The legal industry is becoming increasingly competitive and more client-driven, and some traditional law firms and private practitioners are struggling to incorporate new legal technologies and management methods. Although the legal traditional practice is one of the oldest careers in our history, it is facing new challenges and an ever more complex market.
Even the most challenging, long, and complex legal cases can be thought of, and organized as a project. Effective project management can greatly increase a firm’s competitiveness, a case’s success, and a reduction of attorney’s oversaturation and burnout, another problem that plagues the legal service industry.
Even in a world that requires deeper diversification in every market vertical, it can be hard to find a law firm that actually employs project managers at a legal matter level. So lawyers need to put on several hats in order to face the growing demands of their firms and clients. This is where legal Project Management comes into play. It involves redesigning and repurposing traditional project management methods and techniques and using them in a legal context. It can help attornies budget, plan, manage cases, and evaluate how it has been handled.
For anyone with a financial mindset, these are necessary aspects for analyzing the internal processes of a business and/or project. But law firms don’t usually evaluate projects on a financial level, and they can be losing an incredible chance of driving up their efficiency and profitability.
What is project finance?
Project finance amounts to the funding of long-term infrastructure, industrial or service-oriented projects, and public services via non-recourse or limited recourse financial structure. The equity and/or debt required to finance the operation, whichever may be, is paid back to the investors with the cash flow and revenue generated by the said project. The lenders usually take a lien over the assets of a project, in the form of said cash flow produced, and/or the contracts assuring the stability of the operation.
The main takeaway for people outside big law, non-financial-minded folks is that project financing is a loan structure reliant on the project’s cash flow for payment, with that project’s assets, interests, and rights held as secondary collateral.
Project finance lawyers can be found in multiple industries and working in a varied span of market verticals or business development. But due to the large nature of the style of financing required, project financing is most commonly used to develop great feats of infrastructure projects or the development of energy and natural resources extraction, some examples can be a solar power plant, pipelines, mines, or oil-extracting facilities to name a few. The revenue generated by the sale of the by-product is what is used to pay the loans or debt.
The factors that affect the viability of these kinds of projects are varied, the international shifts in the price of natural commodities like gold, silver, or natural, are naturally a huge influence. But another important aspect that shapes the work of financial projects lawyers is, unsurprisingly, legislation.
For example, in the last 10 years, there’s been an explosive increase in government incentives for renewable energy projects, this is of course reflected in the rise of developing infrastructure for this objective. But legislation is not only a factor in the US, every single industry faces different legislation and local requirements that may vary depending on the region and the economical local landscape. The multiple fronts the financial process lawyers must face is astounding, and thus, there’s a new way of facing them: Legal Process Managers.
Why Are Process Managers Important?
Legal services are becoming more unbundled and specialized by the minute. In this landscape attorneys are shifting to a method of legal representation where lawyers assist in clearly defined tasks or stages of a client’s case, for example, there are specialized team members or departments of a firm that tackle court appearances, others take on the preparation of pertinent documentation. These are all different vital aspects of a case, and for the sake of efficiency are divided amongst specialists, which is nothing new! This is a normal practice in every industry, and can very well involve subcontracting external collaborators to aid with very labor-intensive and time-consuming tasks.
As it also happens in other fields, it becomes harder to maintain cohesive teams at a large scale when not employing project management methods. The legal practice has historically not employed project managers, but rather let their attorneys manage their projects while maintaining traditional billing practices. But now the market is demanding more efficiency, more transparency, and more value for the resources they spend on legal fees. And this is where project management comes in: project managers are trained to tackle these fronts, lawyers are not. These soft skills can go a long way in fostering and improving client relationships.
But project managers are not the same as process managers, the latter is even more important when handling larger matters, as well as managing firms with multiple providers and integrating the different legal departments while taking care of the workflow and the budget. They perform a key role in maintaining the profitability of a legal service business and allowing for investing in the future of a firm.
What Do Legal Process Managers Do?
Process managers make sure that the projects the business is tackling are delivered on time, are within the scope of the planned budget, and are carried out with transparency, predictability, and accountability. This isn’t just done in a project-based mind frame, it also involves the management and analysis of the human resources employed, technology research and development, budget forecast, and the integration of all areas of the firm.
While traditional project managers are charged with the oversight of these issues, process managers are also responsible for the understanding and diagnosis of long overarching procedures. This is not taught in law school, nor is project management, and the skills and answers these fields provide are becoming increasingly essential for lawyers in their day-to-day life. They need to be able to face the growing concerns and value demands of their clients.
Legal service providers were the first to utilize PM methods, due to what some refer to as “Commoditized” high volume work like documentation review. In the current market, the practice has become more common and has been embraced by high-end legal work done by top law firms. Having at least an introductory course in law school could benefit future attorneys, wherever they choose to work. Nowadays there are great Management software tools that can help support legal service providers and firms, and lighten their load by automating some tasks and providing an administrative mind frame to their daily work.
What you need to succeed
The Project Management Institute informs that project managers increase the success of a project by roughly 40%. The legal profession can also benefit from this, even while taking into account the industry differentials and special challenges they face. The International Institute of Legal Project Management reported there are 4 core phases a project must go through to be carried out into completion:
- Definition. In order to gauge the scope of the case, it’s necessary to have conversations with the clients to understand what they truly want. Active listening from the practice management will go a long way in gathering valuable insight and allow you to set SMART (specific, measurable, achievable, realistic, and timely) objectives. This will also help metrics for client expectations.
- Project planning. Lawyers, especially in finance, will work with a diverse team to define the tasks which need to be done in order to complete the project and their order. The scope of work should use realistically phased planning to create transparent and informed discussions with clients. To achieve this it is preferable to use the support of a project management tool, it will help with setting dates, tasks, and supervising cases.
- Delivery. Framing a service so it stays within a budget is critical and essential. To deliver any case, attorneys must be sure that every task, deliverable, and milestone in a project has the correct employee doing the right amount of work. A legal team can involve paralegals, assistants, senior associates, or firm partners. But as a lawyer, you may need to carry the initiative to boost engagement in your team. Managing and generating regular risk management can minimize the potential of a failed project.
- Closing. For legal requirements, an attorney should wait to close a case even after it has been billed and done. Even after reaching the quality standards set by the client and the firm. When the project has been cleared by the client and the team it needs to be reviewed and used as a case study to gain insight from what went awry or analyze what could have been done better and take that knowledge into further cases. Take a moment to meet with the team and think about what went well, what could be improved, and what practices are best to avoid in the future. These analyses can be an extremely valuable asset for the firm and create be a competitive advantage while fostering teamwork and placating stakeholders.
Changes and challenges in the legal industry
There’s been a sweeping change going through the legal industry, which brings forth an unprecedented competition as accounting firms reestablish their legal practice and use the data and intelligence gathered during their auditing services to present holistic counseling. Companies and organizations are more likely to create in-house legal teams and counsels, reducing the amount of available work for law firms and practices. This in turn hurries law firms to demonstrate why and how they are the better choice, pressuring them to showcase exactly how they bring back value to their clients.
To add to these issues we are experiencing a globalization trend. This becomes a challenge for law firms that target a specific geographic market because it invites an increase of mergers and acquisitions to face growing competition. In turn, the practices that try to insert themselves into new uncharted territorial markets face practical, theoretical, and emotional burdens when facing a culture that is radically different from their original one.
The current global economic crisis is another pressure point for law firms, and it is a very urgent wake-up call for financial lawyers to manage their practice’s with higher and more rigorous standards. Another important shift in the industry is the prominent influence clients have over how legal services should be delivered. They demand higher efficiency, more value for less money, and predictability. They also have unedited access to legal information, and “non-legal” counsel from other firms looking to take them into their own business.
This means that clients are more sophisticated and educated, which is not a bad thing of course! But it does entail raising the quality and accountability bar and opens the field for explaining to the client how the service the firm provides translates into value for them. Attorneys will dedicate time to explain what they are doing, and sometimes clients gather misconceptions online, or misread legal jargon, and have to be re-educated by their lawyers so they don’t get a wrong idea of the work done.
Another point of crisis for law firms is the change of pricing styles and methodology. There is pressure to move away from the traditional pricing mechanism of billing in six minutes increments. Some alternative fee arrangements like blended rates, fixed pricing, value pricing, capped fees, success fees, event costs, and staged costing, require a deeper understanding of how the internal costs and overhead affect the pricing strategy. Law firms that don’t have access to accurate, scalable, and efficient reporting capabilities are at a loss when trying to generate a profitable business.
Without a correct pricing strategy, firms have a hard time getting the revenue they require to stay afloat. And more importantly, to generate the extra cash flow needed for internal investment and technological development: successful firms have the necessary excedent to further train their employees, to present future career opportunities, to hire the right technological support, to branch into new market segments, and to pave the way for the future of the business. The best talent in any field goes to the best opportunities, and this means benefits and payment as well as career growth possibilities and challenges. And even the most dedicated attorney needs to train and continue their capacitation while they develop in their practice area. This is an excellent investment for a firm since it will return more value to them and their clients, and in time increase their bottom line.
At COR, data-driven decisions and working smarter is our preferred method. We believe that legal firms could use a little support in their blind spots, in order to improve their processes and reach a new level of profitability, process improvement, and development. Our all-in-one, AI-powered project management solution can help automate time-consuming tasks, get an accurate idea of how much each project costs, and estimate the rates or cost of each billable hour in order to remain profitable. If you want to take a step in the right direction, request a demo today.
