Lisa Damon: The Evolution of Business Analytics at Seyfarth Shaw

Lisa J. Damon is a member of Seyfarth Shaw’s Executive Committee.

[These are my notes from the 2013 Ark Group Conference: Business Intelligence and Analytics in the Legal Profession.  Since I’m publishing them as soon as possible after the end of a session, they may contain the occasional typographical or grammatical error.  Please excuse those. To the extent I’ve made any editorial comments, I’ve shown those in brackets.]

NOTES:

  • LEAN. Lean is “a way to think” at Seyfarth. They use it for their high-end work and in their commodity work. They use it to increase efficiency and quality so they can charge less while delivering more.
  • Data is Ridiculously Powerful! The challenge for lawyers and law firms is to understand the value and power of data. This will require moving beyond their natural discomfort with numbers and discomfort with messy data. Perfect data are hard to find. To do this, they should start with the data they have. For example, look at billing data — your clients are. Each law firm should know at least as much about its billing as its clients know.
  • Business Analytics Are a Framework for Innovation. Use the data to change what you are doing and how you work. Use the business analytics not simply to understand the past, but to design the future.
  • Case Study: The Conflicts Process. They started by focusing on a universal pain point — the conflicts process. They used it as a pilot project for their Lean Six Sigma initiative. The problem was that the conflicts process was slow. “Solution jumping” suggested that the firm simply hire more conflicts researchers. However, data revealed how long it took to move through each step of the conflicts process. Further, the data revealed that the slowest part of the process didn’t involved the conflicts researchers. Rather, it was the attorneys who were slowing down the process. This was a great example of using data to avoid solution jumping and to focus on the root cause of the problem. Next, they continued to collect monitoring data to show how the new and improved process was working.
  • Case Study: Using Business Analytics on Cycle Time. In this case, the client was concerned that they were spending too much time and money on low-value, high-volume work. They asked Seyfarth to find a way to improve this situation. Seyfarth started by collecting data to understand better what was going on. They learned that a lot of time was spent by the client trying to determine which firm should handle the work. (There was low-risk work that could be sent to an outsourcer. Medium-risk work went to a specific person. High-risk went to a panel of firms, including Seyfarth.) The data suggested that if they could triage the matters (e.g., what kinds of work is involved and which law firm should support each type of work), then the client could assign matters to the appropriate law firms, which then reduced the cycle time.
  • Case Study: Using Business Analytics to Drive Financial Performance. The client wanted to lower costs and increase recovery in connection with a specific type of litigation matter. Seyfarth established a base data set (e.g., how long was the case, what was the recovery, what fees were paid?). What were the variables that affected legal fees and recovery? Their study identified key correlations that helped them understand what affected recovery and costs. For example, did a specific delay result in a reduction in recovery? Since the correlation was clear, Seyfarth designed a workflow whereby the client was able to reduce that delay.
  • Case Study: Using Business Analytics to Measure Firm Performance. At the behest of their client, Wolverine, Seyfarth had to demonstrate greater efficiency and effectiveness, while reducing costs. They monitored their processes (and sub-processes),collected data, and then used that data to change their processes to meet the client goals regarding efficiency, efficacy and cost. Part of the extra challenge was that in addition to improving Seyfarth’s processes, they had to help the client improve its processes. To do this, Seyfarth used the data to see what the sticking point was and then created an iPad app to help the in-house lawyers make the key decisions more quickly so that entire cycle time was reduced.
  • Conclusions. Treat the clients as “true north.” Let them guide you to what matters. Use that data to improve your efficiency and quality, while reducing your risk — and the clients risk. Data can change behavior within your firm, make sure you use it to bring about the right behaviors.

 

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Seyfarth’s Success Story [#Ark]

If Lisa J. Damon has a bridge to sell, I’m buying it.  And, it’s not because I’m all that gullible.  However, over the course of one hour she changed me from an admitted Lean Six Sigma skeptic into a person willing to consider the possibilities of that approach for every law firm. I had previously heard several presentations on the law firm miracle that is Seyfarth Lean Six Sigma, but it was only when Ms. Damon and Seyfarth’s Chief Information Officer, David Hambourger, explained how they and their colleagues are beginning to change the way the lawyers of their firm actually practice law that I began to appreciate the scope of their accomplishment.

First a little background, Six Sigma is a business technique developed by Motorola to quickly identify and fix defects in its manufacturing processes.  Lean is a business technique derived from the Toyota Production System to redesign a manufacturing process to make it more balanced and consistent, thereby removing waste from the system.  (Another way of looking at this is to eliminate anything that does not create value for the end customer.)

At first blush, neither approach to manufacturing would have much obvious application to the work of any lawyer who considers herself or himself to be an artiste. Even in a so-called “law factory,” I’m not sure many would consider lawyers to be in the manufacturing business.   However, Seyfarth’s leadership came to the conclusion that elements of their practice needed to be handled with the same discipline Motorola and Toyota brought to manufacturing.

What drove them to this conclusion? Economics.  As their clients started requesting more alternative fee arrangements, Seyfarth’s leadership correctly concluded that the firm would take a loss unless it could find a way to reduce its own costs of production. So six years ago they began with the following goals:

  • improve predictability of fees
  • lower client costs
  • increase transparency
  • allow clients to collaborate
  • provide clients with real-time access to fees and the management of a matter

After looking at pure Six Sigma and Lean, and talking to clients who had used these approaches, Seyfarth settled on a modified Lean Six Sigma approach tailored for legal services.  To begin with, they eliminated the jargon, some of the statistical tools and the heavy-duty math. (Ms. Damon acknowledges that the focus on numbers demanded by Six Sigma would have been a major turn-off for every lawyer in the firm who went to law school just to avoid another math class.)  They also built in some strategy, project management and change management.  Along with this, they hired client-facing professional project managers and created a project management office. The other key element is a commitment to continuous, sustained improvement (kaizen) in the quality of the services they deliver.

To make these wholesale changes in the way they practiced law, the lawyers of Seyfarth also had to make wholesale changes in the way they carried out the business of law:

  • They replaced their professional development and promotion model with a more dynamic model based on advancement by competency and achievement rather than tenure.
  • They replaced their compensation model so that it rewarded results achieved rather than time spent.
    • Seyfarth has a scorecard system based on the ACC value index. They survey clients and then reflect that response in partner compensation.
  • They moved from merely automating manual processes to the creative, strategic use of knowledge, expertise and operational information.
  • They changed their service model from bill/pay as you go to one with a more strategic focus, with defined outcomes based on client business goals.

Lisa Damon is honest about the work involved in making such extensive changes within her firm.  While they don’t yet have 100% adoption, she says they make a new convert every day. Along the way, they take every opportunity to improve their practice and their business. As the inimitable Ms. Damon put it, “Seyfarth loves to process map. We create process maps for anything that moves within the firm.”  In addition, they approach this in a way that flattens the hierarchy within the firm; everyone with expertise is brought into the effort — whether they are professional project managers, paralegals, secretaries or lawyers.  In the beginning, they create their process maps with paper and pen. Later, they record their process maps using a lawyer-friendly tool called Task Map (an overlay to Visio). Once the process maps are created, they are linked to key knowledge management tools such as case analysis, checklists and samples. Better still, each process map can be tailored to the needs of individual clients or matters.

On the IT and knowledge management side, Dave Hambourger reports that they started by implementing enterprise search.  They also have built extranets that create new business for the firm.  (They are not just inert document repositories).  Another important element is the way they have deployed SharePoint to deliver “memorable value” to clients.  This includes matter management tools and financial dashboards.  The matter management tools show both the percentage of the project completed as well as the percentage of the budget spent. Since the dashboards are visible to the clients, the lawyers of the firm have had to learn the discipline of entering their time daily.

Lisa Damon will be the first to tell you that none of this has been easy or cheap.  However, the sheer joy with which she tells the Seyfarth Success Story suggests that the undertaking has been well worth the effort. At the end of the day, sustaining a success story like this requires top-level business support, careful project selection, project discipline, and a focus on continuous improvement.  Seyfarth shows that it can be done.  Is your firm willing to try?

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If you’d like to learn more about SeyfarthLean, I’d encourage you to read (or listen to) the following:

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