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Archive for the ‘Continuous Improvement’ Category

Lean in law firms – five key lessons

Monday, December 4th, 2017

by Alastair Ross

I’ve been working with many major UK law firms since 2005, helping them to improve both the value and the efficiency of their services. A key philosophy I have used in this work has been Lean thinking. I thought it would be useful to reflect on that experience and capture five key lessons I’ve learned over the last 12 years about applying Lean in law firms.

Lesson 1 – A law firm is not a factory (not quite anyway)

I first applied Lean back in 1990 as a manufacturing manager in IBM. It was not known as Lean then – but as ‘Continuous Flow Manufacturing, ‘Just in time’ or Kaizen. Later I used it in improvement projects in chemicals, automotive and aerospace companies. In the late 1990s the term ‘Lean’ was coined by Womack and Jones to cover this improvement philosophy and tools. In 2005 I began working with major law firms in the UK that were feeling the heat of increasing competition and market deregulation. It quickly became clear that Lean thinking could be readily applied to help these firms improve their service value and delivery efficiency. But it was also clear that the culture in a law firm, the ‘craft’ based working methods and the terminology meant that Lean needed to be communicated and tailored differently. Partners did not readily relate to case studies of car factories – they needed to understand how lean could be applied to knowledge-intensive services such as law. And equally lean approaches that worked on the factory floor did not always work quite so readily in a legal team!

Lesson 2 – Process thinking does not come naturally to lawyers

Lean thinking is naturally focused on how work activities and resources are applied to the flow of value from the business to the customer – the so-called ‘value stream’. This value stream is realised in a business process that delivers products or services to the customer. So lean thinking is used to assess and improve these processes. This approach comes naturally in a manufacturing environment where there is a common understanding of work being codified into production processes. But this is not the case in a law firm – ‘process thinking’ is an alien concept especially for work types where one fee earner may currently perform all of the work. This is where process mapping is very effective in getting a team of fee earners to draw up the activities that are required to deliver a service – thus producing a visual map of the process. This can then be used to highlight wastes and begin the journey to improvement. Doing this in a collaborative way with fee earners in a change team is the best approach in my experience – getting lawyer buy-in to the improvements and also creating a cadre of ‘process improvement advocates’ within the firm. (And by the way this is why I am not a fan of Six Sigma for law firms – it’s overkill and not as easily deployed as Lean).

Lesson 3 – There is a lot of waste in legal services

A core element of the Lean philosophy is a ruthless focus on the identification and elimination of waste. But what can be considered as waste? It is any activity or resource that does not add value to what is provided to the customer. Waste accumulates in businesses just like dust and debris in a house. Regular hoovering and the occasional major ‘spring clean’ is the solution in a house. And something similar is required in a business to keep its business processes effective and efficient. But what if a business doesn’t feel the need to do this? If the competitive and market pressures are not sufficiently tough that they need to do such ‘process housekeeping’? This was pretty much the situation in the legal sector for many years – times were good and margins were high. But since the financial crash in 2008, the dramatic impact of the internet and other information technologies and in the UK the deregulation of the sector – things have changed. Law firms are feeling the pressure from budget-squeezed clients, new entrants and new business models. So now firms are looking at their how they deliver their services – and they are finding much waste: Poorly defined, inefficient working methods, inefficient use of people (so much legal work is performed at too high a skill level), errors, rework and poor use of IT, for example.

There is a positive message: With this high level of waste, there is much improvement possible.

So firms can significantly improve their competitive position by using lean to identify and radically reduce this waste (see Lesson 5).

Lesson 4 – Start with a partner champion and a fixed fee service

Making change in partnerships is tough – much more so than in a corporate where the ‘it’s my way or the highway’ diktat can more readily be applied… The other major challenge is that ‘the billable’ hour discourages law firms from improving efficiency – as it results in reduced revenue. Great for the client, but not so compelling for the partnership. But the fee regime is changing with more clients in the UK looking for budget certainty and so enforcing reduced and fixed fees for many transactions. This has created financial pain for firms – much of my work has been with firms who have been forced to move to a fixed fee for a service and are making little or no profit for each matter.

To effectively harness this ‘burning platform’ for improvement, a Partner ‘champion’ is needed – one who is positive and committed to driving major improvement in the service. They are critical in being the business partner to an external change agent, in leading a change team of fee earners and removing road-blocks to change within the firm. From my experience, the presence of such a partner champion is a key ‘Go/No Go’ for a Lean improvement project.

 Lesson 5 – More for less is an achievable outcome

There is a common believe in professional services firms that cost reduction will inevitably lead to a reduction in service quality. In other words something has to give – you either have a high quality or low cost service, you can’t have both.

 This is simply not true.

My work with multiple law firms covering 20 legal services has enabled direct cost reductions of between 25 and 75% – whilst improving value to the client, with more consistency and responsiveness. Why is this possible? Because firms can reduce service cost by reducing or eliminating the waste inherent in legal service delivery (see Lesson 3). This waste adds no value to clients and indeed consumes lawyer resources and time – so removing it will not have any negative effects on client value. Only positive ones.

 So service quality can be improved and cost reduced at the same time.

So what’s the key message for law firms?

It’s a simple one, if a firm is not yet using Lean thinking as part of its transformation work it’s failing to grasp a major opportunity. For Lean can deliver significant business improvements with little capital investment (IT can help, but it’s not mandatory) and provide a foundation for ongoing improvement. And if a firm is looking to exploit new technologies such as AI, it had better make sure it’s building on solid foundations – automating a poor process may simply deliver the proverbial ‘pig with lipstick’….

 

This article was first published by Alastair Ross on LinkedIn on 1st December 2017.

Director’s blog: Can you really train people to be innovators?

Wednesday, May 25th, 2016

the director's blog on innovation - logo with text

More innovation please

Raising the level of innovation is becoming a critical need for businesses as they face increasing competitive pressures. A fundamental requirement for making businesses more innovative – in what they provide to their customers and how they do so – is to get their managers and employees engaged and able to effectively participate in innovation activities. This requires an internal system for innovation that establishes key elements of enabling innovation infrastructure such as strategy, processes, tools and supporting resources. And part of this work involves training managers and employees in innovation.

But can you really train people to be innovators?

I ask this question, as there is a view – and not an uncommon one – that innovators are born not made: “Just look at Steve Jobs, James Dyson or Jeff Bezos – they weren’t trained to make them the innovators they are!” Implicit in this view is the belief that when it comes to innovation ‘you’ve either got it or you haven’t’. If that’s the case then what hope is there for businesses trying to innovate if they don’t happen to have a Jobs, Dyson, Bezos or the like in their midst….?

Innovation is not just creativity

Let’s step back and review a few innovation basics: Firstly, people often mix up innovation and creativity. Creativity is about generating ideas. Innovation is about creating value from ideas. Ideas on their own have no value – only potential value which has to be realised. Certainly some people are naturally more creative than others and thus more likely to generate potentially valuable ideas. But being creative alone is not enough – we also need the skills to realise the ideas and transform them into value. That requires skills in idea exploration and analysis, development of new offerings and methods, project management, marketing and selling (internally and externally) for example. And ideas can be effectively generated by (less creative) people working systematically anyway (through effective brainstorming and other ideation methods). So innovation requires a mix of capabilities, not just creativity.

Not only a lone genius required

When talking about improving innovation in an organisation it’s important to remember that the goal should be to ‘institutionalise’ innovation – to enable regular and sustained innovation through widespread and integrated efforts – rather than the occasional spark of innovation enabled by a few individuals (who can have off days or can leave). People forget that Apple’s innovation success with its iPod, iPhone and iPad was the result of multiple innovations by many individuals with Steve Jobs being the orchestrator and very much the public face, but by no means the sole innovator – and indeed his orchestration was ineffective and inefficient at times (read the excellent biography ‘Steve Jobs’ by Walter Isaacson for details).

One of the earliest examples of effective institutional innovation was the Menlo Park laboratories established by Thomas Edison in 1876. This was one of the first large-scale research establishments and formed the template for R&D organisations for the next fifty years. Edison brought together more than 200 talented scientists, engineers and craftsman and overlaid a system of innovation that harnessed their skills in a structured and productive way with defined teams, extensive experimentation and record keeping. It was a highly productive operation and created more than 400 patents. Whilst Edison was very much the public face of innovation, it was very much an institutional rather than individual approach to innovation, with defined targets such as ‘a minor innovation every 10 days and a big thing every six months or so’.

Most innovation is doing existing things better

A more modern example in a services firm is that of AXA Insurance in Ireland which started up an innovation programme in 2000. Theirs was very much an experimental approach, learning as they went along. They found that they could generate lots of new ideas from their employees but they needed to apply a process to effectively screen and select the best ideas. One key insight was when they analysed the ideas implemented in their first few years of the programme they found that 80% of them were concerned with removing waste or improving existing services or ways of working. Only 10% were ideas for new innovative services. This finding helped demystify innovation in the business – employees realised that most innovation was in doing existing things better – incremental innovation – which they could certainly do in their daily work. That is a powerful message for all businesses: Don’t just look for the ‘silver bullets’ of radical innovation, spend most of your time removing the ‘rust and grime’ from your existing methods and processes and then ‘polish them’ to make them more effective. Industrial experience of Continuous Improvement, making use of basic techniques for measurement, analysis and waste elimination – often within a Lean programme – has shown the power of such ‘do better’ innovation. Training employees in these core techniques can make them more structured and effective in their work on process innovation.

So you can train people to become innovators?

You can indeed train people to be effective in ‘do better’ or incremental innovation – which accounts for the vast majority of innovation. But what about ‘do different’ radical innovation? This type of innovation is needed if a firm wants to leap ahead of rivals. And firms would certainly want a few silver bullets as part of their innovation armoury…

To help answer this question I’m going to use the example of the UK legal sector. Most observers would not consider law to be a natural environment for innovation and rather unkindly might jest that ‘lawyer’ and ‘innovative’ are two words never found in the same sentence… That might well have been true(ish) twenty years ago, but it’s a viewpoint that is increasingly out of date today. For the UK legal sector has been in a state of major change for the last decade, driven by a combination of deregulation, tougher market conditions driven by the economic fallout from the 2008 financial crash, and the increasing impact of the internet. The result is clients ‘wanting more for less’, new rivals, internet-enabled entrants and law firms recognising the need for major changes in both their offerings and their working methods. Many have embraced innovation in their services – often with a primary goal of efficiency and cost improvement.

Through Codexx I have worked with a good number of major UK law firms helping them to respond to these major challenges by applying innovation. This has taken the form of two different types of interventions:

  • Specific service innovation (aka ‘re-engineering’)
  • Improving a firm’s innovation capabilities

Service innovation – a focused environment for innovation

In my work with law firms since 2006 I have helped law firms re-engineer a total of 20 legal services using a Codexx approach called ‘Smarter Working’. This approach uses a small core team of fee earners and support staff to perform the re-engineering with the support of the Codexx consultant. We effectively establish a ‘micro innovation environment’ using collaborative workshops and with training in team-working, some basic Lean principles and creative idea generation methods. This has resulted in major redesign of services such as Commercial Due Diligence, Inquest and Clinical Negligence, to reduce costs by as much as 75% whilst improving service quality. It has also resulted in the development of new internet-enabled services. Looking back at this work over the last decade I can unequivocally say that you can train lawyers – or indeed any other employees – to be very effective innovators within a supportive environment for innovation.

Improving innovation capabilities

Other law firms have wanted to take a broader approach, not just focused on selected services, but to make their firms ‘more innovative’. Their goal was a firm that used sustained innovation to improve its services, its efficiency and thus its competitive differentiation and its attraction as a place to work for progressive lawyers. To help them do this I have applied Codexx methods and tools to help them establish a systematic approach to innovation and use this to drive innovation of new and improved services and working methods. This work included strategy development, an innovation process & support structure, change management and of course training for selected personnel.

From my experience a key strategic approach to establishing innovation on a firm-wide basis is to run two parallel missions: the first to build the required innovation system and the second to deliver innovation outcomes (e.g. improvements, enhanced services etc.). The first mission is key to long term innovation success; the second is key to delivering benefits early and to help gain buy-in through demonstrable early success. I have delivered training on innovation to selected personnel in a number of firms (often innovation ‘champions’ whose role is to spearhead innovation activities) and typically found lawyers receptive and able to effectively apply the new methods – generating both incremental and more radical ideas. Based on this, there is no doubt in my mind that these lawyers and support personnel can be very effective in catalysing and supporting innovation within their firm.

That is of course if they are given the ‘space’ for innovation.

The one proviso – space for innovation

So you can indeed train people to be capable of innovation. But they can only subsequently realise that capability and successfully innovate if the organisation allows them space to do so. ‘Space for innovation’ covers a number of key attributes:

  • Leadership supportive of innovation – not just focusing on today’s business
  • Time available for work on innovation – always a challenge for people busy running the daily business
  • A wide, but defined, frame to seek innovation in – innovation in a vacuum is rarely effective…
  • A supportive culture for innovation – valuing effort and recognising some failures as inevitable
  • Resources to support innovation (such as other personnel, methods, tools and budget)

Unfortunately these are not always put in place or sustained to accompany training for innovation – and then all the teaching in the world on innovation will have as much effect as trying to light a fire on boggy ground….

Alastair Ross

Director
Codexx Associates Ltd

Further reading

To read further about Thomas Edison’s approach to innovation and the Menlo Park research organisation, see a delightful and informative book on innovation: ‘Innovation – a very short introduction’ by Mark Dodgson and David Gann, published by Oxford University Press.

For more information on the AXA Ireland case study and effective approaches to innovation in knowledge intensive service firms  see ‘Innovating professional services – transforming value and efficiency’ published by Gower. https://www.routledge.com/products/9781472427915

For a case study on law firm re-engineering see: http://www.codexx.com/2015/a-story-of-law-firm-re-engineering-people-processes-profit/

 

Continuous Improvement – the quiet giant of innovation

Wednesday, December 2nd, 2015

Continuous Improvement image

A BBC article (here) recently gave media prominence to a well-established business approach, namely incremental or Continuous Improvement. It cited the example of how Sir Dave Brailsford applied Continuous Improvement approaches in his role as performance director of British Cycling to benefit from ‘marginal gains’:

Brailsford believed that if it was possible to make a 1% improvement in a whole host of areas, the cumulative gains would end up being hugely significant. He was on the look-out for all the weaknesses in the team’s assumptions, all the latent problems, so he could improve on each of them. (Source: ‘Should we all be looking for marginal gains?’, BBC)

Brailsford made small improvements in cycling aerodynamics, in maintenance methods, in rider health and other areas identified by analysis as being small areas of weakness. These small improvements aggregated together transformed the competitiveness of the British Cycling team and subsequently Brailsford used a similar approach in the Team Sky cycling team. The result?

Team GB used to be also-rans in world cycling. Indeed, one pundit described the operation as “a laughing stock”. But in the last two Olympics, Team GB has captured 16 gold medals and British riders have won the Tour de France three times in the last four years. (Source: ‘Should we all be looking for marginal gains?’, BBC)

A short history of Continuous Improvement

Continuous Improvement (CI) is a type of innovation (defined as creating value from ideas) that sits at the unsexy end of the spectrum of business innovation. It receives few column inches in innovation blogs, individual projects do not result in earth-shattering changes and few of the project instigators will receive individual rewards. It is noteworthy only for its aggregated impact – of using new ideas to increase customer value or internal efficiency (by a little at a time). Toyota is often considered, incorrectly, as the parent of CI as part of its Toyota Production System (TPS), which later became known as Lean. But its conception was much earlier, primarily in the work study movement of the early twentieth century, fathered by Frederick Taylor and resulting in Taylorism. Toyota wrapped the resulting hard mechanics of time & motion study with its own philosophy of waste elimination and high workforce engagement.

Toyota sets the performance bar

Toyota’s ability to generate an average of 10 implemented improvement ideas per employee per year places it in the premier league for continuous improvement; most western firms struggle to get into the lowest league with typically 0.1 implemented ideas per employee per year. Toyota’s approach to CI lies in its combination of a specific methodology and a work philosophy that defines a unique organisational culture: ‘Toyota views employees not just as pairs of hands but as knowledge workers who accumulate the wisdom of experience on the company’s front lines.’ (Source: ‘The contradictions that drive Toyota’s success’, Harvard Business Review, June 2008) This is a powerful view and one that is all too often missing from business organisations.

Whilst industrial firms will have established CI programmes, focusing on shop floor teams, they vary significantly in their effectiveness. In my work with Codexx I have assessed a number of industrial CI programmes and typical weaknesses that occur include: Limited training in the use of CI methods, lack of defined goals and focus areas for CI, weak processes for reviewing and selecting ideas and limited workforce engagement (i.e. most ideas come from a few people). However for businesses that get it right, CI programmes can deliver significant financial benefits year on year and create a working culture that energizes and engages the workforce.

What about services?

Service businesses often lack robust capabilities for CI, although this is changing as Lean thinking continuous to permeate this sector. Allianz Insurance plc launched a major and ongoing innovation programme in 2006. At its core is a Continuous Improvement system.This uses departmental teams meeting regularly to identify and implement improvement opportunities. Each department team defines three key goals for their team and then, using a short weekly or bi-weekly meeting, they seek to solve problems that have been identified during the previous week and put on a departmental whiteboard by team members. Idea exploration and selection is performed by the team through a discussion. Implemented solutions are then recorded in the firm’s ideas management system. In total there are about 400 teams working in this way with the support of 100 trained innovation champions. Since its start the programme has yielded 38,000 implemented ideas with benefits measured at £19m (1).

Making difficulties visible

A challenge for service firms in Continuous Improvement is the difficulty of ‘seeing’ problems. In industry, a production process is physical, parts and products move through process steps involving people and machines. In a service business, the ‘product’ is information or an experience and is not always physical. This is especially so in Knowledge Intensive Services such as design, accountancy, law and management consulting where the ‘product’ is information-based. Why does this matter? It matters because ‘making difficulties visible‘ is key to Continuous Improvement. This is why a key mantra in Toyota is Genchi genbutsu or ‘Go See’. In other words: Don’t rely on reports or information from others, go and see the situation for yourself. In a services environment, walking into the location where work is performed provides limited value, particularly in information-based work, for there is little to see: what does a law firm’s office filled with people, desks, computer screens and paper (oh yes) tell you about the services performed there? Very little. This is why process mapping and visual management methods are key to making processes and their performance visible in a services environment. In my re-engineering work with professional service firms, the power of collaborative process mapping cannot be underestimated.

Continuous Improvement needs ‘Know Why’ not ‘Know How’

‘Know How’ is a common term used to describe expertise and is thus considered a ‘good thing’. However it is a bad thing when it becomes a barrier to innovation, which is not uncommon. Let me explain further. Much of work is repetitive to a degree with work comprising common activities and sequences of tasks. ‘Know How’ is sufficient to perform such work, as the procedures to be performed and the steps to be followed can be learned and represent the required ‘Know How’. The underlying reasons for why the work is designed in this way are not necessarily understood or indeed do not need to be to perform the work. But ‘Know Why’ is key to making significant improvements in how this work is performed as there needs to be understanding as to why the work is designed in its current form. Indeed much waste exists in working methods because steps and procedures in place were relevant to a situation that does not apply any more. For example, in a major insurance client, some activities in an internal process related to an IT-workaround which had not been required for many years….the people performing the work simply had not been told. The disciplines of questioning, investigation and analysis to enable ‘Know Why’ – a deep understanding – of the work area under focus provide a strong foundation for Continuous Improvement.

Marginal gains x high participation = something big

One of the biggest challenges in driving innovation in an organisation is how to fit it in around the daily business. Innovation is about creating ‘tomorrow’s business’ – a organisation’s focus is on delivering ‘today’s business’ and employees are measured and rewarded on this. So finding time for innovation is always challenging. A related challenge is that the term ‘innovation’ can be intimidating to employees. Many people (incorrectly) associate innovation with the need for creativity and radical ideas and thus feel that they can’t contribute. AXA Insurance Ireland ran an innovation programme in the early 2000s (2). AXA’s analysis of those improvement ideas implemented in the first few years of the programme showed that 80% of them related to small process or service improvements or waste elimination. This helped employees realise that indeed they could participate effectively in the programme by seeking improvements in how they performed their daily work. This helps engage employees in innovation as a regular part of their work – as demonstrated at Allianz Insurance. CI thus provides a good foundation for commencing a programme of innovation in an organisation. So whilst Continuous Improvement might not make as much noise as other forms of innovation, don’t underestimate the power of marginal gains multiplied by high participation in your organisation.

Notes:

1. Source:‘High engagement innovation at Allianz Insurance plc’.  2. Source:‘Experiments in innovation at AXA Insurance Ireland’

both case studies in ‘Innovating professional services – transforming value and efficiency, Alastair Ross, 2015, published by Gower.

A story of law firm re-engineering: people, processes & profit

Thursday, November 5th, 2015

Law firm re-engineering - enhanced with clients

by Alastair Ross, Director, Codexx

Introduction
Whilst the term ‘re-engineering’ is typically prefaced by the word ‘process’ as this is the key focus area, re-engineering in professional services firms is very much about people. Successful re-engineering requires partners, fee earners and support personnel to make changes in their beliefs, behaviours and working methods. No small challenge then! To help illustrate the people-side of re-engineering in professional service firms, I’m going to review two recent projects I performed for a medium-sized UK law firm operating across three offices over a 12 month period.

Getting started
Codexx was contracted to help the firm drive major improvements in the efficiency of service delivery. The sponsor for the programme was the Managing Partner. The programme commenced in summer 2013 with an ‘Opportunity Assessment’ where I worked with the firm to select the initial services for re-engineering. The selection criteria we used included the potential financial benefits achievable through re-engineering as well as the level of support and commitment from relevant partners. As this was the start of the programme, it was particularly important to pick two services with a good likelihood of success – as otherwise it would reduce internal support for subsequent projects. For the first wave, two services were selected: an insurance claims management service and a clinical negligence service. Both services were delivered in relatively high volume, at a fixed fee, to important clients. And neither service was profitable. A ‘partner champion’ for each service was selected and I worked with each of them to help prepare them for the re-engineering programme that we were to undertake. The methodology we used in this programme was the Codexx ‘Smarter Working’ re-engineering solution which we developed and have used with professional service firms over the last decade. This uses a phased approach (see diagram) with a high level of collaboration from the client and the work in the initial AS-IS and TO-BE phases performed in interactive workshops and client visits.

The importance of the partner champions in professional service re-engineering projects cannot be underestimated. They help set the importance of the project for the fee-earning team members who are continually challenged for time on the project with their chargeable work commitments. If the partner champion is less than committed, the team members will follow suit. In this programme both the partner champions proved to be both committed and effective – attending all the required workshops and leading the team in challenging existing ways of working and identifying opportunities for service improvements. Together we selected a core team for each of the services, comprising 3-4 lawyers and an administrator. I established the ‘Steering Committee’ comprising the Managing Partner, Finance & HR Directors and Department Heads, for progress reviews and key decision making (e.g. in project investments) during the programme. Then the workshops was scheduled and we kicked off the programme with the first ‘AS-IS’ workshop for each of the two services.

D21 - 4

The AS-IS phase – capturing today’s situation and changing beliefs

There are three key objectives for the AS-IS phase:

1. To capture the operation of the service as it is today to provide a performance baseline;

2. To educate the core team in new ways of thinking and assessing service efficiency and value;

3. To get the core team to recognise and commit to the need for change.

To do this our workshops cover both analysis and training in Lean-based service analysis and improvement principles. Thus the team members are able to map the existing service and identify key wastes. I guided the team in profiling the value provided to clients and the service experience they receive. I then prepared them to visit a number of selected clients to get their views on the service provided by the firm and to identify service improvement opportunities. In parallel I worked with the partner champion and Finance department to gather financial performance information on the service to identify typical matter cost and the resulting profit margin. So at the conclusion of the AS-IS phase we had a rich, detailed picture of the existing performance and issues of the two services and a growing list of potential improvements, which the partner champions and I reported to the Steering Committee.

Equally important in this phase is the development of the team – both in the beliefs and capabilities of the individual members and the team’s effectiveness as a whole. Initially in these two projects there was more than a little doubt in the team members about the value of this programme. The most experienced and senior associate in the claims management team was frankly dubious that their working methods could be improved in any significant way. This is not an unusual reaction in our legal projects, as process-thinking is not common in law firms. Indeed a lot of the concepts and thinking that we introduce to the team – such as Lean thinking, waste identification, process mapping, service disaggregation and right-skilling – is new and indeed alien to most lawyers! As our approach is deliberately collaborative with the team members actively performing mapping and analysis, they each make a journey of self-discovery by using these techniques and seeing the results for themselves. This results in an important transformation of individual thinking and leads to a level of buy-in to the resulting changes that is far deeper and permanent than a consultant-enforced change.

Re-engineering personal journeyThat very much proved to be the case here, with the formerly resistant associate lawyer, obviously enlightened and energised following the AS-IS, then working in her spare time to outline a new ‘TO-BE’ process for performing the claims management service that would reduce the time required to perform the service by nearly 75%. This is an outstanding example of individual change. But it is not uncommon and I find that fee earners are generally surprised at the level of inefficiency that their process mapping and waste analysis reveals. So by the end of the AS-IS phase they certainly recognise the need and also the obvious scope for improvement. To capture the insights and energy that builds in this phase we start capturing a list of improvement opportunities in the first workshop and build it during the AS-IS phase. New ideas are allocated to team members who are responsible for providing an initial exploration and recommendation as to whether this idea should go forward and even be a ‘Quick Hit’ project (we implemented a number of these in the claims management project during the AS-IS phase). This further engages team members and also provides a useful first ‘filter’ on new ideas. To broaden engagement beyond the core teams we used a ‘Living Walls’ approach to share our findings with the rest of the fee earners working on the service – and get their feedback – using large paper charts pinned up in working areas

Some of the major challenges in the AS-IS phase in this programme were: Difficulty in getting accurate service cost data and issues of fee earners fitting in project work alongside their existing client workload. These are challenges typically experienced in most of our legal re-engineering projects.

The TO-BE phase – designing a new service and new working methods
The objective of the TO-BE phase is to build on the learning from the AS-IS phase and design a new process, with a supporting organisation and IT, for delivering the service which is significantly more efficient (to yield cost savings) and provides higher value and a better experience for clients. In addition an implementation plan with supporting resourcing and business case are needed to validate the case for change.

To help in ‘framing’ the team’s TO-BE work, we typically use a ‘Vision workshop’ at the start of this phase with a number of partners and managers. We share the team’s AS-IS findings and work to develop a 3-5 year Vision for the service, with measurable targets. In this programme I ran a vision workshop for only one of the two services, where the multi-office and multi-partner operation of the service meant that it was valuable to share progress and likely changes to get partner input and eventual buy-in to support the partner champion.

In the TO-BE phase I worked with each team using a number of innovation tools and the existing ideas list to generate a number of ‘transformational concepts’ for the new service which we then mapped. This provided a blueprint for the new service which required much less time and cost to deliver whilst improving on the existing client service. The concepts were developed into transformation projects, making use of Codexx project definition templates, and an overall implementation plan and business case for change.

Interestingly, whilst at the start of the programme both teams were adamant that a new case management system was needed to enable major efficiency improvements, they did not eventually recommend this in the TO-BE phase. For by then it was clear that whilst the existing Case Management software was indeed old and ‘clunky’ the implementation of new case plans and templates to support the new TO-BE process would enable major improvements. So for now the old case management system would be ‘good enough’ – which improved the business case for these changes.

The major changes in the new TO-BE process for each service was an underlying process that was optimised to reduce required fee earner time, that was ‘right-skilled’ to push work down to the lowest skill level that it could be performed at with acceptable quality, that was ‘codified’ using templates and documented procedures that captured and deployed the ‘one best way’ approach for repetitive work elements, making use of Case Management to control workflow and deliver documents. Both services also changed the way in which experienced associates and partners were used in the service. Their time was reduced and focused on ‘up front’ matter strategy to guide fee earners rather than ‘back end’ review and checking of work already performed – to maximise their value and minimise fee earner inefficiencies. This freed up the most experienced (and expensive) fee earners to work on more complex work.

Overall the TO-BE for both services moved them from a rather informal working approach, where issues in resources and controls had led to variable (and expensive) outputs, to a more systematic working approach with improved resources and controls leading to more consistent outputs, at lower cost (see diagram below).

D21 - 5

Implementation – changing behaviours and realising business benefits
The objective of the Implementation phase is to realise the TO-BE service by executing the defined transformation projects. Both programmes required the development and documentation of new templates, a ‘new process bible’ and updating the case management processes and screens (though keeping the existing case management system).

Implementation is always a challenge. The Managing Partner of one of our clients referred to it as ‘the grind of implementation’, which is an apt description. For the AS-IS and To-BE workshop phases of a re-engineering programme are ‘new and exciting’ with much collaboration. But in contrast, Implementation is more akin to ‘heads down’ and ‘get it done’ by project teams working on their own for much of the time – whilst team members also juggle a case load of work. It’s tough. We recognise this and particularly the challenge for time from client work. To help in this we provide a monthly progress review with the project leaders and partner champion, to keep at least a ‘monthly pulse’ of project work and to identify issues early. Despite this, we find that law firm projects typically slip and on this programme it was no different with most projects completing 8 weeks late. One key reason for this is that it is the core team members that typically lead the transformation projects and it is difficult to get their case load reduced during the implementation period (despite our recommendations) so they are typically very busy.

Our two programmes differed somewhat in their implementation experience. The claims management service was delivered from one office and thus is was easier and thus faster to get the required buy-in and implement the required changes. The clinical negligence service was delivered from teams and partners located across three offices. The partner champion thus had the added challenge of streamlining a service using fee earners who did not directly report to him, necessitating working to get the buy-in of other partners. In addition this service was more complex and thus required more work on process detailing and case management changes.

Continuous Improvement – locking in and extending improvements
I have been placing more emphasis on this phase in our re-engineering projects with law firms. This is because there is always the danger that the new methods and resulting improvements can fade away, as these islands of ‘new ways of working’ are surrounded by a large ocean of ‘business as usual’ in the rest of the firm…. So locking in new ways of working is key to retaining their benefits. But this is really not enough. For the reality is that there will continue to be downward pressure from clients on fees. So unless the firm wishes to suffer eroding margins, it needs to find further improvements over time.

So the objective of the Continuous Improvement phase is to lock in the existing improvements and establish a simple and ‘light touch’ system for identifying and implementing ongoing improvements that will further improve service and cost-effectiveness. Key elements that we put in place for these two services were a performance dashboard with monthly updates and at least a quarterly session involving team members to define improvement needs. One ongoing challenge is how best to reward fee earners delivering a fixed fee service and motivate them to further improve service efficiency – whilst their conventional targets and compensation are based on chargeable time… As part of these two programmes the firm recognised the need to develop new mechanisms for fee earner recognition based more on revenue and profit generated than on time recorded.

So what were the outcomes?
Both services have now been operating with the new methods for around 9 months at the time of writing. Compared to their operation prior to re-engineering, the claims management service has reduced costs by around 70% whilst maintaining service quality and improving reporting and billing quality. In addition, the firm has strengthened its relationship with the financial services client  receiving the service, as the firm’s lean-based improvements were seen very positively by the client. The clinical negligence service has reduced costs by around 50% whilst improving service consistency and providing a faster service to its public sector client.

This significant cost reduction meant that both services are now providing a good level of profit to the firm. In addition, the fee earners in the teams working to the new methods have given a very positive feedback – a key reason being that they are finding the work less stressful than before – whilst delivering  a better service at higher productivity. One team has used their process analysis experience to map and analyse a related support process which had performance issues. The firm subsequently commenced two more service re-engineering projects with Codexx.

Energizing Change

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