4 “Lean” tools to radically improve your legal practice, but few lawyers in the UK have applied them … yet.
Given the current economic climate there has never been a better time to be leaner, more resilient and operationally agile, but what do these approaches actually mean in the context of running a lean legal practice? In this article, I will introduce you to “Lean”, its five core principles and some of the lean tools that you can apply to make your business more resilient, agile and profitable; also reducing WIP and improving cashflow.
What is Lean?
“Lean” has five ways of thinking at the core of five basic principles, enabling a business to ensure customer/client satisfaction, driving up profits and creating business processes that are efficient, effective and agile. To live by these principles, I can help lawyers to understand and apply a number of Lean tools and techniques to support its adoption that most are unlikely to have considered before (outlined below), adding a completely new perspective to how a law firm and lawyers could operate more effectively.
Without this Toolbox of lean techniques, it is very difficult for lawyers to envisage how they can work (often very) differently, to constantly improve the business and value of services to clients. Lean thinking should introduce radical improvements by enabling lawyers to capitalise fully on their expert knowledge but also release them to think afresh and “out of the box” about what best practice can be.
The five core principles of Lean are:
Customer Value – companies compete by consistently delivering greater value to customers than their competitors, and the first principle of Lean is the identification of what customers value, or more specifically, what they expect. To do this you need to engage with your customers and ask them! It may appear obvious that a legal client may want to win a case or mitigate risk, but how they do this and the processes they go through may be very different. Some may value an online process that is quick and simple; others may prefer the personal touch. Some want to maximise use of technology; others aren’t equipped to do that. You need to know that and to respond to their situation. A Voice of the Customer (VoC) study is a great way to elicit what your customers actually value.
Value Streams – all customers measure value through experiences. Your customers’ experience when engaging with you and other companies they deal with has a profound effect on how they perceive your value and set their expectations of you. The way you interact with customers to create value are “value streams”; interlinked processes that describe how you create value or – when they fail – how you destroy value. An example of a value stream within legal practice can be the process of completing a residential or a commercial conveyancing transaction. Both are made up of a set of basic building blocks. However, the value created at each stage for one customer can be very different for another. A “Value Stream Mapping” (VSM) exercise helps you to describe and understand how you create value … so you can then modify your approach to add more.
Flow – once you have described the way in which value can “stream” to your customers, it is essential to understand the efficiency and effectiveness of the streams. We call this flow and it describes how efficient and effective your “streams” are in actually delivering value to customers. An optimised stream will have zero waste, zero defects and deliver 100% on customer expectations. i.e. the “experience value” equals the “expectation value”, but this is rare. Examples of how “flow” is visualised in a legal practice can be:
- The number of backwards and forwards communications between the various parties; and,
- The amount of time spent waiting between each activity.
Based on experience, I’d estimate that the total time spent on a transaction is less than 10% of the total elapsed time. This level of inefficiency has a cost and an impact to the customer and your business. A “Waste and Defect Analysis” (WADA) helps to understand flow capability.
Pull – this principle focuses on the laws of supply and demand. It is generally easier to create supply than to stimulate demand and so there is often an imbalance. “Pull” centres on having the right level of resources/services available to meet demand as it materialises; often described as “Just in Time”. We see pull failures everyday in stockpiles and traffic jams where we experience the value destruction effects when we have to wait for things to happen before we can take the next step. Pull is a way of optimising delivery of value by ensuring supply is delivered to the ‘drum beat’ of demand rather than creating supply and hoping that customers will fall in line!
The new smart motorways are a way of controlling the supply of road space in order to meet customer demand. In legal practices this can mean the alignment of marketing and business development activity to ensure that all departments are working to capacity and not over burdened with work; or where a flexible and agile workforce or processes enable the practice to adapt to changing customer demand. To understand pull you need to complete a “Customer Demand Analysis” (CDA).
Perfection – imagine a world where everything you do is perfect; nothing goes wrong, everything works and there is no waste. You win every case you get or every contract is immediately accepted by a third party and never challenged. Perfecting a process is best achieved by internal teams focused on creating Zero waste/Zero defects. When your teams are embracing the other four principles of Lean, the focus on “perfection” becomes a self-fulfilling prophecy. An example of how “perfection” can be built into a process would be the use of checklists or “field-required notifications” to ensure that you gather all the data you need at the right time; otherwise some effort would be wasted or reworking might be needed.
Being “Agile” Helps Too
A further benefit of being lean is that it also makes your practice agile. By constantly reviewing what customers want/need and the value delivered; then adapting business processes accordingly, you are able to maintain customer satisfaction. A proactive “Voice of the Customer” activity enables firms to stay ahead of the game by starting to adapt processes and develop services that meet the customers’ demands. Agility does however add complexity, so there has to be a balance in how flexible you want to be.
Strategically, every business should be “agile”. Listening to the Voice of the Customer is invaluable in enabling you to achieve this as you develop your business strategy and improve your business.
As you start to adopt lean, your people will increasingly recognise business processes and they will begin to work more closely and collaboratively with your customers. Your business will become more resilient to changing demands and market pressures as you become more efficient and effective in what you do.
The question should not be whether to adopt lean, but “what happens to your business if you don’t adopt lean thinking … and your competitors do?”