There are two ways to increase profit: increase price and reduce cost. Traditionally, lawyers have profited from the billable hour concept. The higher the price (the hourly rate) and the higher the cost (volume of hours billed), the more profit. The new reality for lawyers is that clients do not want the customary annual billable hour price increases. Some are even refusing to pay for junior associates. And more and more clients are demanding fixed rates, capped fees, alternative fee arrangements or contingency fee-based engagements, or are simply refusing to cover costs that lawyers traditionally pass on to clients. Right now, lawyers have a strong incentive to reduce costs. Our Karta team can help. We apply true and tested business methods to the practice of law to increase your bottom line.
What is Lean Six Sigma (LSS)?
LSS is a method that relies on a collaborative team effort to improve efficiency, speed and performance by systematically removing waste and variances from a process.
What is Agile Legal Project Management (ALPM)?
Project management is the practice of initiating, planning, executing, controlling and closing a specific project to achieve specific goals and meet the success criteria and deadline. ALPM is an approach for delivering project requirements iteratively and in waves throughout the cycle of any legal project.
How are they different?
Think about LSS as process improvement. What is the best way to do this? LSS uses data and statistical analysis, brainstorming and other team events, and tools like process maps to reduce waste and achieve a state of continuous process improvement. ALPM is about the process itself—schedule and deliverables. What needs to be done by when and by whom? It uses tools like scooping and the critical path method to get a project up and running on schedule.
LSS points to eight different types of muda, or waste, all of which can be found both at law firms and in legal departments. An alternate word for “muda” in LSS is the acronym DOWNTIME. That is, examples of muda at law firms are:
Defects: misfiled information, data entry errors, the production of privileged or nonresponsive documents, misdirected internal or external communications.
Overproduction: memoranda on the same issue, unnecessary legal research, paper printouts, production of nonresponsive documents.
Waiting: staff or junior associates waiting for assignments and instructions, for conflict clearance, for files or for client approvals.
Non-utilized talent: partners doing the work of associates, associates doing the work of paralegals, paralegals doing the work legal assistants can do, anyone at a law firm doing work the client is best equipped to do, etc.
Transportation: unnecessary travel of people or documents.
Inventory: over-hiring; over-staffing; over-purchasing supplies, memberships, etc.
Motion: using snail mail, not planning well, being late to meetings.
Extra processing: no templates, different people doing the same task, working in silos, not having data mapping, not using knowledge management software, unnecessary proofreaders or researchers, many drafts, reviewing the same document multiple times or having many timekeepers reviewing the same document.
Starting with a well-designed scoping document and a Kaizen event, our team will work on customized process improvement plans using a lean methodology. By adding project management tools to promote value, efficiency, predictability, communication, understanding and alignment, we achieve optimum performance.
Law firm innovation faces many challenges: the law firm hierarchy, the billable hour model, the allergic reaction to change, and the need for systems knowledge and expertise. As famed statistical W. Edwards Deming once said, “A bad system will beat a good person every time.” With the rise of, and fierce competition from, alternative legal service providers, law firms are being called upon right now to embrace the changes their clients have been demanding for years. By combining LSS and ALPM, law firms can achieve an optimal state of process improvement.