How to Move Toward “Effectively Predictable” Legal Fees: Scoping
In my last post, “Why Striving for “Predictable” Legal Fees May be a Cop-out,” I contrasted the cost of having one’s Porsche serviced at the predictable, but highly-expensive, Porsche dealership (BigLaw), versus having the work done at a much lesser cost, by the local specialist, Gunther (specialized boutique). The point of the post was summed up in a comment by Patrick Lamb of Valorem Law:
Predictably high is not worth much to clients.
I whole-heartedly agree with Patrick, although far too many clients still continue to use the Porsche dealership (thereby making Mr. BigLaw one of the few persons who can still afford to have his new Turbo Porsche serviced at said overpriced dealership). Smart clients, however, realize that the holy grail is effective predictability, i.e., achieving maximum value for all necessary legal work at a fair and predictable price. Worthy goal. So how do we get there? Given that many GC and clients are fundamentally risk-averse, I’ll start with a solution that is virtually risk-free, but like most good things in life, does require hard work from the client, i.e., effective project scoping.
Effective scoping requires the client to take responsibility and ownership of its legal needs/problems and effectively communicate this information and their expectations to the attorney(s) before the matter is undertaken. Two experts who have done an excellent job discussing effective scoping are Pam Woldow in “Legal Project Management 101: Why Scoping Matters,” and Kevin Colangelo in “The Single Service Level Law Firm (Part 2).” Both of these articles discuss the perils of failing to properly scope, which then unnecessarily leaves the company wide-open to bad billing surprises. Better to follow Pam’s advice:
Thorough up-front scoping beats damage control, any day.
Or, as I paraphrased Kevin’s article in a tweet:
If you hand off a “mess” – don’t be surprised when your legal billings become a bigger mess.
Both Pam and Kevin’s posts are clear and concise outlines of the mutual benefits of scoping, and are must-reads for any GC or client interested in paying more than lip service to managing and controlling their own legal costs. Both authors stress that effective project scoping requires:
- Not taking anything for granted.
- Requiring the client to understand and evaluate its expectations and desired outcome before the matter is handed off.
- Having open discussions with the attorney(s) on how best to meet the client’s objectives and at what potential costs, including discussions on less expensive alternatives like unbundling, insourcing, outsourcing, etc.
- Discussing any level of risk the client is willing to accept to save costs.
- Defining proper staffing, expected stages or timelines, real budgets, and how to deal with any unexpected developments.
- Putting all of the above in writing.
When done properly, effective scoping has tremendous upside, including significant cost savings to clients, much greater effective predictability of legal fees, while also resulting in a stronger attorney-client relationship (that will likely benefit the attorney(s) with a loyal and repeat client). While proper scoping is just the first step required to effectively manage legal spend, it is a crucial and necessary step.