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November 23, 2022

Building a Lean Law Practice: Eliminate Waste Continuously

As law practice consultants we always look for new ideas to help attorneys build better businesses. Today we will look at the proven operations principles of lean manufacturing to eliminate over-processing and rework in a law practice.

Lean manufacturing is based on the core principles of relentless attention to detail, data-driven experimentation, and worker-driven efficiency and elimination of waste.

A growing number of lawyers and other knowledge-based workers are using lean disciplines to increase response time, improve quality and creativity, reduce costs and frustration, and improve job satisfaction.

To start your thinking about how you might use lean principles, consider you much you agree with these statements:

1) A substantial amount of knowledge about how my law practice runs is understood but unwritten – and that much of this can be written down.

2) A significant amount of my work in law practice has nothing to do with applying my special legal judgment and skill. This work can be organized in a way so that paralegals or assistants can do it just as effectively as I can – if not better.

Toyota’s widely acclaimed approach to lean management is called the Toyota Production System (TPS).  TPS is built on the following six principles:

  1. Root out all waste continuously
  2. Make knowledge explicit
  3. Clear communications channels
  4. Accelerate problem-solving
  5. Exercise patience
  6. Leadership blazes the trail.

This post focuses on the first principle – eliminating waste. We care about waste because it costs money, reduces efficiency, and reduces attorney satisfaction. Even small amounts of waste have a significant cumulative effect. Consider the work you do each day and the time you spend processing information and correcting or updating work. If this consumes as little as 60 minutes a day then you’re leaking $36,000 a year in take home pay (assuming a billing rate of $150 / hour).

Manufacturers think about waste in terms of:

  • overproduction (making too much),
  • over-processing (doing too much to make the product), and
  • defects and rework (correcting mistakes).

Think of overproduction and over processing in terms of spending too much time on repetitive tasks that do not require your direct legal judgment or skills. Examples can include opening files, collecting demographic data and background information, setting up and administering billing and collection processes, creating routine case updates or managing back-office functions such as supplies and HR.

Overproduction and over-processing can also apply to core legal work. Some matters are novel and require extensive research, thinking time, and your personal attention. Yet I still remember one of the first invoices I reviewed from outside counsel when I was in-house. I was charged for 42 hours of associate time for researching the concept of privity of contract! First, that issue doesn’t require that amount of time. Second, it should never have appeared on my invoice. That firm didn’t last long with us.

Correcting mistakes kills productivity. Common mistakes can include errors in planning or communication which puts you into a time-crunch to meet a deadline. Or perhaps there is a mistake in billing which requires you to write off time or wait longer for payment. It could be having to review and revise the work of a paralegal or associate multiple times.

The following steps will help you find and eliminate the hidden areas of waste in your law practice.

Step 1: Baseline how you’re working.

  • Track your time by function for a week (or even a couple of days).
  • At the end of each day and at the end of the week look at how you’ve spent your time.
  • For each group of tasks, ask yourself how much of that task didn’t need to be done at all. Create a “Stop doing” list
  • Look at the tasks again and find things that could have been done differently or by someone else. Create a “Do differently” list.
  • Commit to working on 1 thing from your Stop Doing and Do Differently lists for the coming week.
  • Repeat regularly. Make it a habit.

 Step 2: Standardize your communication templates.

  • Specifically, examine how you create written communications. Look for tasks that consume time without adding value (e.g., looking for documents, formatting, crafting similar language repeatedly, entering the same data multiple times).
  • Create a standard template that is easy to complete with custom information. Get it to 80% complete and then you’ll only have to spend time on the 20% that is custom to the client or situation.
  • If you use a law practice management system be sure you are using its capabilities to eliminate duplicate data entry and create standard documents.
  • If you do not have a practice management system you can increase effectiveness by having standard forms organized so that your assistant can take the custom information from you, add it to the form, and create the documents for your final review.

Step 3: Pay attention to process. Look at these aspects of your practice:

  • Have a complete client intake process that captures all relevant data in the right places at the beginning of the engagement. This will save you time looking for important information when you are in the flow of doing your work.
  • Calendar all key dates and events at one time and as soon as possible. This will reduce how often you need to suddenly shift commitments and priorities at the last minute.
  • Delegate consistently. If you have to repeatedly review the same mistakes (or issues) with paralegals or staff then consider looking at the process you are using for delegation. The errors may come from a lack of understanding on their part – or a lack of clarity on your part.

Step 4: Review activities promptly. Get into the habit of stopping to take a look at what’s working, what’s not, and why. Making this investment will help you improve the process and reduce the time you spend on re-work and correcting mistakes.

Adopting a lean mindset in your law practice will help you improve client service and profitability. It will also reduce frustration levels for you and your staff and increase job satisfaction.