The post-pandemic world has presented numerous challenges for law firms, requiring them to rethink their approach to managing matters and maintaining profitability. Legal project management (LPM) offers solutions to these challenges by introducing efficient and cost-effective practices. India Preston, director of platform solutions at Lupl, outlines how LPM can help boost law firm profitability, including some actionable takeaways.
Problem: Law firms face increased pressure to optimise matter management and improve profitability in a competitive market.
Implementation: By focusing on effective legal project management, law firms can improve their financial performance, streamline processes, and better manage risks.
Payout: By embracing LPM best practices, law firms can increase profitability, develop stronger client relationships, and create a more efficient work environment.
Here are five crucial steps to enhance matter profitability through LPM:
- Develop a Matter Plan
By having a detailed matter plan, you can work out the anticipated gross profit (GP) for the matter and adjust your plan to increase that profitability.
A comprehensive matter plan is essential for ensuring profitability. Break down the matter into tasks, estimate the number of people required to complete each task, and determine the number of hours needed. Consult your finance team for the bill rates and costs for each role on the team. This will help you calculate the anticipated GP and adjust your plan accordingly.
- Track Spending in Real Time
So often I hear about matter managers waiting until the end of a matter to find out how they really did. In terms of recovery, even on small matters, this is a massive gamble.
Monitoring actual spending against the estimate helps to identify areas where things are going wrong and manage client expectations. Align your work streams with your time recording segments, create separate segments for different tasks, and nominate someone on your team to coordinate with finance for regular work-in-progress (WIP) reports. This allows you to assess your matter’s performance and keep the client informed.
- Create a Risk Management Strategy
If you have a plan for escalating risk, it helps the team act quickly. When issues do arise, time isn’t wasted.
A risk management strategy minimises disruption and reduces the risk of having to discount or write off time already spent. Identify different types of risks specific to the matter, assign priority levels, and develop protocols to follow when each risk arises. Ensure all team members are familiar with the strategy and know how to respond to unexpected challenges.
- Communicate Regularly and Openly
Communication is one of the biggest challenges that legal project managers typically face on matters… A team that communicates well is up to date, understands the impact of their own work on others, progresses quickly, and can even surpass expectations on time and budget.
Effective communication is key to avoiding uncertainty, time wastage, duplication, and missed deadlines. Set up short weekly internal meetings with tight agendas to discuss significant changes, challenges, and potential risks. Use collaboration tools instead of email, which is inefficient and not matter-centric. Include clients in the conversation to foster transparency and increase their likelihood of paying the full price.
- Reflect and Learn from Experience
When you neglect to stop, look back, and reflect on what went well, what you would’ve done differently, and whether or not something was really worthwhile, you lose out every time.
Taking the time to reflect on completed matters can provide valuable insights that improve efficiency and profitability. Gather the team for a debriefing meeting, discuss the matter’s profitability, and identify areas for improvement. Consider how technology, resource allocation, and standardisation can be used to enhance workflows and profit margins. Share learnings with others in your practice group to promote continuous improvement.
By embracing these LPM strategies, law firms can adapt to the changing landscape, maximise profitability, and secure their firm’s future. Legal project management offers a roadmap for navigating the complexities of today’s legal market, providing firms with a competitive edge and the ability to deliver exceptional client value.
- Develop comprehensive matter plans to improve efficiency, increase profitability, and set realistic expectations for both clients and team members.
- Foster open communication and collaboration within teams and with clients, resulting in greater transparency, faster issue resolution, and higher client satisfaction.
- Reflect on past matters to identify areas for improvement, standardise processes, and implement best practices, leading to better recovery of billable hours and increased profits.
India is the director of platform solutions at Lupl. Before joining Lupl, India built LPM teams for magic circle and Top 50 UK law firms. At Lupl, India uses her expertise to create practical solutions for the real problems that lawyers and clients experience in their day-to-day work.