Clifford Chance: Applying Continuous Improvement to High-End Legal Services

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Applying Continuous Improvement to high-end legal services

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Clifford Chance (CC) is at the forefront of the deployment of Continuous Improvement techniques in the legal sector. This paper sets out CC's experiences over the past five years of applying this methodology within an elite law firm; the benefits experienced by CC's clients and by the firm; and CC's views on how Continuous Improvement will be used by lawyers in the future.

Transcript of Clifford Chance: Applying Continuous Improvement to High-End Legal Services

Page 1: Clifford Chance: Applying Continuous Improvement to High-End Legal Services

Applying Continuous Improvementto high-end legal services

Page 2: Clifford Chance: Applying Continuous Improvement to High-End Legal Services

If you can’t describe what you are doing as a process, youdon’t know what you are doing.”

W. Edwards Deming“

Continuous Improvement is a structured and logical approach to analysing andimproving how people work. It is not new: in fact, it can trace its history back over100 years to the manufacturing innovations that heralded mass production, butadoption in the legal industry is still rare.

Clifford Chance is at the forefront of the deployment of Continuous Improvementtechniques in the legal sector. This paper sets out our experiences over the pastfive years of applying this methodology within an elite law firm; the benefitsexperienced by our clients and by the firm; and our views on how ContinuousImprovement will be used by lawyers in the future.

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Continuous Improvement in the legal sector . . . . . . . 4

Understanding law as a process . . . . . . . . . . . . . . . . 5

Starting with recognisable processes . . . . . . . . . . . . 5

Identifying broader opportunities for improvement. . . 6

Making change happen. . . . . . . . . . . . . . . . . . . . . . . 6

Working with clients . . . . . . . . . . . . . . . . . . . . . . . . . 7

Evaluating results . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Building an efficiency culture . . . . . . . . . . . . . . . . . . . 8

The future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

About Clifford Chance . . . . . . . . . . . . . . . . . . . . . . . . 10

Different ways of working at Clifford Chance . . . . . . . 10cont

ents

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Continuous Improvement inthe legal sectorDespite the fact that processimprovement principles are now used inmany different walks of life, it is rare tohear lawyers discussing a ‘value stream

map’ or seeking out the input of a ‘blackbelt’, the experts in this craft.

However, the legal sector is nowundergoing a number of importantdevelopments that are likely to change this.

The increased emphasis on value is mostcertainly a driver. Many organisations areseeking to control carefully their legalspend. They are looking to their law firmsfor discounts or other fee arrangements tohelp reduce costs. Efficiency improvementscan often have the same effect.

Applying Continuous Improvement to high-endlegal servicesContinuous Improvement is a combination of the well-established processimprovement methodologies of ‘lean’ (which is about doing the right things) and‘six sigma’ (which is about doing those things right).

Continuous Improvement is more than just process mapping; it is a collaborativeapproach where an expert in the tools and techniques of Continuous Improvementhelps a group of people familiar with the relevant task to analyse what they are doingand to find ways of doing it better. Put simply, it involves applying scientific rigour todetermine the best approach to carrying out a piece of work.

The starting point for any Continuous Improvement project is the ‘voice of the client’:establishing what the client wants, what they value and making sure that is preciselywhat is delivered every time.

Case studyMaking document review flowDuring the course of litigation, or in response to regulatory enquiries, our clients are required to collect large quantities of data that canamount to many hundreds of thousands of emails and documents. The documents must then be reviewed to identify those documentsthat are responsive to the particular litigation or regulatory request.

We worked with a team of partners, lawyers and case managers in London to analyse this process and found that, by making a fewchanges, we were able to improve its efficiency significantly.

For example, by instituting formal communication points within the process, we were able to increase the flow of documents through thereview team – which comprised both paralegals and junior lawyers – by giving them more efficient access to the experienced lawyersworking on the matter. Queries from the review team were dealt with on a daily basis, therefore reducing the number of documentstagged incorrectly. Feedback is immediate, giving the reviewers a clearer understanding of the documents and related issues. Theintroduction of a statistical ‘sample size calculator’ also enabled the team to decide, on a mathematical basis, the optimum number ofdocuments to be checked for quality assurance purposes.

Using these techniques on suitable document reviews can potentially lead to significant time savings on the previous process overall bydecreasing the number of documents that are tagged incorrectly and reducing the amount of senior lawyer time spent reviewingirrelevant documents.

We have also introduced a standard template briefing document and review protocol. This has ensured that teams are better preparedbefore the review and the lawyers are engaged from the outset with the review team and the issues.

© Clifford Chance, January 2014

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Equally important to clients is finding abetter, more sustainable way of doingthings. Simpler, more manageable,transparent, predictable and, indeed,faster delivery of projects andtransactions brings huge benefits toin-house legal teams pressurised by theirown constrained resource andever-broadening responsibilities.

Another critical shift is that legal advice isnow seen as a more integral element ofthe commercial picture. The scope of thelegal advice required is adjusted to matchthe risk of the matter, meaning that it is nolonger a fixed or absolute concept; thelegal dimension has become anotherconsideration in the matrix that will decidewhether a transaction, or particular courseof action, is attractive or feasible. As aresult, lawyers have become part of theprocess and legal fees part of the financialmodel – creating greater expectations offlexibility on behalf of external advisors toensure their input and effort arecommensurate with the client’s need.

As a result of these factors it is becomingincreasingly important for external lawyers

to have both an in-depth understanding oftheir clients’ business as well as a goodgrasp of their processes. It is only in thisway that the client and its legal adviserswill be able to work effectively as anintegrated team. While excellence of legaladvice remains critical, how a firm workscan, in fact, be a significant differentiator.

Understanding law asa processAlmost any task that has a beginning, amiddle and an end can be construed asa process, including the practice of law.

However, the threshold challenge forapplying Continuous Improvement in thisindustry is that lawyers historically havenot been trained to look at the work theydo as a process.

This can be traced back to law’s heritageas a professional apprenticeship. Traineelawyers learn by observing how moresenior lawyers operate; the focus is onthe acquisition of knowledge andexpertise, rather than understanding the‘how’ or ‘why’ of service delivery.

The result is not a lack of process, butfewer fully standardised processes.

When applying Continuous Improvementin the legal sector, then, the first stepmust involve bringing everyone togetherto map out an agreed and standardprocess for delivering the given task,creating a foundation for improvement.This often challenges those involved tothink about what they do on a daily basis,and have often done over many years, ina completely new way.

The output of this highly interactivesession is a process map which actsboth as a visual instruction manual and aframework for organising knowledgeresources related to the relevant task.

We have observed that a valuableadditional benefit is that the processmapping sessions often become teachingsessions, as more senior lawyers sharetheir deal experience and wisdom withtheir junior colleagues.

Starting with recognisableprocessesSome processes are easily identified andunderstood; some are repeated manyhundreds of times.

Even in a firm such as Clifford Chance,which focuses on complex legal services,frequently tailored to individual clients,processes of this sort exist. An exampleis our Bound Volumes project (see casestudy), which is where we started ourContinuous Improvement programme.

In these cases, it is possible to collectrobust data and then to draw on theentire process improvement toolkit,using the detail of concepts suchas ‘flow’ and ‘pull’ to identifybottlenecks and smooth the way in

Case studyMaking bound volumes easier, cheaper and fasterMaking a bound volume, the indexed compilation of transaction documentsprepared for reference at the end of a matter, used to be a time-consuming andpaper-heavy process that caused a lot of frustration. Given that over 1,500 boundvolumes are produced each year in Clifford Chance’s London office alone, this wasfertile territory for one of the firm’s first Continuous Improvement projects.

A team of people involved in the process – from partner to print room – was broughttogether to identify inefficiencies and areas for improvement. The original process tendedto be initiated late in the timetable of the transaction and involved a great deal ofduplication and unnecessary printing. The revised process now begins at a much earlierstage and draws more heavily on technology to avoid wasted effort and paper.

The new process has reduced the cost of producing a bound volume byapproximately 60% and has reduced the time taken to dispatch a bound volumefollowing the end of a transaction by up to 80%.

© Clifford Chance, January 2014

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which work moves between the differentindividuals involved.

These types of projects are also oftenrelatively easy to measure, with clearlydemonstrable benefits.

Identifying broaderopportunities forimprovementThe challenge in a less commoditisedservice environment, such as at CliffordChance, is that legal processes are rarelyrepetitive or consistent. For example,there is no such thing as an ‘average’M&A transaction – the amount of timetaken, or the cost, can vary considerablyfrom one matter to the next dependingon a vast range of factors.

What is more, although law firmscollect a lot of information – includingextensive time recording for eachmatter – the data points are ofteninsufficiently granular to supportdetailed analysis of transactions.

Although data analysis can identify areasfor improvement, we find that the

majority of projects surface through oneof three routes:

n Senior lawyers with extensiveexperience and a strong grasp of thefirm’s operational dynamics highlightareas for improvement, sometimesbased on client feedback

n Market expectations undergo asignificant shift, causing the clientand its advisers to revisit howquickly, or at what cost, atransaction can be completed

n Individual lawyers – sometimes at amore junior level but who are veryclose to a particular type of process –experience a level of frustration thatcauses them to seek help in creatinga change.

In all cases, there needs to be agreementthat there is a ‘problem’ and support foreffecting change. This is particularlyimportant in the matrixed law firmpartnership structure that makes it hardto identify centrally those processes inneed of improvement.

Making change happenAll our projects follow the standardContinuous Improvement methodology:define, measure, analyse, improveand control.

The first stage involves scoping a possibleproject to verify that there is an opportunityfor improvement. This includes securingbuy-in from all the stakeholders involved:projects have little chance of successunless everyone agrees to participate andis willing to find a solution.

We then ‘baseline’ the currentperformance of the process. If the projectis about cost, this will involve

Case studyChanging the way the client operatesIt is easy for private practice lawyers to believe that inefficiencies are inherent to atransaction, because the process is believed to reflect client needs. This was thecase when we started a project reviewing a particular type of asset disposal we workon regularly for one of our clients.

During the analysis, we identified a number of opportunities for improvement,including some changes that the client needed to make. We took our analysisand recommendations to the client and they were amenable to the proposedchanges, including a suggestion that a different team at their end should beinvolved in some aspects of the transaction.

Having implemented changes on both sides, these asset disposals are muchsmoother – and cheaper – for everyone involved.

© Clifford Chance, January 2014

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© Clifford Chance, January 2014

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understanding how much these matterstypically cost whereas, if the project isabout speed, it will involve measuringhow long these engagements last.

Given the relative lack of comparable‘hard data’ about different matters, theproject team needs to be quite flexibleand creative in finding the right inputs forthis measurement, and in the approach ittakes to the subsequent analysis. Whilethis may mean that the project is oftentackled at a relatively high level, we havegenerally found that this is where thegreatest inefficiencies exist.

We then convene all the relevant partiesto analyse the process in depth, and toidentify the ‘root causes’ of the problem.This involves bringing together a group ofindividuals from different offices, practicegroups and levels of seniority – from thelead partner to the most junior trainee.

This requires a significant investment –both from the firm and from theindividuals involved – as the analysisworkshops usually run over a few days.These sessions are facilitated byContinuous Improvement experts(at Clifford Chance we employ a team offour full-time specialists supported by anumber of part-time specialists that wehave trained internally) and concludewith a list of improvements and anagreed set of actions required tosupport those improvements.

The final stage of the project involvesmaking sure that the improvements aresustained, and sharing them with otherteams that might benefit.

This has proved the most challengingaspect of our Continuous Improvementimplementation as the organisation of thefirm around clients and matters does noteasily fit with the concept of having a

‘process owner’ that is responsible for theongoing implementation and monitoring ofthe improvements. Although there is stillroom for improvement, our greatestsuccesses in this area have involvedallocating responsibility for owning bestpractice methodologies to one or moresenior associates.

Working with clientsAs the most effective ContinuousImprovement projects are the result ofcollaboration across all of the actors ina process, working directly with clientsis an obvious step. This ensures thatthe clients’ needs are reflected in thenew process.

At Clifford Chance, we actively seekclient participation when examining theend-to-end process on regular legalmandates. It is these joint projects thathave identified the greatestimprovements to the value chain.

Many of our client organisations have theirown Continuous Improvement teams, withwhom we are happy to engage. However,the in-house legal function has not alwaysbeen a priority for this type of work.Moreover, because in-house lawyers, asmuch as their private practicecounterparts, may not always recognisethe possibilities for process improvement,the opportunities and benefits need to beset out in a way that is meaningful to theirparticular operating context.

While we often ask clients to provide theirperspective on processes we revise, weare increasingly seeing an appetite for amore holistic approach where the client’sinvolvement is fully integrated into theContinuous Improvement project, wherea group of our lawyers and severalrepresentatives of the client cometogether to map out the process and lookfor the potential efficiencies.

The outcomes from this collaborativeapproach are generally significant,benefiting all parties and helping to forgea stronger client/adviser relationship.

Evaluating resultsThe benefit secured from eachContinuous Improvement project willdepend on its specific focus.

Some projects are concentrated aroundfinancial metrics, considering howimproved efficiency and bettermanagement of a process can reducethe amount charged to a client, orminimise write-offs on a particular type oftransaction. These projects often lead toan improvement of 15% or more,sometimes significantly more.

Case studyWorking with a client to speed upregular transactionsThrough our discussions with a keybanking client, we became aware thata regular transaction we perform forthem was taking longer than was ideal.

We agreed with the client thatimprovements could be made andkicked off a joint ContinuousImprovement project. An intensive twoday workshop, attended by CliffordChance partners and associates andthree representatives from the client,analysed every step in the existingprocess, with the help of two of ourContinuous Improvement specialists.The workshop identified the causes ofdelays and agreed changes to bemade on both sides.

Since implementing the changes, manyof these transactions are completing upto 40% faster than before. Moreover,our two teams now understand eachother better and are working togetherin a more joined up way.

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© Clifford Chance, January 2014

Applying Continuous Improvement to high-end legal services

Other projects primarily focus on speed.Improving the speed of a process –sometimes by up to 50% – can bringvaluable advantages to all partiesinvolved, not just reducing cost and delaybut improving service, sometimes to thebenefit of our client’s own customers.

An additional advantage of ContinuousImprovement projects is often somethingmore difficult to evaluate but valuablenonetheless: a certain ‘smoothness’ inthe process, with more clarity andcertainty about roles and responsibilities,minimal duplication of effort and, overall,creating a more coherent andmanageable experience.

Over the past five years, we have provedthat this approach works across a widespectrum of deal types including highvalue and more customised transactions,such as M&A, real estate acquisitions anddisposals, large-scale asset finance andcross-border loans and restructurings.We have also seen that many teams havebeen able to apply the improvements,and benefits, from one project to othersimilar types of work.

While the variety of outcomes can makethe overall financial business case forContinuous Improvement hard to track, itis very apparent that these projects bringreal benefits to clients, and therefore alsoto our own business.

Building an efficiency cultureThe more widely deployed ContinuousImprovement techniques are, the greaterthe number, size and value of benefitsthat can be secured.

As a result, embedding this way ofthinking into organisational culture willunlock the greatest opportunities. To dothis effectively, training is required acrossa broad range of relevant individualsworking on key processes – it cannot beallowed to exist in a silo. In a law firm,this means it is critical to bring all of ourlawyers on board.

While about 450 of our associates andpartners have already been involved inContinuous Improvement projects, we arenow rolling out an ambitious trainingprogramme that will help all our lawyersto apply the techniques to their work.

The programme teaches participantshow to apply simple ContinuousImprovement tools to diagnose theinefficiencies they routinely face and tomake plans – as individuals, as matterteams and as practice groups – to starttackling them from the very next day.The course is broadly equivalent to a‘yellow belt’ in Continuous Improvementin other industries.

During the course, the lawyers applywhat they have learnt to a case studythat is directly relevant to their work,meaning participants immediatelyunderstand the relevance of the tools. Weoften find that teams start developingmore efficient ways of working before thecourse even ends.

By the end of April 2014, we plan for about20% of our lawyers to have been trained,with the ambition that all of our lawyers willbe trained over the coming years.

Similar training programmes, including‘yellow belt’ and ‘green belt’ courses inContinuous Improvement, are also run formembers of our Business Services teams.

There are a number of signs that ourpioneering investment is helping us tobuild an ‘efficiency culture’:

n Individual lawyers subscribe to theoverall philosophy (‘I should bemore efficient’)

n Lawyers apply the techniques ofContinuous Improvement to theirday-to-day tasks

n Teams collaborate to ensure individualclient matters are managed efficiently

n Groups come together to addressprocess improvements around typesof matters, seeking immediate andsustainable improvements across awhole category of work

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© Clifford Chance, January 2014

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n People suggest more large-scaleproject ideas that are facilitated by thecentral Continuous Improvement team.

Embedding this type of culture results inimprovements in procedures, templatesand client planning, with the outcomethat lawyers focus on consistent andoutstanding client service, as well as thebest legal advice.

The futureBased on our positive experiences todate, we expect the journey towardsincreased efficiency, supported byContinuous Improvement methodologies,to continue to gather pace.

Continuous Improvement will, at somepoint, change from being something thatwe do ‘to’ the way we work and willsimply become the way we work. Thiswill involve an even greater focus on

understanding the client’s particularrequirements for each piece of work. Weexpect to see our legal teams increasinglyincorporated into the client’s team, not asa supplier or external adviser, but as anintegral element of the transaction.

This type of thinking will bring ourlawyers closer to their clients and theirway of thinking. Our best lawyers alreadyhave strong commercial sense – a focuson efficiency reinforces thatunderstanding, and helps them todevelop greater business awarenessacross their entire teams and from earlieron in a lawyer’s career.

Even at the high end, where legal work ischaracterised by complexity, it willbecome more project managed andprocess-driven with procedures in placeto measure and control the performance

of each step in the process. As a result ofthis increased transparency of process,we are likely to see greater involvement ofa range of talent from within the law firmwith professionals, other than lawyers,bringing their particular area of expertiseand Continuous Improvement skillsto bear in the effective delivery oflegal services.

A deeper understanding of the legalprocess, and greater transparency aboutthe steps involved, may also be a driverfor a fundamental shift in the way inwhich law firms and their clients valueand price legal services.

Continuous Improvement may have beena long time coming to legal services butwe fully believe it will become integral tohow many private practice and in-houseteams work over the next few years.

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© Clifford Chance, January 2014

About Clifford ChanceClifford Chance is one of the world’spre-eminent law firms with significantdepth and range of resources across fivecontinents. As a single, fully integrated,global partnership, we pride ourselves onour approachable, collegiate and teambased way of working. We always striveto exceed the expectations of our clients,which include corporates from all thecommercial and industrial sectors,governments, regulators, trade bodiesand not for profit organisations. Weprovide them with the highest qualityadvice and legal insight, which combines

the firm’s global standards with in-depthlocal expertise.

Different ways of working atClifford ChanceClifford Chance has a well-establishedtrack record of introducing new ways ofworking to keep the firm at the leadingedge of the high-end legal sector. Thefirm was one of the first in its industry tooffshore business support functions,setting up a service centre in India in2007. This centre now employs 18% of

the firm’s non-secretarial businessservices staff, covering areas such asresearch, administration, HR and finance.

The firm also has a dedicated group of60 consultants at its Knowledge Centrefor Transaction and Case Support in Indiawhich provides support to our legal teamsglobally on a wide range of matters. TheKnowledge Centre enables us to ensurethat routine tasks are managed to CliffordChance’s high standards, but efficientlyand at minimal cost.

Author

Oliver CampbellGlobal Head of Business Transformation

Oliver runs our Continuous Improvement programme and has responsibility for developing and implementing strategic change initiativesat Clifford Chance, to increase value to the firm’s clients and to make the firm’s internal processes and systems more efficient.

Oliver is a qualified solicitor, having trained at Clifford Chance, and previously practised as a medical doctor.

T: +44 20 7006 2062E: [email protected]

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