1 LEGAL PROJECT MANAGEMENT Cost management of litigation is becoming a focus of legislators in both Australia and the UK, in an attempt to streamline litigation and ensure costs are proportionate. The Civil Procedure Act 2010 (Vic) introduces cost budgeting as part of case management of trials. Lord Justice Jackson in his report on English Civil Litigation Costs, has recommended Judges settle cost budgets. This is now being trialled throughout the U.K. When faced with estimating costs, many lawyers respond "How long is a piece of string?" Providing clients with an accurate estimate of legal costs, with serious penalties for failure to do so, has been a feature of the Australian legal landscape for a number of years. Use of alternative pricing methodologies is also increasing as a result of client pressure for cost certainty. Effective cost management is the only means of addressing these two issues. Cost Management Cost management has two facets - cost budgeting (including case planning), and matter management to keep the costs within budget. In other words, it requires the application of some basic project management skills. Effective cost management also requires a change of mindset for many lawyers acceptance of the maxim "Better is the enemy of good". In managing any project, small or large, there will be a number of steps. The amount of work which goes into each step will vary depending on the complexity of the matter. On a practical basis, there is no point in spending hours in planning and managing a matter that is only going to involve a couple of hours work. But even for the smallest matter, a little time spent planning will reap benefits. Planning involves balancing what is know in project management circles as the iron triangle Time Scope Resources
2 It also involves balancing a second triangle which comes from manufacturing: Time Cost Quality This where the mantra better is the enemy of good comes into play. The difference in terms of cost and time in improving a document from 90% to 95% perfect is often not justified. Steps in Project Management Define the project. Understand and scope what needs to be done agree the objective and what done looks like. In project management terms, this is the project charter and statement of work. Risk Management - Identify risks and gaps and plan how to deal with the major ones. Developing the strategy - plan what work needs to be done to achieve the objective. In project management terms, this is developing the work breakdown structure (WBS). Developing the roadmap - Plan who will do the work, when the work will be done and assign tasks. In project management terms, this is the critical path. Establish the budget price the work, taking risks, assumptions and contingencies into account. Agree a communications strategy for the client, and for the project team. Manage the projects in time, to agreed quality and to budget. Identify and negotiate changes in scope. Review the matter at conclusion for lessons learned. Let s look at each in turn. 2
3 The Project Charter and Statement of Work (SOW)- Working out what the client wants, what the client needs, and what you can deliver The project charter is the document which gives authority for the project. It will detail the project description (what), the client objectives and reason for the project (why), the project deliverables (acceptable outcomes) and the statement of work. It may also detail the justification for the project, resources, stakeholders, stakeholder requirements, the overall requirements (including resources allocated), and approval requirements (who has final sign off). For lawyers, it will often be contained in the client retainer agreement. The statement of work defines the scope of the project including what is within scope and what is excluded. It also details assumptions regarding the extent of the work, how and where the work will be undertaken, and the responsibilities of the client. Careful scoping of the work is vital for a successful project, and mandatory if a fixed fee is to be charged. Accurate scoping involves taking comprehensive instructions from the client about both legal and business/personal expectations. Part of this should include discussing the client's expectations on costs. Communication is the key to avoiding cost disputes, and it is important, from day one, to manage expectations as to both result and cost. The discussion about the client's expectations should canvas their level of involvement in the matter and their expectations of you as a lawyer. Are they the sort of client who requires detailed written reports on progress, or who phones once a day? Do they "need their hand held"? Are they happy to take on some of the work themselves e.g. undertaking preliminary review of discoverable documents? Identify the objective Agreeing the objective is the starting point for scoping the work and ensuring that the outcome meets the client s expectations. Ask the questions: What does the client want? Why does the client want this? What is the problem to be solved? What does the client need (may be different from what they want)? What outcomes are possible? What outcomes are acceptable? 3
4 Does the client have a budget or expectation about the level of cost? Are there deadlines? What is a realistic schedule? Who is the final decision maker at the client? How does the client define value? This latter question can clarify the focus on the matter. It can lead to a discussion about the value you are delivering, (which is not measured by the hours you spend on the matter). The answer helps define what the client sees as a reasonable ROI, and can result in a change of scope, in order to meet the expected ROI. In large, complex projects you might have separate objectives for each stage of the project or perhaps even separate objectives for different working on different aspects of the project. Risk Management - Identify risks and gaps and plan how to deal with the major ones Brainstorm the possible risks. Brainstorming and mind mapping can be great tools, particularly when used with a team! This should be done with the whole team because when people identify what can go wrong, they are more likely to take steps to avoid the risk, and are prepared to deal with something if it happens. Some risks often not taken into account are: Other parties involved in the matter and their likely attitude The relationship between the parties The nature of the opposing lawyer and previous experience of same The availability and likely cooperation of witnesses Resource availability Lack of Skills Wrong resource Under/over resourcing Unclear methodology Lack of access to information Client/opposing lawyer churn Political/Policy 4
5 Use a risk analysis template to identify the risks that would have the most impact, and then plan how these can be avoided, mitigated, or resolved. You don t have to plan to deal with every possible risk choose the most significant. Define the scope of work Once you have identified the objective, the next step is to create the statement of work, which sets out the objective and defines the project scope. It should set out what done will look like. Just as important as setting out what work is within the scope, is detailing the exclusions (what you are not going to do), and the assumptions. Examples of assumptions include: What work is going to be undertaken by the client (e.g. that they will undertake initial vetting of all documents in their possession) The present state of play with existing documentation/instructions (e.g. that all relevant documents have been disclosed by the other party). The likely timing of matters which are dependent on third parties (e.g. that the expert witness statement will be provided within 1 month of the witness receiving formal instructions). Limits on negotiations or numbers of drafts of documents. Any uncertainties that may significantly vary the scope. Timeframes deadlines are likely to increase costs due to the need to add additional members to the team. It is a matter of judgement as to how far you go in detailing scope, exclusions and assumptions. It may also be a matter of pressure time pressures, or pressure from the client to just get on with the job. But the larger the matter, the greater the risk of argument down the track, if you do not prepare a detailed scope of work. The statement of work needs to be provided to all so that everyone is on the same page about what is being done. For litigators, the team is likely to include counsel. Developing the Strategy what needs to be done, how and when? In any large matter, break the work into phases. It's easiest to identify the big rocks and then fill in the gaps with the pebbles and sand. But remember to add to the cement. Let's look at an example in litigation. 5
6 Big Rocks Initial instructions Preparing pleadings Preparing witness statements Discovery Interlocutory hearings Mediation Pebbles Initial instructions o Receive and review initial instructions o Undertake preliminary review o Identify crucial documents and witnesses o Plan the matter and create a budget Preparing pleadings o Interviewing the client to take instructions for a statement of claim o Reviewing documents to the purpose of drafting statement of claim o The initial draft of the statement of claim o Second review of the statement of claim o Preparing a brief to counsel to settle the statement of claim o Reviewing the statement of claim settled by counsel o Sending a settled statement of claim to the client o Discussions with the client to confirm the statement of claim o Reviewing the final draft o Filing with the court o Arranging service on the defendant Sand Initial instructions o Receive and review initial instructions Open new file, create database information for use with practice management software o Undertake preliminary review Research law o Identify crucial documents and witnesses Provision of advice to the client about possible options to enable them to provide instructions about what to be included in the client 6
7 Provision of advice regarding possible settlement options to be explored prior to proceedings being issued Possible work in settlement negotiations o Plan the matter and create a budget Additional time required to clarify any the client's expectations wants and needs prior to finalisation of the statement of claim Preparing pleadings o Interviewing the client to take instructions for a statement of claim Making arrangements to interview witnesses Possibly a second interview required after review of documents provided or to clarify initial instructions o Reviewing documents to the purpose of drafting statement of claim Obtaining the relevant documents from the client Identifying and obtaining missing or additional documents required Collating the document so that they are in a useful order o The initial draft of the statement of claim Any research on points of law Going back to the client to clarify instructions Identifying further people who need to be spoken to obtain instructions Going back to the documents to clarify aspects Identifying any precedents which may be of use Cement Use of precedents File management time Project management time team meetings, strategic planning Time spent reviewing file to get back up to speed, where breaks in the work Team management including monitoring of progress of Internal conferences Delegation and supervision work Blow out work arising from risks which are being assumed Reporting work Hand holding work The size of the matter will determine the level of granularity required. Sometimes undertaking this process will identify areas where you need to get clarification from the client about how the work should be done, or whether they actually want to undertake the work. 7
8 Tasks must be specific and descriptive of a specific outcome. The task research is non specific. The task research the interpretation of 'controlled waste' as defined in Section 3(1) of COPA dot point memo is far more meaningful for the team. Creating the Roadmap Creating your team and assigning tasks Once you have identified the tasks, you can create the roadmap, which is a plan of when the tasks are to be undertaken. This plan of tasks helps identify where parallel tasks can be undertaken, sequencing of tasks, priorities and dependencies, and ways in which a schedule is best managed. It provides a realistic schedule by highlighting what tasks cannot be commenced until prior tasks are completed. The major advantage of creating this road map and sequencing tasks, is identifying dependencies and possible resource constraints, both of which can have significant impacts on a schedule. Predecessor tasks can be prioritised to avoid delay with dependant tasks. Your sequenced plan of tasks will help you identify the critical path, which is the longest path through all necessary tasks. Once you have the plan, look at what could be eliminated, what could be streamlined, what should be prioritised, what will deliver the most value to the client? One benefit of this planning process is the ability to have discussions with client about fees and value. You will be better able to explain what you are proposing to do, and if there is an issues with fees, you may be able to discuss carve outs of work. The roadmap/critical path is the blueprint for your project and should be distributed to the whole team (including client and counsel), are reviewed at all team meetings. It will be the reference point to judge progress and a means of alerting to the project going off track. Assigning Tasks Who has the right skills and experience to do the work? Who is available? What should be delegated down? What should be delegated up? Delegating up should occur when timing is important, and it is preferable that the work be done more quickly by a senior person, or to reduce the possibility of bottlenecks Before finally assigning a task, discuss with the team member and obtain their agreement to take on the task. 8
9 Balance planning some people get bogged down in the planning phase and don t get the work done. But too little planning increases the likelihood of the budget being wrong or the matter going off the rails because risks were not identified, time blows out, or work is done inefficiently. Delegation skills Always make clear: What needs to be done, Suggestions about how, including any precedents or other guidance, When time expectations and deadlines, Expected outcome (e.g. a 3 page advice), Why explain in the context of the bigger picture (provide them with the SOW), Any other limitations (e.g. predecessor tasks, we do not need to research point A, only point X), Any support or help they may need. Ask if the team member thinks what they are being asked to do is achievable within the time frames set. Encourage them to seek clarification of any of the above. It can be good to ask a team member to explain their understanding of what needs to be done to ensure you are on the same page. Ask them how long they think they will spend on the task to ensure it ties in with the budget. Give ownership don t micromanage. It s unusual that work has to be undertaken in one way only. Set clear lines of responsibility. People communicate in different ways some need s, some need to talk. Talking can work matters through. Visual planning is very helpful and works particularly well for some people. Give feedback, particularly when positive! Establish the budget price the work taking risks and contingencies into account Budgeting will often involve a review of comparable, completed files to cost the work involved, identify areas where efficiencies can be achieved, possible areas of blow-out, appropriate staffing and resources, and timing of work. 9
10 Estimate the time each task is likely to take. Goals need to be realistic for each team member taking their skills, strengths, experience and weaknesses into account, together with their existing workload. The best way to deal with this is to ask the team member to estimate how long they think the task will take. If this is longer than you think appropriate, discuss this with the team member. Studies show we underestimate time by >25%. We are always optimistic about how long something will take. Adapt your estimate accordingly. Also, factor in the cement work add 10-20%. Add a contingency factor to accommodate risks. This will depend on the matter, but could be as high as 100% if the instructions are particularly unclear, or if there are particularly unusual legal or factual issues. In smaller matters, you can look at costs on previous similar matters. But when looking at historical information, take the following into account: If time was written off/not recorded because the original fee estimate was too low. Any differences between the past matter and the current. Who worked on the past matter. That there should have been a value component to reflect experience or use of precedents. For large matters you might prepare both an optimistic and pessimistic budget and then look at the weighted average. A weighted average formula applied by many project managers is: Optimistic + Pessimistic + (4 x Most Likely) 6 Often, you are likely to have a feel for what price the matter will bear. But also take into account that you don t want to undertake work where the price will result in a loss. Don t go down the loss leader track and tell your client you won t. If necessary, explain what work is required and why. Be able to explain the cost drivers and give the client options e.g. interview fewer witnesses, get the client to do some of the work, use counsel for some aspect, offer a more junior (or more senior!) lawyer to do some of the work. The involvement of counsel is one of the challenges for litigators in establishing a budget. If you are including counsel as part of your team and part of your budget, you need to ensure counsel have either agreed to your proposals, or are aware of the limitations when you brief them. 10
11 Manage the projects time, quality and to budget Keep in mind the big picture and the overall objective! Don t get caught up chasing rabbits down burrows. Do a quick review of the roadmap/critical path at every team meeting. Make sure the team is aware of possible roadblocks and the plans to avoid these. Set clear expectations about deadlines. If necessary, discuss with how they are going to meet the deadline, given other workloads. Manage the matter track cost against budget, and progress against timelines. Identify early if things are going awry and work out a solution. If there is a change in scope, discuss this with the client and renegotiate the fee. Communications Strategy Effective communication is one of the hallmarks of a successful project and therefore, best practice mandates developing communications strategies for the client and for the project team. In working with clients, I have found it a common complaint that the client is not consulted about what they would like to know, and how they would like to receive the information. Sample communication plans are attached. Any communications plans should include all relevant members of the team, including counsel. Two powerful tools are a RACI 1 matrix, and the use agendas (with timings) for team meetings (including conferences with counsel). Too often meetings between lawyers run more as brainstorming sessions, rather than structured meetings with agendas. The focus should be on bringing agenda items to resolution if possible. Meetings should be minuted, if only in dot point form. Communicate the Statement of Work and Roadmap to the whole team. Cost blowout occurs when someone undertakes a task in isolation and does not understand its context as part of the big picture. It s also important to work out the practicalities of working in the big picture e.g. if multiple people are working on different parts of a document, it is better to mandate the numbering format to reduce the time subsequently spent in formatting. 1 Responsible, Accountable, Consulted, Informed 11
12 Identify and negotiate changes in scope Keep the statement of work in mind and review frequently, so you can quickly be aware of change in scope. However, you need to be pragmatic about when you seek to negotiate a change in scope. Is it a true change of scope or a risk that you did/should have identified? Lessons learned End of matter audits are powerful ways of improving case management, by identifying what went wrong, what went right, further training required for, particular skills identified which could be used in future, issues with the client which need to be identified as future risks. In a more limited format, they can and should be used to obtain client feedback about how they thought the matter was handled. To conclude some laws of project management A client is someone who tells you what they want the day you give them what they asked for. Any project can be estimated accurately (once it is completed). And a final word from Douglas Adams I love deadlines. I love the whooshing noise they make as they go by 12
13 Communications Plan for the client What Why Who When How Project Justification Determine client needs and justification, agree scope and authorization to proceed Client decision makers, project manager (responsible lawyer) At commencement, and as required for updates and approval Meeting, telephone call Strategy Consideration Presentation of options and agreement regarding approach to be adopted Client decision makers, project manager At commencement, and as required where options regarding strategy to be considered Meeting, telephone call, Stakeholder Expectations Determination of scope, clarification of work to be undertaken by client and lawyer Client decision makers, client team, project manager At commencement, and as required where change in strategy/scope Meeting, telephone call, Project Authorisation Agreement re project charter and statement of work, and authorisation for project to proceed Client decision maker principle contact (Client contact), project manager At commencement Formal acceptance in writing Issue Resolution Raising issues which may impact on project success, or where further instructions required Client contact, client team, project manager, project When issues occur Formal report on issue (letter or ), meeting, telephone call, 13
14 Status Report Report on current status, time frames and completed task, open tasks and high level schedule Client contact, client team, project manager, project Weekly Formal report by Change of scope request Request for approval of change of scope Client decision makers, project manager As required where change in strategy/scope Telephone call followed by letter or ,, meeting if significant change Change of scope authorisation Approval of change of scope Client decision makers, project manager As required where change in strategy/scope Formal acceptance in writing, Updated in wiki Completion report Acknowledgement of completion, sign off by client of successful completion Client contact, client team, project manager, project At conclusion of the matter or at milestones In writing, if appropriate also meeting End of matter review Feedback from client regarding satisfaction with the project and how it was conducted Report both as to content and process improvements, and performance appraisals Client contact, client team, project manager, project At conclusion of the matter In meeting, or in writing as appropriate given nature of the matter 14
15 Communications Plan for the project team What Why Who When How Risk Identification To identify risk and develop risk management strategies Project manager and team members At commencement and periodically in team status meetings Meeting Critical Analysis Path To ensure clear understanding of all tasks, and identification and monitoring of those which can impact schedule and costs Project manager and team members At commencement and reviewed in weekly meetings Formal document on wiki RACI Matrix To define task allocation and responsibility, and reporting requirements Client contact, client team, project manager, project At commencement and updated at team meetings as required Formal document available on wiki Individual Report Status To monitor status of the project against schedule and budget Team members, project manager Weekly , or updating on blog Team Meetings Status Review current status of the project against schedule and budget, identify issues Team members, project manager Weekly Meetings, with agendas and minuted Team Project Status Report Report on current status, time frames and completed task, open tasks and schedule Project manager, project Weekly Formal report sent by updated after each team status meeting 15
16 Issue reporting and logging Monitoring of issues and risks Project manager, project On going Updated in wiki Change of scope authorisation Approval of change of scope Client decision makers, project manager As required where change in strategy/scope Formal acceptance in writing, Updated in wiki End of matter evaluation Appraisal of project performance for identification of content and process improvements Project manager, project At conclusion of the matter Formal report Lessons learned Distribution of information regarding content and process improvements for use in future projects Project manager, project At conclusion of the matter Updated on Firm internal website and discussed at monthly staff meeting 16
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FINANCIAL SERVICES TRAINING PACKAGE FNB99 This is Volume 12 of a 13-volume set. This volume should not be used in isolation but in the context of the complete set for the Financial Services Training Package.
Contents Glossary 2 About this chapter 5 3.1 An introduction to strategic business planning 6 3.1.1 What is strategic business planning? 6 3.1.2 Why does the Board need a strategic business plan? 7 3.1.3
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Executive summary and overview of the national report for Denmark Section I Summary of findings There is no special legislation concerning damages for breach of EC or national competition law in Denmark,
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