Lean Methodology for Law Firms: Lessons from the Tech Industry

Lean Methodology for Law Firms: Lessons from the Tech Industry 04/11/2021

What I Have Found

Building a fast-growing company in legal services is not easy and I have learned multiple lessons throughout the journey. Sometimes, I find myself reaching into external disciplines in fields like management, recruitment, accounting and marketing. In this article, I am sharing valuable lessons I have learned about the lean management methodology.

Disruption in Legal Services

It is apparent that the world of business is changing rapidly, and the legal industry is no exception. Although I found that law firms are constantly searching for ways to keep up with their clients in this fast-paced and tech-enabled new age, the risk-averse nature of their profession often discourages them from adopting innovative ideas.

What Law Firms Can Do?

In my view, law firms can improve their operations, add more value to clients, and keep up with other dynamic industries by adopting a phenomenon originally created in the manufacturing sector, namely, the ‘lean method‘.

What is the ‘Lean Method’?

First introduced by Toyota in the 1980s, the lean method was adopted by tech startups to minimise waste and reduce their innovation cycles from months to days. Many iterations of lean methods were developed over the years, and appeared with names such as Lean Six Sigma, Total Quality Management, and Kaizen. The underlying principle, however, remains the same, namely, that of continuous improvement.

With lean methodologies, processes and products are constantly tested and adjusted thereby ensuring optimal client satisfaction as well as the reduction of costs.

In his book ‘The Lean Startup’, Eric Ries adapted the lean methodology into an ‘innovation cycle’ for tech startups and refered to it as ‘validated learning.’ In this process, assumptions about problems and solutions are methodologically tested and adjusted before implementation.

The Lean Process

The simplified lean process can be condensed into four main stages: IDENTIFY, PLAN, EXECUTE and REVIEW. 

IDENTIFY: The first step of any lean process is usually identifying the steps involved in a task or engagement from start to finish or, using operations terminology, the ‘process map’. It is important to approach this holistically and include all tangible inputs (outside of the billable hours metric, for example, the non-billable time spent on business development and the effort contributed by support staff should not be ignored).

The next step is identifying where the bottlenecks in the process are or where there is wastage. In a law firm, this may typically appear as over-staffing a project, leading to wasted capacity and client dissatisfaction, or under-staffing and unduly putting excessive pressure on employees’ mental health. It could also be recurring, tedious tasks that could be easily automated or tasks that are particularly error-prone.

Finally, the source of these issues must be found in what the engineering industry calls a ‘root cause analysis.’ Here, the central question is always ‘Why?’. Why do our lawyers work excessively long hours? Why do clients keep complaining about this particular department’s billing? This method is crucial if we are to be in the habit of treating the disease and not merely the symptom of a problem.

PLAN: After identifying potential problems a team would need to brainstorm plans of action. What can be done, and how should it be done? In a truly innovative firm culture, input should be welcome from anyone, no matter the seniority or department. Everyone’s perspective is valuable when building a holistic solution.

One thing to note, particularly when applying this to a notoriously risk-averse profession, is that over-planning can be a hindrance to innovation. Teams must be mindful of avoiding ‘paralysis by analysis.’ To be truly innovative, I have found that one must be comfortable with the existence of unknowns and uncertainties. In a 2017 interview, former Apple General Counsel; Bruce Sewell explained that his role was not to give the widest berth to the line dividing risky actions and safe actions, but to “steer the ship as close to the line as you can, because that’s where the competitive advantage lies … you want to get to the point where you can use risk as a competitive advantage.”

Innovation necessarily entails risk and, as the proverb goes, ‘nothing ventured, nothing gained.’ To move quickly and decisively, the process must be treated as a constantly evolving experiment.

EXECUTE: When trying out new ideas, teams should always be cognisant of what they are really trying to achieve, referring back to the problems initially identified. Solutions don’t have to be expensive or time-consuming; they just need to get the job done. Commissioning an expensive project management platform with bespoke branding may not be necessary when a simple shared spreadsheet may be sufficient for the purposes of the experiment. The goal is to address the problem in as fast and as efficient a manner as possible. Big rollouts and big budgets come only after validating the suitability of a solution. For solutions like electronic signature platforms, this is where things like free trials are best utilised.

Another vital element in any experiment is data; results should be consistently tracked, and care should be taken to avoid ‘vanity metrics’, which are numbers whose only purpose is to flatter the proposed solution. Metrics should always link back to whether the root problem is being addressed. The right key performance indicators are crucial to inform the next step of the process.

REVIEW: WIth the right KPIs, a team can properly assess whether the solution worked, whether it can be improved or whether it failed. Candid reflection is extremely important here; there is no room for being defensive about ideas or allocating blame. Whether a team is open to being corrected dictates how well they are able to make truly innovative decisions.

If a solution does not work, then the team should be open to scrapping it or pivoting towards a different approach. One of the biggest obstacles to the process being the ‘sunk cost fallacy’, which is the reluctance to alter course because of the time and money invested, even though the experiment has failed. This is why it is important to be frugal with the initial iterations of a solution. If a potential failure or setback would heavily affect morale or lose the team a lot of money then the experiment may not be efficient enough.

Summary

In my experience, whatever the version of the lean method, the key takeaway is that teams need to adopt a learning mindset. To be truly innovative, teams need to welcome change, embrace unknowns and get more comfortable with failure.

Every setback, if properly measured and reviewed, is a lesson that contributes to the evolution of a solution. The learning mindset does not end with one project – it needs to be part of the team’s culture and should be constantly and consistently applied. In my view, the legal profession has huge potential for innovation and innovation is something that can be learned.

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