In our work with major UK law firms since 2005, we have seen a number of major benefits through applying ‘re-engineering’ techniques proven in other business sectors. Re-engineering drives down costs and increases value through a process and client-focused approach. We have successfully applied re-engineering to legal services including Commercial Due Diligence, Insurance, Employment, Inquests, Commercial Property, Probate and Matter Management. From this work we have seen that there are 7 distinct ways in which re-engineering can be used to improve law firm performance:

1. Reducing the chargeable time required to perform a matter by improving the efficiency with which processes are defined and operated – through the application of techniques such as Lean. This results in a reduction in the cost of performing the process. The process can be a service (i.e. a client facing process such as Corporate Acquisition or Probate) or a support process (i.e. an administrative process such as Client Inception or Billing). Law firms need to move to fixed or value pricing arrangements to fully benefit from the increased profitability that this enables.

2. Lowering the cost of performing a matter by reducing the cost of the personnel required to perform the process – what we call ‘right-skilling’. This means using a higher proportion of junior and paralegal personnel. To enable this whilst maintaining required service quality the process needs to be redesigned, standardised and supported with operating procedures, templates and documents – so that it can be effectively operated by lower skilled personnel. This also creates opportunities for reducing the indirect costs of support staff and infrastructure. It should be emphasised that the resulting process will be of higher quality and consistency – even though lower skilled personnel are being used – because it is designed and operated based on the ‘one best way’ process derived from the codified knowledge of the senior experienced personnel. In our work with law firms, reducing chargeable time and right-skilling have yielded direct cost reductions of between 20-40% – with minimal capital investment.

3. Improving the service received by clients through improvement/redesign of the client experience throughout the service cycle. For example by improving responsiveness, reducing errors and improving consistency – focusing on the key ‘moments of truth’ in the client service experience.

4. Raising the value received by clients by improving/innovating the overall service value proposition and the individual elements of the service offer in ways that are valued by the client and so improve client retention and the firm’s competitiveness. The required client-centred approach in our re-engineering work flushes out these opportunities. For example we worked with one firm to develop a new internet-enabled service for inquests, with another we developed a new collaborative improvement approach for insurance claims management and have worked with a number of firms to develop fixed price services.

5. Exploiting the potential of IT and internet-enabled IT as part of re-engineering to improve internal efficiency and client service, including the development of internet-enabled services or service elements. We do this by ensuring that IT is well represented in the re-engineering programme team and so identify opportunities for leveraging IT.

6. Developing opportunities for strategic innovation in the firm covering a change in the value proposition, new business models and organisational change. Re-engineering promotes questioning and analysis of the services provided and how they are delivered, together with improving insights into client requirements. This naturally leads to opportunities for significant changes in the firm’s business model.

7. Catalysing the firm’s approach to innovation – addressing culture, resourcing and management of innovation and ongoing improvement. A re-engineering project establishes an environment for focused and collaborative innovation, together with experience in a systematic improvement approach. The Partners and employees involved can share this knowledge with others and the re-engineering approach can be deployed in other parts of the firm. We assist this in our projects with deliberate and structured skills transfer. In addition, this work creates a new paradigm where questioning and new ideas become welcome.

As law firms face challenging business times, re-engineering is an approach for step-change competitive improvement that we believe should not be overlooked, based on the significant improvements that can be achieved.

Law Firms can request a complimentary copy of our whitepaper: ‘Smarter working in law firms – re-engineering value and cost’ published in March 2012, which covers this subject in detail, by contacting us via the website.

I’d welcome your views and comments on this topic.

Alastair Ross
Director
Codexx Associates Ltd