Worried about managing cost of complex matters when pricing by value? Consider Agile techniques

It is not uncommon to hear lawyers say that, while they like the concept of value pricing, it could not possibly be applied to their practice area.  One of the reasons cited most often in support of this assertion is that their practice area is just too complex for value pricing to work.  Underpinning pleas about complexity are worries about scoping matters (cases) properly and managing costs effectively.

I suggest an ‘Agile’ approach to managing legal work is particularly well suited for certain matter types, especially where a fee reflecting value delivered rather than time spent on the file by the lawyer(s) has been agreed with the client.  When value pricing, from a project delivery point of view, the key question to be asked is:

What costs can we afford to incur on this project given the price obtainable from the client and still earn an adequate profit?

It will be noted the emphasis here is on cost containment rather than cost reduction as such. My contention is that Agile techniques, applied appropriately, increase the likelihood of being able to contain costs to within acceptable tolerances.  Agile techniques can also help to scope better and exercise greater control over the ‘build and delivery’ effort of legal service delivery.

So what is Agile?  I like the definition proposed by Mike Cohn of Mountain Goat Software

Agile is an umbrella term used to describe a general approach [to software development]. Though there are many agile incarnations, all agile processes, including Scrum emphasize teamwork, frequent deliveries [of working software], close customer collaboration, and the ability to respond quickly to change.

I have bracketed out reference to software development as, for the purpose of this post, I think ‘legal work’ or ‘legal services’ could be substituted instead.  As is well known (and apparent from the quote) the Agile movement originated in, and is still most closely associated with, the field of software development.  I have seen software development teams which have transitioned to an Agile framework become more productive and responsive to client need.  I believe that, given the right circumstances, lawyers could also become more productive using Agile and this approach could also help alleviate concerns about scoping and cost management when value pricing.

Agile techniques appear to be more successful relative to other project based methods where:

  • There is a complex endeavour requiring teamwork
  • Detailed client requirements may be hazy at the outset (and therefore likely to change as the project progresses)
  • There is a high level objective to be attained by reference to a fixed event or date.

When considering legal services, these criteria seem to fit what has become known (in the U.K at least) as ‘project’ legal work.  The legal practice areas most likely to be considered as project legal work are:

  • Dispute Resolution (especially areas such as complex construction disputes)
  • Banking and Finance
  • Commercial Property transactions
  • Legal aspects of software development and IT installation
  • Corporate and Commercial work including M&A activity.

While I think some aspects of Agile may be applied with success to other practice areas, it seems to me that those listed above are likely to benefit most from an Agile approach given their general profile.  Typically project work found in these practice areas has the following characteristics in common:

  • The matters are large and complex and they require teams of legal professionals to work on them if objectives are to be achieved within the timescale required.
  • The matters are so time-consuming that some team members may be engaged on just one matter at a time – this is not high volume work.
  • While the detailed outcome may be uncertain, the overriding objective is clear enough – for example, where a commercial landlord asks for a review and revision of its commercial leases with a view to, say, selling off some properties by a certain date.
  • The legal work is capable of being divided up into a number of delivery stages – clearly the matter will only be completed when the final stage has been delivered, but interim delivery stages where the client sees outputs from each stage can be devised.

Roya Behnia has called for an Agile Manifesto for Lawyers and that:

The values underlying this call to action could include (1) continual collaboration with clients; (2) a commitment to flexibility and rapidity; (3) direct communication rather than complex documentation; (4) continual focus on client goals; (5) realistically weighing risk; and (6) a strong bias toward simplicity.

Laudable aims that few would disagree with.  In my next two posts I will:

  1. Explain in some detail how Agile could work in a law firm conducting project based legal work, especially in the context of value pricing.
  2. Consider why Agile techniques do not appear to be as widely used for legal service delivery as I think they should be and suggest ways of overcoming objections to adopting Agile and also improving the likelihood of successful Agile implementation.

In the meantime, if you have any experience of applying Agile processes in law – whether it turned out good, bad or indifferent – I would be really interested to hear from you.

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