Why Law Departments Struggle to Improve Productivity

As mentioned in a previous post, the ACLA/CLANZ Legal Department Benchmarking Report 2008 found that Australian and New Zealand general counsel overwhelmingly view workload / time pressure as the most pressing issue they face.

However, relatively few law departments manage to improve their productivity and thereby reduce the workload of their lawyers. According to former CLANZ president Ron Pol (whose company conducted the survey for the benchmarking report):

“Many legal teams could implement systems to improve productivity and save money. The hold-up is not usually financial – there’s always budget to boost productivity – but more to do with attitudes. One general counsel recently told me that his legal department would rather just tell the chief executive that they’re doing a good job than take the risk that objective measures might indicate areas for improvement. For most of the participants in this research, however, ‘it works, so why change?’ is probably the wrong question. ‘It works, but can it work better?’ is the mark of a new breed of legal managers, constantly on the lookout for new ways to improve the effectiveness of legal service delivery. For some companies and government agencies, even a 10% improvement can mean millions of dollars in savings.”

I certainly agree with Pol that process improvement can potentially deliver millions of dollars in savings. However, I think there are a number of reasons why some law departments are unable to unlock these savings, including:

  • Background – the majority of in-house lawyers started their working life in law firms. Process improvement projects often don’t make sense in law firms where the “time billing” business model prevails. Accordingly, in my view, most lawyers are not taught to think in terms of analyzing and improving business processes.
  • Attitude – lawyers, by nature and by training, look for risks before they look for opportunities. As with anything, the opportunity to save money by improving processes has attendant risks. Accordingly, for many general counsel a process improvement project just feels too risky.
  • Organizational culture – it is difficult to imbue any team (let alone a law department) with a culture of continuous improvement. However, for an exception to the rule, see the Dupont Legal Model.
  • Resources – law departments are often simplistically viewed as cost centers that should not be allocated the resources (people, processes and systems) necessary to successfully implement process improvement projects.
  • Metrics – in the case of Australian and New Zealand law departments, the dearth of industry data has meant that there has been a lack of awareness of what’s actually possible.

The good news is that our customers are testament to the fact that there are innovative law departments out there that have managed to embrace change and save their companies millions of dollars as a result. But more on that another time.

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