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Practice Management: Lean methods for lawyers

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Cite as: May 2015 89 (5) LIJ, p.73

With growing competition and downward pressure on fees it is more important than ever to avoid waste in legal practice.

Why lean?

Lean thinking has dramatically improved efficiency and reduced the cost of processes and has evolved and spread to virtually every industry. Lean philosophy developed at Toyota with its Production System (http://leangenie.com/toyota-production-system/) and was applied from the 1980s and moved into services from the late 1990s.

The legal profession has been slower to adopt lean thinking. This is changing with growing competition and downward pressure on fees – with increasing commoditisation, fixed fees, and the rise of alternative online resources giving more power to customers. It is now important to understand your cost base and time taken to do the work.

There is also a growing awareness of the possibilities and benefits. A key way to improve profit is to reduce costs, and eliminating waste from legal and business processes enables this. Waste also affects customer satisfaction as clients want delivery on time and quality at the right price.

What is waste?

The goal of lean thinking is to maximise value and minimise waste. Lean separates value adding from non-value adding work. Value to the client is the top priority. The starting point is establishing what the client wants, what they value and making sure it is delivered every time.

Waste is something that adds no value. Work adds value if it meets three value criteria. That is, it must physically alter the form, substance or function of the document or service, be something the client is willing to pay for, and be done right the first time. If work doesn’t meet these criteria, it’s waste.

Every law firm needs to aim to eliminate waste. In many organisations, few people have the ability to change a product or service to increase the customer value, but everyone can reduce waste.

The eight wastes outlined here provide a central theme to the lean methodology.

Transportation: Transportation waste in law firms can be seen in unnecessary or excessive movement of people, information and materials between processes as well as in poor office layout. In a digital world, this may be seen as less of an issue, however it often adds zero value. Does it annoy or reassure clients to receive emails or drafts? Where and how are digital documents, emails and notes for clients shared by lawyers stored? How do internal requests find the way from partner to partner?

Inventory: Excess work in progress, documents awaiting signature, unanswered emails and voicemail and even oversupply of stationery require capital investment but add no value. Time or material tied up in these have a cost which is not recovered until it is actually sold. At times this is due to mismatches throughout the supply chain, such as when there is imbalanced demand from client and supply by lawyers.

Motion: Motion waste can be seen in unnecessary movement of people or information within the processes. Does a draft need to move sequentially between lawyers, or a partner need to check and then check again before signing? It can be seen in time and energy spent with extra steps to access the photocopier, research material or filing cabinet, wasted clicks to find the electronic document store or physically tracking down a partner or a file. Follow a worker for a few days and you will likely see multiple and different paths each time, various wild goose chases and backtracking and poor posture.

Waiting: Waiting waste occurs when materials, people, information or equipment is sitting idle. For example, time spent getting up to speed when switching between files or tasks, waiting for a colleague or client to get back with comments or payment, or waiting for a computer to be fixed. This idle time also increases lead time to the customer. For example, how long does a mortgage typically spend waiting to be processed compared to being processed?

Overproduction: Overproduction waste includes making too much of something, making it faster or making it earlier than is needed by the client or when an individual process can be combined with other processes. Legal examples range from printing too many hard copies through to taking a “cover all bases” approach to legal advice when only a targeted one is required. It can also refer to charging for two lawyers when a junior lawyer does legal research and the senior lawyer reviews it. In-house lawyers risk managers paying high legal fees to external lawyers when they already have solutions for most requests that are essentially free.

Overprocessing: Overprocessing occurs when using inappropriate techniques, oversized equipment, working to standards that are too high or unclear or that the customer does not require. Legal examples abound. The multiple “steps” in the process of a legal matter, giving a client the Ferrari version when they only need the Ford, researching every possible legal answer rather than answering the client’s question and business needs. Another is the failure to systematically address knowledge management so that knowledge is fragmented and is often re-discovered by others within the same firm.

Defects: Poor quality or wasted materials and labour are obvious although not always the easiest to find before reaching clients. And the impact can be great. While lean thinking sees review, re-drafting and corrections as waste, in law there is often a lot of this. Yet how much of this is valuable as compared to formatting or style changes? Even if a re-draft “fixes” a mistake or omission, how much is wasted because it was not done correctly the first time?

Skills under-utilisation: The eighth waste is failing to fully use the potential of the workforce such as ideas, creativity, skills, experience and abilities. Waste for a law firm may include failing to acknowledge and access the skills of its people to their full potential, failing to delegate, or operating a hierarchical culture with limited communication.

Next steps

Eliminating wastes can be done by examining the processes in your legal practice, identifying the waste and then identifying the causes plus putting measures in place to minimise or eliminate those causes.

However do not just identify and remove these eight wastes. It is vital to use lean principles to ensure you are implementing value as perceived by your clients. Otherwise you risk the organisation getting better and better at doing things clients do not want.

The results: A lean, efficient processes, more time to spend on value-add activities, happier lawyers and staff, and more satisfied clients.


JUDITH BENNETT is a lawyer, LIV Practice Support Committee member, university lecturer and management consultant for law firms at www.Business4Group.com.

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