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  Embryonic Art Meets Science

Author: Richard Stock - Lexpert (September 2013 at p. 90)

I RECENTLY HAD the experience of requesting estimates for two complex files from three law firms and two expert consultant firms. Our client wanted some predictability in pricing for budget-planning purposes. One case, a commercial file, was on a fast track: five months. The second case was a litigation/administrative-law matter with an 18-month horizon. Each of the five firms had a defined role, so there was no competitive process to secure the work. The timing and unique nature of each file, however, suggested that reliable estimates of phases and tasks would be a challenge for firms to prepare.

Each firm was asked whether it had experience in project planning and the preparation of the related budgets. Two of the three law firms said they had experience, and one of the expert consultancies did as well. But after some discussion, it became apparent that each firm had its own way of preparing plans and estimates. For most, it seems, legal project plans and budgeting are an embryonic art form.

Because each of the firms had already been retained, it was easier to provide them with two forms that they could customize. The first document was a distribution of labour/hours by phase and task, with specific phases and tasks defined. Firms were invited to add tasks or skip over those that did not apply. An additional feature required that the time for each fee earner be distributed by level of experience. This exercise was mathematical.

The real challenge for the firms was in listing the planning assumptions and the degree of probability for each phase and major task. This information really helps the conversation with the client when it comes to understanding the relative complexity of the work and why certain members of the firm should be called upon to carry out certain tasks. Because the lead times for this process were quite short, the firms were invited to define the scope of work in their own words, based on prior business with the client.

The second form given to each firm arranged the same data by the individual professional for the reference period, and it included billing rates. Pricing was on an hourly basis for both matters. One could then see whether the distribution of the work was appropriate. In every case, there was an insufficient use of technical and paralegal staff for research and document preparation. In the case of two of the law firms, there was also insufficient use of associates in witness preparation.

Our experience suggests that many professionals have too little experience in using qualified paralegals, often because they themselves once performed "paralegal tasks" when they were young associates. The pattern is repeated and so one sees that half of the work of first- and second-year associates would be more appropriately handled by qualified litigation and research paralegals. Unless the client probes to this level of detail and presses the firm for an alternative distribution for some of the work, the overall cost of the matter will be 20 per cent higher than it should be.

The underlying question, when it comes to planning and budgeting projects and matters, is whether the pain is really worth the gain? It certainly is from a financial point of view -- yet there are other important considerations.

The client, who is usually in-house counsel, may have no experience with the fundamentals of project planning and bThe real advantages I find in this type of planning detail are that the scope of work is defined up front by more than a phone call or a short email. Beyond this, the assumptions and their probability for each phase and major task are reduced to writing. The discussion occurs up front, and the onus is on the firm to respond. Firms will readily do so -- it is to their professional and financial benefit because it introduces structure and improved profitability.udgeting as it applies to complex legal files. In a booming economy, it was always easier for the client to ask for a 10-per-cent discount and perform a detailed audit of the bills after the fact. Some clients worry that having “the talk” with their lawyers or experts will somehow sour the relationship and maybe even compromise service levels and results.

Both the client and the law firm have a role to play in securing detailed estimates, and clarity about the conditions and budgets for complex work. Experienced consumers of legal services do this as a matter of course for files over 50 hours. And some law firms have discovered that it is a competitive advantage to offer it before being asked. The benefits are there, even if there are no guarantees.

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