Lean is becoming more and more popular in the legal field, bringing innovative new models to the business of law. A great event, held on February 21st at the MaRS Discovery District in Toronto, discussed the landscape of legal innovation. We contacted the event organizers and Law Made Founders, Jason Moyse and Aron Solomon, and asked them several questions about the benefits of applying lean principles to the legal field.
Q: What was the “light-bulb moment” that made the Lean Six Sigma methodology an integral part of your mindset? How does it relate to law?
Jason: I worked in both legal and operations at Xerox which is a Lean Six Sigma environment. When you are immersed in the culture–and everyone is on the same page–you just accept it as the norm. It was upon my exiting of Xerox that I realized that the broader legal sector was sort of just discovering Lean Six Sigma. In particular, I attended an Association of Corporate Counsel event where they were workshopping various things, including a little bit on the Lean Six Sigma side. The fact that it was so foreign to just about everyone in the room (except those that work in-house) was my light bulb moment. Aha–this is unchartered territory for private practitioners.
In terms of how it relates to law, that is still evolving, but it is all about the diminution or elimination of wastes or standardization of processes to curtail errors and non-value added activities in relation to achieving measurable business objectives. In some cases, this may relate to internal processes such as client intake or billing, but increasingly, it is applicable to transactional and litigation management. With errors, there needs to be rework or corrections, or in some cases reaching out to the client to remedy. There also tends to be a lot of extra processing in legal work, particularly among larger firms—-and without editorializing too much—the billable hour model doesn’t really make much sense from the standpoint of driving efficiency. A savvy client doesn’t want to pay an inefficient supplier.
Q: Aside from the basic methodology, what specifically can legal professionals do to implement lean principles in their firm?
Jason, Aron: Well, it seems that what you would see in other environments versus what you would see in legal are not quite the same thing as relates to Lean Six Sigma. The legal version is less statistically driven and much of the effort is on process mapping which is in fact only one tool among many. However, process mapping is an important starting point for legal professionals because in many cases, it may be the first time that they see a workflow from start to finish, particularly if there are multiple players that contribute to the process including lawyer, paralegal, and other professionals. People have a tendency to stay in their lane without looking at the bigger picture and asking — why is this task done this way (or at all)? Is this a value adding step that benefits the client, or the business or is it non-value added? In many cases, capturing current (perceived) state is a good place to begin.
It is also helpful for there to be some form of training program on Lean and Six Sigma and increasingly, there are some providers specifically aimed toward the legal market given that legal professionals tend to have less background in statistical metrics that are otherwise the foundation of Lean Six Sigma. The version of “LegalLean” is different than other industries. Certainly Aron and I love to teach and train on these concepts and are always happy to engage with others and provide resources.
The number one priority, however, is to have a commitment from leadership. Change management is always a challenge–but even more so in the legal world. Start small with quick win projects that demonstrate a financial capture or process improvement. From there, winning engagement from others within the organization will come in time.
Q: In your presentation during the event in Toronto, you point out that in a legal context, Lean Six Sigma can be very helpful for pricing and finding better ways to complete transactions. In what other ways Lean can be helpful for law firms?
Jason, Aron: There are some outstanding examples where it has been used to cut cycle times on highly productionized process work, such as Hunoval Law’s reduction in the number of days to process mortgage enforcement actions (specifically the Notice of Hearing) from 70 days down to 8 days. The net result was a $4M savings in 2012 through efficiencies and error reductions.
Much of law is document driven and that involves applying process and specialized knowledge to a particular regime–whether it be compliance management, a finance transaction or litigation.
Another excellent example outside of a law firm is Novus Law which uses Six Sigma in many of its processes. Novus is a document review company. Document review is of course, really, just a process at its core. The process used to be completely driven by lawyers. These days, it is a blend of people, technology and process.
Document review is collecting, processing, reviewing, organizing, producing and analyzing documents for either litigation, competition or transactional matters. By applying Lean Six Sigma-Novus has found that they are:
- 86% more accurate, regularly achieving accuracy rates of 99% and above
- 52% faster, based on the actual amount of time required to complete engagements
- 78% less expensive, based on amounts clients typically pay for “industry-standard” alternatives
Q: Can you tell us how much time it usually takes for a small or mid-sized firm to implement lean strategy?
Jason, Aron: Once started, it is a continuing implementation and drive for improvement. It’s not like a software system where you roll out across the organization, measure for competence and then you are done. Not to be glib, but you are never “done” because you can always improve and will always have improvement projects.
However, setting up a program around training and certifying staff, choosing initial first low stakes, high-value projects and capturing wins can happen inside of 12 months. In all cases–be sure to be able to point to a measurable improvement.
As Ken Grady of Seyfarth Lean pointed out at our #LegalLean event – there are going to be stops and starts along the way. Seyfarth has been on a 10 year journey and it was very difficult in the beginning. Success started to come when there was a groundswell of clients asking for assistance using the techniques. Ken speaks to the early days at Seyfarth Lean in this video. It was a disaster in the beginning!
Q: Can you tell us more about the “wastes in processes” and which of them are damaging law firms the most?
Jason, Aron: Typically, there are 8 wastes:
- Defects/Mistakes – for example, missing deadlines, poor drafting or data entry errors
- Overproduction – in law, an over-inclusion of too many lawyers on a single file
- Waiting – hardware issues, poor meeting execution (start on time!)
- Non-Utilized Talent – other professionals and fee earners not being utilized or partners doing work appropriate for others in order to make billable targets
- Transportation – failing to use electronic delivery, or workflows with multiple approvals
- Inventory – this is your pipeline of work including files, correspondence or other work in progress
- Motion – travel is still favoured for meetings where video or teleconferencing is acceptable
- Extra-Processing – number of “turns” of a document, over-researching, multiple lawyers on a matter
In our opinion, in law firms, far and away, the most damaging wastes are overproduction and extra-processing. One of the fundamental differences between in-house and private practice is the efficiency imperative for corporate departments to deliver on time, on budget and on point! Internal business unit clients need to be provided direction on how to achieve business objectives – weighing risks – but demanding action.
As Ronan Levy pointed out at our #LegalLean event, “is it worthwhile for lawyers to fight over so many words, commas and indemnities on the front end?” It’s best to think of the desired outcomes rather than unlikely risks as he outlines in this video.
Q: Aron pointed that in lean startups, it’s extremely important that whenever you have an idea, or a series of hypothesis, you need to test each one in order to build a company that lasts. Should lawyers use this strategy as well? What specific steps can they take to actually implement it?
Jason, Aron: Lawyers should absolutely have hypotheses that they then need to test. We talk with legal professionals all over the world about the magic of thinking as an entrepreneur. The concept of Lean is new to the law and to lawyers, but not so new anymore to startup founders, so the former can learn a lot from the latter. The entire Lean cycle is critically important, a process of building, measuring, and learning. Lawyers should certainly use this strategy.
Anything to add?
We also recommend you to take a look Jason’s talk on the mashup of echo chambers in the legal service industry.