits of the new re-engineered probate process:

• significantly lower cost – over 45 per cent reduction in probate direct costs;

• improved responsiveness and quality, due to consistent working;

• reduced skills issues with an increase in paralegal work from less than 20 per cent to more than 60 per cent;

• senior associates and partners were freed up for higher value work; and

• the significant improvements showed the potential for other improvement in private client.

However, this project encountered a number of challenges, which slowed and later reduced the potential benefits to the firm, which included the below.

• The project was greatly slowed by the availability of the core team personnel, who as fee earners had limited time on the project.

• Two of the three new team leaders found the change from performing probates to leading a team of paralegals doing this very difficult and tended to revert to their comfort zone of undertaking much of the work themselves, which reduced the team profitability.

• The firm was not sufficiently active in enforcing the new system and had difficulty in finding lawyers able to effectively lead teams of paralegals. So, over the next few years, an increased amount of work was performed at a more senior level, reducing the potential profitability of probate matters.

• Overall implementation management was a relatively weak area, with the firm having no project management or consulting support available to support this phase and the pressures of daily business meant that people’s priorities were elsewhere.

My intention for this article was to guide change leaders in private client departments in how to best seize the opportunity presented by re-engineering in their firms.

There is no doubt that the journey of re-engineering is a challenging one and not to be taken lightly. Yet the benefits from the journey are major for firms that make it. And the business, regulatory and technology trends have ?an unstoppable momentum, which means that those private client departments that wish to survive and prosper must make the trip.

On that basis, knowing the best ?path and where the most dangerous obstacles lie can only be an aid to ?a traveller.