The project approach is changing the legal industry. To the benefit of clients
Project management, which has been successfully practised for decades in most industries (e.g. construction, infrastructure or manufacturing), has been slow to catch on in the legal industry.
While the Project Management Institute (PMI) was founded more than 50 years ago, its legal counterpart, the International Institute of Legal Project Management, is only a few years old. Nevertheless, legal project management has quickly become an integral part of the services offered by leading law firms around the world, being most popular in the US, Australia and the UK. In 2021, the global LPM market reached USD 1.2 billion and it is estimated to exceed USD 2 billion by 2028.
LPM benefits lawyers and their clients
Legal Project Management is the application of formalised project management rules and techniques to the delivery of legal services. In a sense, lawyers have always acted as project managers – if only by setting the budget for a case. LPM however brings a new quality to this through the use of formalised methodologies and techniques, all to the benefit of the client and the lawyer.
LPM is pure profit and hard data
According to a 2019 analysis by the American Bar Association, law firms that have implemented LPM have seen an approximate 21% increase in profitability and an approximate 10% increase in client satisfaction.
In-house legal departments also report benefits from LPM. The results of a study by the US Association of Corporate Counsel suggest that companies using these methods are able to save around 15% on legal costs.
In addition, reports from the Project Management Institute show that more than 70% of lawyers see the use of LPM as critical to the success of ongoing legal projects.
The benefits of LPM include:
- Reduced cost of legal services
- More efficient use of time, reducing the number of non-productive working hours
- Reduced project implementation time
- Effective identification and mitigation of project risks
The use of LPM also improves the quality and frequency of lawyer-client communication, and can be applied to different types of projects, such as complex litigation or arbitration.
The origins of the project-based approach in law firms
The first factor that led law firms to adopt a project-based approach to business was the financial crisis of 2008. At that time, law firm clients, seeking to reduce risk and costs, began to demand services whose total cost was predictable and budgetable. Project management proved to be the best solution and marked the beginning of the transformation of the traditional model of providing legal services to a project-based approach. In times of economic uncertainty and rising inflation, law firm clients are becoming more demanding, and decisions about the use of legal services are being made more consciously – to minimise risk and unpredictable costs.
As a result, LPM is rapidly gaining ground. Many global law firms now employ dozens of dedicated LPM managers, with corporate clients increasingly expecting firms to offer project management.
Data from the US market (Altman Weil’s 2020 report) shows that over 45% of law firms with more than 250 lawyers have LPM managers on board.
In addition, over 60% of respondents (from law firms of all sizes) say that the introduction of LPM has significantly improved their performance.
Given the benefits of LPM, numerous law firms are now funding training for their staff, with over 31% of respondents saying they are currently doing so. More recent data is not available, but there is no doubt the outbreak of the COVID-19 pandemic has only reinforced the market’s belief that LPM is now essential.
In the UK, LPM has been popular for many years. And this is true for law firms of all sizes. As a result, UK law firms are actively investing in developing a project-based approach, and this trend is also being reflected in continental Europe, where numbers of LPM managers are also growing year on year.
LPM: Poland
LPM is slowly becoming a necessity in Poland, and is driven not only by market conditions, but also by the needs expressed by clients, especially legal departments, who expect both specialisation and efficiency from external law firms, whilst at the same time ensuring effective value for money. Without LPM, law firms will not be able to meet these expectations.
In fact, it is not only the need for stable and predictable service costs but also the increased competitiveness of law firms themselves that is driving the popularity of LPM. The market will soon be dominated by those who can offer their clients effective ways of handling and resolving multi-faceted legal issues, focusing on quality, efficiency and transparency in resource and risk management.
Source: Rzeczpospolita
Date: 6.03.2024
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