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Archive for October, 2016

Why professionals should embrace Lean thinking

Wednesday, October 26th, 2016

galley

Delighted clients. High utilisation. Business development.

These are the three key mantras guiding the life of any fee-earning professional – be they a lawyer, an accountant, a management consultant or a specialist in any knowledge-based business. And we shouldn’t forget a 4th mantra in any profession: building your own expertise, aka ‘professional development’ – that is if the professional has any time or energy left after serving the needs of the first three…

With the increasing demands and competitive pressures on professional service firms, the life of a fee-earning professional can often seem akin to a galley slave working in the bilges of the business, rowing frantically to serve the demands of their clients with their Partner cracking the whip on chargeable time….

Just to make this picture even worse is the fact that a good amount of the workload and stress on our poor professional is simply unnecessary. It doesn’t move the business any faster through the competitive waters. Indeed the professional could slow their rowing – or even stop at times – and there would be no difference to the speed of the vessel.

 

Professional services – a story of waste

Much work performed by professionals today is simply waste.

It doesn’t deliver value for clients.

It doesn’t deliver profit to the business.

it doesn’t enhance the professional’s expertise.

How can this be? Professional service firms are smart aren’t they? Law firms, Accountants and Management Consultants charge clients substantial fees for providing expertise and advice that helps improve clients’ businesses. So how could they do this if so much of their employees’ work was waste?

The sobering fact is that they are able to deliver so much value to their clients despite their internal inefficiencies. In my work with professional service firms over the last fifteen years, I’ve seen professionals exhibiting similar types of inefficiency in their work:

  • Doing work that is not required to meet client needs
  • Finding and reworking errors made by others
  • Doing work that could be performed by junior personnel
  • Doing work that could be done by support staff
  • Taking excess time to perform work
  • Not applying better methods used by others

These are all simply approaches to work that waste professional expertise and time. When firms are able to charge clients for all work that is performed for a job or by the hour, this inefficiency can be converted to income (and is thus a ‘good thing’). But these times are changing with clients increasingly demanding fixed fee pricing for work. This inefficiency then becomes a cost to the business.

As an example, in my work with major UK law firms since 2005, I have helped firms re-engineer 20 services. By applying Lean approaches to identify and remove waste from work and redesign the service to better meet client requirements, typically between 25-50% (and once as much as 75%) of the cost of the service was removed. And this cost reduction was not at the expense of quality – indeed in all cases the quality and consistency of the service was actually enhanced.

As these improvements used a highly collaborative approach, working with a team of fee earners and support staff, I was able to experience first hand the change in the professionals’ view of the service re-design project. The mental journey they took went something like this:

Stage 1: Politely Hostile: “Why am I in this team? I haven’t got time for this.”

Stage 2: In Denial: “I don’t see how we can be more efficient. Our work is professional – it can’t be simplified or systemized.”

Stage 3: An Awakening: “Mapping the service showed a lot of inconsistency and inefficiencies – I guess that is waste?”

Stage 4: Energized: “If we could remove the waste, we could do our work more easily and take less time.”

Stage 5: I’m a Believer: “Our work is less stressful, we are more productive and the service is more profitable. Where else can we apply this approach?”

I can think of one project where we were re-designing one fixed-fee legal service that was not profitable for the firm. An experienced associate on the project team was very much at ‘Stage 1″, considering the project a waste of her time. But she began to change in Stage 3 after I introduced Lean thinking and the team mapped the service to lay bare the considerable inefficiencies. She was the one who in Stage 4 spent her own personal time drawing up a map of a new way of performing the work – which became the core of the ‘TO-BE’ service – resulting in a new service that was more consistent, faster and reduced the direct cost of performing the work by 75%. She is now very much a Stage 5 advocate in the firm…

 

Lean can set the professional free

Professionals often consider Lean approaches as a threat. They see it as an attempted commoditization of their work, through standardization and de-skilling, and so they resist it. But actually Lean can enrich a professional’s work by removing frustrations, taking away repetitive and lower skill tasks and so freeing up the professional’s time for more challenging and higher-value work. This increases their personal fulfilment from their work. The application of Lean also allows junior and less skilled personnel to improve their effectiveness – making use of codified methods to perform lower value work that was previously performed by experienced professionals. In doing so the organisation’s effectiveness and efficiency is improved – making it more competitive. So Lean is actually a productivity tool for professionals and should be embraced – not resisted.

 

 

This article was originally published by Alastair Ross on LinkedIn on 24th October 2016.

Law firm merger – making 1 + 1 > 2

Thursday, October 13th, 2016

Merger Dictionary Definition Word Combine Companies Businesses

 

Merger – the theory

Merger is an increasingly popular option for law firms seeking a transformational solution to the increasing challenges in the legal market. A merger will create a firm with increased services scope, geographic coverage and depth of resources. It will be attractive to major international clients seeking a legal partner capable of covering their requirements in the key commercial, real estate, employment and litigation areas. Merger will allow the new firm to benefit from economies of scale in negotiation with suppliers and in its support services. The merger will provide the magic of ‘synergies’ that will enable the sum to be truly greater than its parts (i.e. 1+1 is much greater than 2…)

 

Merger – the reality

Cut the sunshine and the smell of roses and cue fog and the sound of shouting and clashing swords. Back to the reality of merger. Because it’s tough to do well. Especially in a knowledge-intensive people-based business – like a law firm.

Getting the most out of a merger demands a bold vision for the new firm, a structured approach to achieve it and a clear picture of capabilities in each of the merging firms. There are very few cases of effective post-merger integration and optimisation in law firms. Many firms seem content to settle just for the larger scale that merger provides. Why is this?

An obvious reason is that making the most of a merger requires significant change and that is challenging in most law firms. The partnership model is very effective at resisting centrally-driven ‘mandated’ changes. Firms also do not typically operate or like ‘process thinking’ and typically resist standardisation of working. I’m using a thick brush to paint a crude picture here – but it is a recognisable one for most law firms – and it makes effective mergers a challenge. On top of this basic challenge is the fact that firms don’t typically have a vision or a programme for ‘post-merger optimisation’.

 

Post-merger optimisation needs process-thinking

The focus of most firms on merging is to adequately integrate the two organisations, working methods and IT and establish a new management structure. Indeed this is the necessary ‘phase one’ in getting a working business. But to make the most of the merger, a ‘phase two’ is required. This phase will optimise the joint capabilities of the merged firms to realise the potential synergies from the merger – to yield higher value to clients and improved efficiency for the firm. This requires a clear vision, process thinking and a structured approach, for example:

Before the first step: What’s the vision?

A challenging vision for the new firm that provides an improved level of competitiveness based on exploiting the potential synergies in the merged firms should be the starting point.

Step 1: Let’s see what we’ve got

A key first step is to objectively assess the services and processes in the merged firm to identify best practices and performance (i.e. where is the ‘one best way’ in each service/process element).

Step 2: Commonalisation and Rationalisation

The next step is to establish common processes and services, based on existing best practices (i.e. the ‘one best way’) that are standardised across the firm. This work can be part funded by the savings from realising the economies of scale in support and in the purchasing of products and services.

Step 3: Optimisation

For further optimisation the firm should consider the application of formal services management to establish a more systematic approach to delivery and innovation of services. Major automation of key common internal processes – using integrated enterprise software such as SAP – is now worth contemplating now that there are defined and optimised processes in place. Unfortunately too many firms seek to automate existing processes (without first improving them) and face the ‘pig in lipstick’ outcome…

 

Systems thinking is needed

The appetite of major law firms over the last few years to merge and create major – often global – law firms has created major national and international operations, some with yearly turnover well in excess of £1 billion. These mergers provide clients with increased support and a range and depth of legal capabilities – and thus increase the firms’ potential competitive position.

However such mergers also further challenge the existing operational methods within these firms for effective and efficient service delivery and the optimisation of support processes. Law firms typically lack the systematic approaches of services and process management and innovation. This is a weakness that will need to be addressed if these firms are to operate profitably in a services market that is increasingly global and digitally-enabled.

Energizing Change

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