An Interview With Deborah Gordon, Law Firm Efficiency Expert

Today we are interviewing Deborah Gordon, a health law expert and partner at the full service law firm, Seyfarth Shaw. Deborah is one of the most innovative law firm attorneys I have met, and is on the cutting edge in using advanced management techniques taken from the non-legal corporate world to spur efficiency in the legal arena.

Please tell me a bit about your firm and your practice area.

Seyfarth Shaw (“Seyfarth”) has approximately 750 lawyers practicing in Atlanta, Boston, Chicago, Houston, Los Angeles, New York, Sacramento, San Francisco, Washington, D.C., and Brussels, Belgium.  As a full-service law firm, Seyfarth provides a broad range of legal services, including Labor & Employment, Employee Benefits & Executive Compensation, Corporate & Finance, Tax, Real Estate, Intellectual Property, and Litigation.  I am the Vice-Chair of the Corporate Department and I Co-Chair the firm’s Health Care Practice Group.  My practice is focused on general business transactions, such as finance transactions and acquisitions, as well as regulatory and compliance matters.

Your firm is the only one I am aware of in the legal field that boasts substantial experience in Six Sigma, Lean and process improvement. Why is this the case?

About five years ago, Seyfarth invested in learning about and integrating Six Sigma and Lean principles at the encouragement of a few clients.  We invested in training and were impressed with what we learned.  We decided that Lean Six Sigma was the best approach for our firm and realized it could have significant impact for our firm and our clients if we applied it to our service delivery model.

We also understood that the traditional application of these principles was not something that easily applied to the legal services delivery model.  We spent several years tailoring the approach to fit legal services, an approach we now call SeyfarthLean.  Today, we have 75 in-house certified Green Belts and we have applied SeyfarthLean in every practice throughout the firm to deliver quality and efficiency that also delivered client cost savings ranging from 15–50%.  I received my Green Belt in 2006 and have utilized Lean Six Sigma principles in both internal and client projects.

What are some examples of how you’ve assisted clients in their processes that one does not normally find in the typical legal representation?

One is process mapping.  Process mapping is a critical exercise in our SeyfarthLean approach that lays the foundation for increased efficiencies, reduced costs, and other desired outcomes.  A process map lays out, step by step, the process followed in handling certain types of matters.  Each stage is broken down into individual tasks.  Using historical matter data, we take a look at the typical timekeepers and estimated time taken to perform tasks.  We then critique that process, and identify ways we can be more efficient and cost-effective.  Areas that are driving the wrong results—inefficiencies, higher costs—are re-engineered and a new process is created.   We have applied process mapping throughout our practice areas to develop best practices for the benefit of our clients.  Most typical legal engagements are not as data and process driven.

The second is project management.  We worked closely with a client to develop an extensive and detailed plan for organizing, structuring and approaching the project.  Leveraging the skills of one of Seyfarth’s client-facing project managers, our team partnered with the client to review organizational structure, critical path and resource accountabilities while establishing effective reporting protocols.  We then participated with the client in presenting the project plan, goals and the implementation strategy to multiple team leads across many different workstreams.

What initiatives are going on at your firm in the area of knowledge management and associate training and development?

As we apply SeyfarthLean, we continually seek ways to improve our ability to collaborate with and enhance communication internally and with our clients, as well as more efficiently provide services.  One outcome of that is advanced knowledge management tools, including SeyfarthConnect, our internet-based client services information system.  Through SeyfarthConnect, clients gain real time access to information that is pertinent to our work, including documents, budget, correspondence, calendars, schedules, discussions and almost anything related to specific clients or matters.  Furthermore, our team relies on it as a robust knowledge management tool that helps them access information more quickly and effectively to more efficiently work on client matters.  We have employed similar, internal databases of documents and resources to aid in knowledge management.

With respect to training, we are in the process of training all of our attorneys and staff on SeyfarthLean in 2010.  Many of our attorneys have already been trained.  The training includes an overview of Lean Six Sigma and the DMAIC process (Define, Measure, Analyze, Improve and Control) that we use to drive efficient, high-quality solutions for our clients.  We also regularly engage in practice development training and CLE programs for associates.  In the Corporate Department, for example, we are concluding a year-long program of the anatomy of a deal, providing a detailed focused of an M&A deal.  We are planning a continuation of that program into 2011 with the focus on financing transactions.

Do you find that your unique approach better positions your firm in the new alternative fees environment?

SeyfarthLean provides us a unique platform on which to provide alternative fees.  It allows us to base alternative fees on a true understanding of the costs involved in providing services in the most efficient manner, through extensive data analysis and our historical experience providing those services.  Additionally, it provides clients the assurance that when we offer them a flat fee, we are not simply pushing the work down to the most junior staff available.  Our flat fee offerings, for example, are based on right-sized staffing models that drive the greatest result and value for our clients.  Because of this, we have had success with predictable alternative fees.

Thank you, Deborah.

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I think the caste system point is well taken. Interestingly, the caste system affects lawyer KM managers, too, as they usually have less status than many associates at a firm. The unspoken ideology seems to be that either you generate fees, or you do not, and, if not, then you have less status. Ultimately, the “death throes” issue really is at the fore here. Most of the issues I’ve found that librarians care passionately about in managing a collection simply do not overlap well with the daily knowledge acquisition and management needs of the firm. Consider:

• How often does a librarian spend extensive time cataloging material that is almost never used?
• To what degree are acquisitions focused on filling out a typical catalog versus aligning with KM needs?
• How strongly do librarians negotiate vendor contracts (in my experience, hardly at all)?

However, I will grant that KM managers may have blind spots as to certain important library needs. Ultimately, we need a more advanced system that takes into account all of these concerns.

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There’s a nice debate going on right now on this subject within the Legal Innovation Group on Linked In, you can check it out here.  Here’s my most recent comments on the issue, challenging the idea that it is not easy to change the current model (it is, but there is little incentive to do so) and the supposition that managing partners often have firm wide policing to prevent padding (they usually do not):

Gary, I would have to respectfully disagree as to this point “It is not easy or obvious how to accomplish this”. Law firms, being loose federations of individual businesses, each business consisting of an equity partner with a book of business and the willingness to walk away from the firm, would need to do the following:
1. Secure a commitment from each partner with a book of business to make the clients those of the firm.
2. Impose optimized processes using Lean/Six Sigma for doing all of their work and make sure that they are followed.
3. Use knowledge management and software automation to speed up document preparation.

Frankly, Patrick is right, without fixed fees there is little incentive to take these steps, and, in fact, a disincentive to do so. But it would be a straightforward process that is already widely performed in other fields, such as software development.

And:

Chris, I would recommend caution in referring to firms where certain behavior is allowed or isn’t, as I find that firms don’t do much of a job of policing behavior internally, and often times one partner will pad a bill while another partner at the very same firm would find that ethically abhorrent. Also, speaking from the in-house perspective, it really is one’s responsibility to question bills on a regular basis from larger law firms because of this lack of policing. At small firms I find this is less necessary, as you have much more of a chance of establishing a regular relationship and better billing expectations once you’ve removed leverage from the equation.

Perhaps one of the most valuable aspects of PKM is that, for the particular individual involved, you can quickly achieve an unqualified success.

OKM is often hijacked by politics within the organization, resulting in either: (a) a massive change management challenge where the lawyers actively resist or ignore OKM efforts, or (b) OKM that represents a compromise in quality due to “folk wisdom” input from powerful players in the organization (e.g., poorly written contract clauses reflecting an influential equity partner’s preferences, even if they’re rife with legalese and make negotiations more difficult).

None of these problems occur for an individual.  The individual, through the support of a KM expert, can quickly adopt a KM template covering the most common contracts the individual creates and negotiates (in fact, this was how WhichDraft.com’s great contracts were born, check them out here), can set up a simple organizational tree for all research, and can track metrics to document productivity gains (check out our new proposed 3 True Outcomes metric for lawyers here).

Best of all, this kind of PKM can provide the business case to successfully roll out OKM.

Use PKM – it’s elementary, my dear Watson.

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“Why did Constantinople get the works?  That’s nobody’s business but the Turks.”

Alternative rock bands like They Might Be Giants originally emerged because they didn’t fit into any of the genres established by the recording industry/radio axis of musical power, even though listeners yearned for something different.  Alternative music also flowed from punk rock, which itself emerged out of a negative reaction to the dominance of disco and other overly sentimental musical styles.  The music business, like any other, is subject to market forces.  And if an entire industry is not catering to its customers’ desires, then a new, young Turk player will emerge to do so, subverting and reinventing the old Constantinoplesque industry along the way.

Triggered by this NY Times article, people in the legal world are currently wondering if law firms will end the billable hour model and move to flat fees and other alternative approaches (click here for a list of articles on this topic).  Many partners at major law firms are extremely fearful that they are looking at significantly less profits if they switch to alternative fees.  I actually think that partners do not have to accept a drop-off.  They do, though, need to fundamentally restructure the way they do business to make the same or more money than they have with the traditional approach.  And they are tremendously resistant to do so.

I used to be an in-house lawyer at a Fortune 500 company.  On one occasion I had a real estate law firm pitch me.  The partner asked, “What can we do to get your business?” I said, “I think a lot of the word processing and the back and forth on contract versions is a big waste of time. I’d love to see a firm that uses contract creation automation software, and has all of its typical contracts and likely negotiation positions loaded into the software for automatic drafting, using a regularly updated knowledge management system.  I’d also love it if you had an extranet to store all contract versions so we can skip the old email trap of zapping countless drafts back and forth that leads to version control nightmares.  And I’d like you to bill me a flat fee determined up front for each matter.”

He blinked hard, swallowed, and said, “What else can we do?”

His question revealed the tremendous resistance to change in the legal world, where firms are stubbornly committed to a business model that does not meet their clients’ desires for better efficiency and predictable charges.  The irony is that if a firm emerges that would actually embrace an alternative approach, it would have a huge competitive advantage in the marketplace and, in the long run, would make more money by growing its business.  At some point a full service law firm or outsourcing legal services company will step up and seize this competitive advantage (we’re already seeing up front flat fee alternatives from partners like Jay Shepherd of The Shepherd Law Group, a highly regarded Boston employment law firm).

The biggest problem this new player would face is that all of the most desirable clients, major American corporations, have internal legal departments that choose which firm to hire, and all of these departments are populated by lawyers who used to work for law firms following the traditional model.  They’ve all been conditioned to believe that billable hours, unpredictable budgets, and lack of efficiency are par for the course, so they won’t be interested in hiring this new player. Who will then?

Procurement.  Right now, almost everything a major company buys, from cardboard boxes to management consulting services, is handled by a strategic sourcing manager who limits the number of vendors and uses that leverage to negotiate improved quality and lower cost.  These procurement managers are chomping at the bit to control legal services, but, so far, most law departments have fended them off by making the law seem too mystical to tame.  These managers would be the new player’s target market.  If the law department tries to fend off their desire to hire, then the company will have a showdown.  The arbiter will be the Chief Financial Officer, who, as long as she complies with the law, is almost always more powerful than anyone in the legal department.

And Chief Financial Officers love savings.  And Istanbul.  Not Constantinople.

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