Avoid Litigation Surprises with Legal Project Management Software

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1 For in-house litigation counsel, there is no safe haven. Difficult constituencies and the surprises they can generate approach from every direction. First, there is your opposing counsel, paid to keep you offbalance. Second is your outside counsel, an unfortunate source of shifting plans who often can t seem to deliver much of anything on budget; doesn t understand that winning at all costs can be almost as bad as losing; has a definition of a win that doesn t always square with your goals; and too frequently tells you about tactical and strategic decisions after they are made. Unexpected large bills appear without warning and reflect substantial activities that were not cleared with you and that are allegedly the result of that unpredictable opposing counsel who is somehow to blame for all the overruns. And let s not forget your own boss, who is more than a little dismayed by these overruns and the lack of meaningful progress, not to mention your inability to give detailed, current status reports on demand. Unfortunately, surprise has become the expectation, and there has been no easy answer. Avoid Litigation Surprises with Legal Project Management Software By John S. DeGroote and Donald A. Loft ACC Docket 36 November 2007

2 To: You From: Your Opposing Counsel You can bring me good news. You can bring me bad news. But never, ever bring me a surprise. One CEO to his new chief litigation counsel To: You From: Outside Counsel ACC Docket 37 November 2007

3 How Did You Get Into This Mess? There are several answers to that question. First, you are experiencing budget overruns because lawyers aren t very good at making budget estimates in complex cases. This is no secret litigators virtually never embrace the budgeting process, and even experienced trial lawyers tend to think in big picture terms of their last two or three litigation experiences when giving budget estimates. Would a general contractor ever price a skyscraper that way? Of course not; this building may have some similarities to the last one, but at the microlevel it will have many differences that will impact the cost and time to complete. General contractors, after truly understanding the owner s needs, break the new skyscraper down into its smallest components and then, using years of experience, price each of those components as uniquely configured for this project. Second, disconnect between the client and the lawyer s definitions of a win, is often caused by lack of communication all along the way. Litigation is frequently a high-speed fire drill to get the complaint or answer filed, and then, once the ball is in play, the process can become reactive rather than proactive. All too often, the game is well under way before client and lawyer define victory in this case and discuss how to actually get there. Third, in the heat of the litigation battle, outside counsel often move too fast to secure, and integrate, tactical and strategic input and sign-off from the client who knows what he or she wants to achieve and at what cost. Outside counsel often report on events after the fact, surprising even their own in-house legal teams who are told to never, ever bring [their clients] a surprise. Not to belabor the obvious, but efficiency, transparency, and accountability are not always the highest priorities of outside counsel. Perhaps this is why a study published this year by BTI Consulting Group, Inc., reflected that only 30 percent of general counsels nationwide were satisfied with their primary law firms in If 70 percent of those GCs are unhappy, you can rest assured it is in some measure due to litigation costs for work that, unlike transactional work, no client wants to undertake to begin with. How Do You Control the Unpredictable? Today the answer is simple: predictability of cost, result, and how you ll get there can be achieved through a strategic use of process and technology that combines: John S. DeGroote currently serves as deputy general counsel legal risk management and chief litigation counsel at BearingPoint, Inc., a global management and technology consulting firm. He can be reached at john.degroote@ bearingpoint.com. Donald A. Loft is a litigation partner in the Atlanta firm of Morris, Manning & Martin, LLP and is a leader of the firm s litigation legal project management team. His practice is devoted primarily to corporate litigation. He can be reached at dal@mmmlaw.com vigorous early case assessments; a rigorous and detailed budgeting process with mechanisms for mid-course modifications and regular periodic updates; a cooperative partnership between inhouse and outside counsel that establishes tactics, strategies, and overall goals at inception, and formally updates both sets of lawyers as required throughout the litigation; and greater transparency into the day-to-day activities of outside counsel and greater accountability with respect to achieving short-term and long-term litigation goals on budget and on time. Believe it or not, the system needed to achieve predictability is at our fingertips and is used every day in corporate America, although like so many valuable business concepts, law firms have ignored it. The system is called project management. If you ve interacted with the construction industry, you may have seen computerized project management in action since general contractors have used it for years to track the progress and costs of large construction projects. Project management is not a catch phrase dreamed up by some marketing director. It is a well-developed body of science with its own processes, technologies, certified professionals, trade associations, and body of literature. So far, lawyers have not been a part of that world, but that is about to change. Chances are that the company you work for uses project management in running its business. If it embarks on developing a new product, opening a new plant, launching a new marketing campaign, or starting some other significant project, you can almost be assured that project management processes and technology are put to work. A project team will be established that will determine the project s scope, objectives, and requirements. The team will prepare a plan, with timelines and milestones, and get buy-in from the relevant team members. That plan will be entered into one of several popular project management software applications. Project status will be continuously communicated electronically within the project team and to other interested parties. Project risks will be identified and managed. Once the project is completed, its results and effectiveness will be reviewed and process improvements will be identified. In fact, your company, like many, may have its own project management office that supplies this service across the company to many constituencies. Now, when your corporate legal department under- ACC Docket 38 November 2007

4 takes a major project, be it litigation or transactional in nature, do you employ project management? Do any law firms you use offer to employ project management processes and technology in providing you legal services? We didn t think so. Project management is a growing force in the business community. Most Fortune 500 companies have a project management office somewhere in their organizations. The Project Management Institute (PMI) now boasts more than 160,000 active members. In a recent survey of 250 senior executives conducted by PMI, 94 percent said they considered project management to be a valuable company asset, and 92 percent agreed that, utilizing professional project managers is an effective way to ensure success. Of those companies with $500 million or more in revenue, 87 percent have used professional project managers. Project management is now a required course in many MBA programs. Despite the obvious importance of project management for successful companies, law firms seem to remain ACC Extras on Litigation Management ACC Docket Tips & Insights: Litigation Management for Small Law with Joe Catalano (2006). Joe Catalano is a senior vice president and chief litigation counsel at Union Bank of California, where he manages the litigation group. Union Bank of California is a super-regional bank with $55 billion in assets and 11,000 employees, including 30 attorneys. Read this interview to find out what Catalano has to share about litigation management. Articles Applying the Legal Hold: Tips for Preserving Evidence in High-Stakes Litigation (2007). With changes to the Federal Rules, the landmark Zubulake and Morgan Stanley cases, and the Supreme Court analyzing how document retention policies are enforced, corporate practices around the retention/destruction of electronically stored information (ESI) have never been more important. Read this article from LexisNexis to find out what you can do to preserve evidence in high-stakes litigation. ACC has more material on this subject in our Virtual Library SM. To create your personalized search, visit www. acc.com, click on the Research pull down menu button, then select Virtual Library. Type in your keywords and search to see the other resources we have available. blissfully unaware of project management and its potential to increase the effectiveness and efficiency of legal services. Project Management for Litigation Project management has two pieces processes and technology. Processes are the human activities involved in: defining the project and its scope, establishing short-term and long-term goals, creating a detailed, comprehensive task-by-task action plan, budget, and time frame for achieving those goals, measuring progress and actual versus budgeted time and expense as the project moves forward, and amending the project plan and budget as circumstances dictate. The technology component brings discipline, structure, and automation to the processes and provides a critical communication tool for sharing project information among the various participants. There are a number of project management software applications that can be used across industry lines and tailored by the users for the particular kind of project being undertaken. We are not aware of any software applications now commercially available for legal project management, let alone for litigation, with all of the twists and turns and hundreds of individual tasks that are involved in any given lawsuit. Accordingly, what a law firm must do is build a computerized litigation project management system from the ground up a system itemizing virtually every task involved in litigation from the first attorney-client conference through the trial of the case. 1 When a new case is undertaken, each task line likely to apply to the case must then be populated with information concerning the personnel who will handle it, their hourly rates, and the number of hours budgeted for the task, as well as start and finish dates. The project management system will impose the discipline required to perform vigorous early case assessment, shortterm and long-term goal setting, a budget for time and expenses, and an overall game plan for conducting the litigation, all of which are then approved by the client and outside counsel and updated and modified as the case progresses and the inevitable vagaries of litigation set in. The well-designed litigation project management system will generate Gantt charts (a type of bar chart that reflects a project s progress), progress reports, and executive summaries which provide the client with complete up-to-theminute electronic information on the status and progress of the case including actual costs versus budgeted costs and task completion. Not only will this impose a tremendous planning and communication discipline to case management, but it will be a terrific organizational tool and will provide transparency and accountability which remove the mystery and cost efficiency fears that make litigation so painful for clients. ACC Docket 40 November 2007

5 jovercoming the Hurdles to Establishing LPM What are the hurdles and can we overcome them? Obtaining access to an LPM system There are many portfolio management systems available which give high level status reports on a company s entire array of pending lawsuits and claims. However, we are unaware of any commercially available LPM systems which automate the creation and maintenance of detailed task level project plans and budgets, as well as reporting tools to be used on a case-by-case basis. At least one law firm has created its own such system and has applied for a patent. It is believed that one or more legal technology vendors are developing such systems. The authors expect a commercial version of LPM to be available to the legal community in early or mid Getting outside counsel to use an LPM system Most law firms are not eager to embrace LPM since some of its key objectives are to enhance efficiency and reduce corporate legal costs. There are two primary reasons for law firms to adopt LPM. The first is if their clients mandate it. The second is if they believe they can increase market share by using it. Thus, it is largely going to be up to in-house counsel to provide the impetus to get the LPM ball rolling. Once it catches on, many law firms will likely jump on board so as not to suffer a competitive disadvantage. Paying for an LPM system As is the case with any legal support technology, there is often a challenge in getting the funding to build or buy it. If your company employs project managers, as most do, they can collaborate with your IT personnel and attorneys to construct an LPM system for most any practice area, using one of the available project management software tools as a platform. In our research, however, we have discovered weaknesses with these platforms, as they have not been designed to meet the specific and unique requirements of attorneys. In the relatively near future, LPM software will become commercially available. In a market survey of law departments we conducted, 94.7 percent of the respondents stated they would consider purchasing an LPM system if they could obtain a percent ROI through a reduction of legal costs. Given the millions of dollars in legal costs incurred each year by most larger companies, it would take only a very modest percentage reduction in cost per matter handled to generate a significant ROI. What would a percent reduction in legal costs save your company? What if you could pass some or all of your LPM licensing fees on to outside counsel? The overall cost savings could dwarf the expense side of the ledger. Justifying an LPM system beyond the direct cash ROI LPM can do much more than provide a direct way to reduce corporate legal budgets. To begin with, it will produce much more thorough and reliable project budgets which, in turn, will enhance the predictability of costs. This should make the jobs of the GC and CFO a lot easier. The collaboration required between in-house and outside counsel to develop and approve the project plan, and future changes to it, give the corporation more control of the scope and cost of the work being performed. Regularly scheduled status reports with Gantt charts and the like will keep corporate counsel up-to-date on work completed and costs incurred as well as actual-to-budget comparative data. Thus, the information necessary to answer the ad hoc inquiries of senior management would always be at hand. Law firms would gain as well. An LPM system is an effective tool to manage a case team or multiple case teams. The project plan is a great educational tool showing associates all the necessary tasks in a litigation matter, how much work is anticipated for each, and what the completion deadlines are. Transparency, communications, and accountability are enhanced for all participants, both within the firm and with the client. Of course, LPM would provide a competitive advantage in the marketplace as well. This could be especially important in the context of mass torts where accessibility of case specific information across hundreds or thousands of cases can be vital to both law firm and client. Implementation pain As the doctors are fond of saying, you may feel a little discomfort when I start this procedure. We all know what comes next. The implementation of new technology takes leadership, willingness, and work. The first and most important component is the leader who recognizes the value of LPM and is ready to make it happen. With leadership committed to succeed, the team is well-positioned to overcome the challenges associated with implementing new technology and a new way of managing cases and outside counsel. It is up to the system developers to build ease of use, scalability, and security into the system. The system builders must work hand-in-glove with potential users to make certain the functionality is adjusted to the mission and that lawyers, who are not professional project managers, have the skills necessary to use the system. Starting with smaller scale pilot projects is a standard methodology in the software development world that should be seriously considered. Security and the maintenance of the attorney-client and work product privileges must be attended to, just as they are with current document or portfolio management systems. When the LPM software solutions start hitting the market, the consumers will decide in short order which vendors have successfully held implementation pain to a minimum. ACC Docket 41 November 2007

6 jtop Ten Reasons to Adopt Legal Project Management (LPM) 1. Greater Cost Predictability A Systematic Approach to Enhance the Reliability of Fee Estimation By introducing a highly detailed, systematic approach to identify specific task-based time and resource requirements for a particular legal matter, coupled with relevant historical data, LPM raises legal budgeting to a new level of reliability far beyond the traditional high-level, seat-of-the-pants methodologies. A detailed fee estimate based on an analysis of the specific requirements of the legal matter provides a sound basis for clients to make better business decisions. 2. Regularly Scheduled Status Reports on the Progress of Activities and Costs in a Clear and Concise Format Both detailed and high-level status reports can be electronically transmitted in a clear and concise format. These reports could be generated by the LPM system at any desired interval monthly, weekly, or even daily. Readily translatable for use by management, LPM status reports provide current information regarding tasks completed to date, those tasks which remain outstanding, and fee status. 3. Solicitation of Prior Input From Clients With Regard to Tactics, Strategies, and Resources Expended To input the client s project into the system, counsel must go through a checklist of key decisions with the client, which shapes the approach to the work. Subsequently, counsel must revisit these decisions with the client as facts change. Thus, clients would have greater input into, and control over, the work to be performed and strategies implemented. no longer fly below the radar. LPM gives the client an opportunity to fully view the effect of changes through periodic status reports and project plans. 6. LPM Promotes Transparency and Accountability of Outside Counsel The nature of the legal work performed, the timeline for that work, and the budgeted and actual costs of that work, are continuously transmitted to the client through the electronic reports that the system generates. Thus, the game plan is visible, as are the stages of completion of all tasks and the actual expenditures as compared to budget. Clients no longer have to take the initiative to keep up-to-date on their counsel s activities. 7. LPM Avoids Negative Cost and Outcome Surprises Transparency, accountability, and overall communication are significantly enhanced by LPM and reduce the knowledge gap between outside counsel and clients. Surprises can t always be eliminated, but they can be dramatically reduced. Moreover, projects led by a responsible manager usiing state-of-the-art management tools are simply more likely to be completed on time and on budget. 8. LPM Gives the Client Forewarning of the Demands on the Client s Staff The LPM project plan includes a client staff component, which designates significant tasks and time requirements for work to be performed by the client. Thus, the client is fully aware of the resource commitment necessary and can plan accordingly. 4. Client Input and Involvement in Settlement Strategy and Timing The LPM system, as applied to litigation work, requires early case assessment and identification of logical settlement breakpoints in the case to be discussed with, and pre-approved by the client. Together, counsel and client estimate the value of the case and establish dynamic settlement goals and parameters that can be modified as the case progresses. 5. LPM Imposes a Change Management Discipline Tasks, time, and resources are essential components in the development of any LPM project plan. The system requires communication of changes in the case, as well as the impact of such changes on the matter. Communication is achieved through the production of clear and concise status reports, constantly modified for developments in the case. Substantial changes in timing, cost, or strategic approach of a legal matter 9. LPM Provides Enhanced Efficiency Through the Promotion of Control Over Attorney Assignment In LPM project plan design, decisions on attorney assignment are made up front. Attorney names and hourly rates are input into the system and as part of the fabric of the plan. Changes in staffing, as with all significant plan modifications, must be approved by the client. 10. LPM Enhances Early Risk Identification and Executive Buy-in The LPM process involves the creation of an executive summary document outlining risks, tactics, strategies, and goals in a format easily utilized by senior management. The executive summary document is modified over time to reflect any changes in the incorporated assumptions. In-house counsel can use this concise document to memorialize management buy in and approval for future reference. ACC Docket 42 November 2007

7 A good legal project management tool will formalize and systematize at least the following essential activities: establishing project objectives and budget; identifying requirements and risks for achieving those objectives; identifying stakeholders, team members, and responsibilities; developing a project plan; managing project risks to achieve objectives; adapting project plan for changes in circumstances; reporting progress to team members and stakeholders; and reviewing and analyzing project results. Just about any client or litigator would acknowledge the need for and value of these activities in connection with complex litigation, but it takes discipline and structure to accomplish them all in each case. Litigation project management may not solve all of your litigation control problems, but there are some great things it could do. It will replace the old seat-of-the-pants budgeting process with a vigorous task-by-task analysis that is likely to be far more accurate and result in a realistic PS8009 3/15/07 budget 9:29 that minimizes PM Page unpleasant 1 surprises. It will force the corporate law department and its outside counsel to engage in an early case assessment, which is a huge advantage when mapping out tactics and strategy for both conducting the case and resolving it. The system will also provide in-house counsel with virtual, real time reporting on case events, progress, and costs so that status reports can be provided to management on demand. It will bring added accountability to outside counsel in terms of delivering work on time, within budget, and with client approval. It will lay out the assumptions on which budgeting and case strategy are built so that all participants can start in the same place, and can identify when and where those assumptions change and what effect they are likely to have on costs and results. All of these advantages of litigation project management will serve to enhance good relations among outside counsel, in-house counsel, and the clients they serve. Those changes in the process would truly be a welcome surprise. Have a comment on this article? editorinchief@acc.com. Note 1. Currently, the authors are aware of one such system in use by a law firm. Discussions are under way to bring this system to market. Eighty-nine percent of knowledge workers regularly forward copyrighted content.* Do your employees understand the risks of copyright infringement? Thousands of companies large and small rely on Copyright Clearance Center for their content licensing solutions. Shouldn t yours? For a copy of our FREE guide, Top 10 Copyright Pitfalls, visit or call us at ext *Outsell, Inc., The Global Copyright Infringement Pandemic, July 29, 2005.