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Lean Thinking in the Legal World #2

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Mark Greenhouse

   

   

   

   

   

   

  

In the first post I asked “What is Lean Thinking?”.  In this post I will consider;  

1.   What legal organisations could learn from Tesco (& Zara, GE, Starbucks, Toyota, NHS, MOD, HM Prison Service, HM Court Service etc) and ,  

 2.  How can they use Lean Thinking to transform their organisations?  

3.  If Lean could transform legal organisations what could the results be?  

In other sectors typical results are;  

a)  A 40% increase in workload capacity with the same resources,  

b)  Improvement in employee engagement,  

c) 20% increase in speed to responding to client orders (instructions),  

d)  Dramatically improved customer satisfaction and cash flow, to name a few.  

   

A Lean Legal Journey – Can Lean Thinking transform Legal organisations?  

In Autumn 2009, Seyfarth Shaw LLP, a Stateside based full-service law firm with 750 attorneys, made public their attempts to introduce continuous improvement techniques in the form of Lean Thinking into a Law firm; this was their “Seyfarth Lean” programme.  

In 2005, after suggestions from their clients, such as Motorola, Caterpillar & DuPont, Seyfarth Shaw investigated the potential of Lean Six Sigma (combining Lean Thinking with Six Sigma quality practices). The suggestions from clients were that Seyfarth should be able to demonstrate how it was improving its processes and delivering best value; as any other supplier would be asked to.  

Carla Goldstein, director of strategic management at Seyfarth, stated that earlier this decade, the firm brought in a Six Sigma consultant and gave 35 people in the firm “green belt” training in the process management technique borrowed from the manufacturing world.  

Six Sigma alone didn’t appear to work at first – the solution became Lean  

“We were dying,” Goldstein said. “They came in with these binders of jargon and statistics and numbers and the lawyers’ eyes were rolling around in their heads. We realized the process was what we wanted. The training would never succeed in a law firm.”  

Over the course of a year-and-a-half, the firm pared down the training, got rid of the jargon and left a lot of the heavy statistics for a few people within the project management office so that most of the lawyers wouldn’t have to concentrate on that aspect. The “Seyfarth Lean” model was put into effect in 2006.  

Here you can listen to Lisa and Carla talk about “Seyfarth Lean”, there maybe a short delay of around 10seconds for the programme to start.  

Seyfarth Lean (Mapping the Process)  

   

Goldstein said the process wasn’t instantly embraced by all of its attorneys. The project managers’ work with teams to help facilitate process mapping [Value Stream Mapping], she said. They get together in a room and use sticky notes to map out each step of the process to create visuals for the attorneys so they can see how a matter can be parsed out.  

Mapping the process includes organising matters so that younger attorneys know which steps to handle and supervising attorneys know who is doing what and when so that they can focus on strategy. Firms can see whether too many hands touch a document and can streamline that process. They can ensure the right people are doing the right work.  

Mapping the process is exactly the same type of work conducted by Tesco on one of their first lean projects – the bottling of Cola. They found it took 20 days from bottle manufacturing to a customer walking out of the store with the same bottle and that the process had 150 touch points. One “Lean Project” later and this was down to 5 days and involved only 50 touch points.  

Goldstein and her office have worked with practice groups including real estate, mergers and acquisitions, commercial litigation, immigration, labour arbitrations and several others in implementing Lean Thinking.  

This shows that Lean currently shows no bounds in this legal organisation and may be at odds with UK firms who have decided to retreat from supplying certain markets and become niche rather than take up the mantle of improvement.  

Asking and Teaching Clients  

“Not only did we create efficiencies internally,” Goldstein said, “but we started to bring it to the clients.” Once the internal mapping was handled, the firm would take the maps to the clients so they could look at the process, know what was expected from all parties and offer suggestions for driving out inefficiencies. The process helps both sides have a clearer understanding of what the matter will cost and shows the client the firm is committed to providing this pricing, Goldstein insisted.  

What did Seyfarth achieve with Lean? The results of Lean Thinking.  

  A cost reduction to Clients of between 15% and 50%!  

Yes up to 50% reduction in legal costs and therefore time to complete client instructions, in many of their departments.  

The typical cost up model, favoured by most organisations is based upon  

Selling Price = actual cost + profit (courtesy of Taiichi Ohno again)  

Being able demonstrate that you have cut the actual cost, through continuous improvement, means that you can reduce the costs to your clients. Some advocates of lean projects will encourage organisations to simultaneously:  

-  Reduce the costs to clients and  

-  Increase your margins, a powerful WIN-WIN.  

From our knowledge of lean some of the cost reduction achieved at Seyfarth, will be in the costs of accessing, gathering and recording information. However some of this reduction will relate to the time spent on the legal process so Seyfarth Shaw will have increased the speed of these processes, making them:  

-  Faster on delivering client instructions  

-  At a lower cost.  

Risk free, Fixed-fee Reality  

   

An effective fixed fee model process has also been introduced by Seyfarth Shaw. This will have been a benefit of having undertaken the Value Stream mapping, removing processes that didn’t add value and improving the quality and speed of the processes left in.  This fixed fee approach has been particularly strong in the Mergers & Acquisitions area of operation where the cost savings to the clients have been in the region of 15%, though the effects of Lean have been felt in many specialist areas as noted previously.  

Without going through all the Six Sigma Quality maths work, which Seyfarth decided didn’t work for them, the fewer the number of processes and the more in control those that are left are, the less likelihood it is that risks are introduced.  

If your value stream is understood up front and the part that your customers and suppliers play in it well documented then you should be able to demonstrate where you require their input, why and how important the input is and its’ timing in the whole process.  

This sharing of the value stream helps establish all the processes associated with a particular client solution (product/service), helping Seyfarth to demonstrate what their clients are paying for and helping the client to fully understand where and why the fees are built up.  

What other benefits have Seyfarth Shaw seen?  

Strategic: The Association of Corporate Counsel, for example, has noted that what Seyfarth Shaw is doing with SeyfarthLean is “five years ahead of every other AmLaw 200 firm,” referring to a list of the [US] nation’s 200 highest-grossing law firms.  

Client Attraction: When Lisa Damon, chair of Seyfarth Shaw’s employment practice, told a gathering of United Technologies Corporation* lawyers about how her firm pores obsessively over data to set and manage alternative fee arrangements, the company’s in-house counsel swarmed around Damon like groupies & Peter Gutermann, general counsel of business unit Pratt & Whitney, got so excited he grabbed the microphone and announced that Seyfarth Shaw would be getting a lot of his business.   

* United Technologies Corporation owns Otis Elevator Company (lifts), Pratt & Whitney (commercial & military aircraft), Carrier Corporation, (global leader in heating and air conditioning units), Sikorsky Aircraft Corporation (helicopter) and Hamilton Sundstrand Corporation (aircraft engines and control systems)  

What could it mean in the UK?  

Lean has been successfully transferred around the globe and to many different sectors. The example at Seyfarth Shaw demonstrates that it has the same effects and results for a legal organisation. There will be those that reach out to understand what Lean Thinking is and whether they could learn from it, there will be those who choose to ignore it.  

If the effect of Lean Thinking in this sector is the same as elsewhere then the future, long term winners, may well prove to be those inquisitive enough to ask “Could it just work here?”  

So if you’re:  

-  grappling with the effects of the recession,  

-  attempting to define your strategy in view of the coming changes in the market,  

-  trying to find a new, better, effective way,  

could Lean Thinking be part of the answer for you?  

Mark  

                                                                                                                        Mark Greenhouse of resQ Management Resources was invited to write this blog for Trouble Ahead and he’s always ready for a chat about lean.  

  You can catch more of his insights into Lean Thinking at  

Ÿ  www.theleanmanager.wordpress.com (blog)  

Ÿ  or read more about Lean at www.resqmr.co.uk  

Ÿ  or follow him on www.twitter.com/theleanmanager.  

  

 


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