With the growing popularity of lean in the legal industry, we have a growing population of wrong ideas about what lean means. The confusion over what lean is and isn’t shouldn’t surprise anyone. I think it is worth addressing one point that I hear over and over again. There is the belief that lean thinking is all about cost cutting. Lawyers hear “lean” or “lean six sigma” and they immediately jump to the conclusion that they will be asked to spend their time trimming costs, as if they were on the manufacturing floor trying to find ways to make widgets less expensively.
Lean thinking certainly helps reduce unnecessary costs. If lawyers spend 10 hours completing a task and we can remove five of those 10 hours because they involve activities that don’t add value to the final service, we will have cut the cost in half. The value the client gets remains exactly the same in this example (let’s assume it is a contract). The client gets the same contract whether the lawyer spends 10 hours or five hours preparing the contract. But, when the lawyer spends five hours, the cost to her firm to prepare the contract goes down. Her firm can (1) charge the client for five hours, or (2) ask the client to pay an agreed value for the contract. Why wouldn’t the cost to the client automatically get cut in half? Because the firm had to invest to get the cost down, that investment cost the firm money, and the firm should receive some return on that investment.
Now, the above example is a very simple one and as good lawyers you already are trying to rip it to pieces. So, step back and think of the big picture rather than faulting the example for not dealing with all the nuances. By applying lean thinking to the process of preparing the contract, the firm achieved many things including a reduction in the contract preparation cost.
If we go back to the central premise of this post – lean is not about cost cutting – then I need to address what lean “is” about.
Lean is a philosophy through which we look at value from the client’s perspective and focus what we do on delivering that value while respecting people.
While there are many definitions of lean, I think this one captures the essential elements and works well for lawyers.
We will start with the phrase “perspective of the client.” One of the most overused, yet most misunderstood, phrases rumbling around the legal industry right now is “voice of the client.” When I ask people what they mean by “voice of the client” I typically hear “we should listen to what the client wants.” Certainly, we all should listen to our clients. Understanding a client’s perspective, however, means much more than listening. It includes understanding the client’s business, industry, political situation, competitors, financial situation, and so on. It means really understanding the client’s position, and from that position looking at how best to solve the client’s problem.
Perspective also includes what the client itself sees, since we view the same set of facts through our own unique lenses. So, we can’t simply tell a client “I looked at things from your perspective and regardless of what you think, this is the solution.” We must incorporate into our thinking what the client sees. This is the piece that requires listening to our clients, the narrow slice that many mistake as the entirety of voice of the client. Think of voice of the client not just as what the client says, but its complete voice, which include far more than just the client’s words.
When we deliver value through services, we improve the position of the party receiving the services. Improvements can take many forms. For example, we might improve their position by increasing their wealth or by reducing risk. Either way, they are in a better position after they received the value than before.
When a client says, “I received a three page memo that didn’t help me” or “that advice doesn’t work in my industry” we have not delivered value from the perspective of the client. Many times I hear lawyers describe what they did as adding value, because from the lawyer’s perspective the memo includes great legal analysis or the advice was very insightful. Taken from a lean perspective, in both cases the lawyer delivered waste, not value. So, in this context, lean means ensuring that what the lawyer delivers to the client is value from the client’s perspective.
There is another mistake lawyers frequently make when thinking about value from the client’s perspective, and this mistake deals with quality. Put another way, it is the “Cadillac or Chevy” issue. Lawyers often think delivering value means delivering something that addresses the client’s problem using all available resources. Using the car analogy, when a client has a transportation problem that can be solved with a car, many lawyers believe that only a Cadillac will do. As we know, however, most of the time a less expensive car will do. Less expensive does not mean poor quality. It means high quality, but with a feature set appropriate for the client’s needs.
If we deliver value, but at the same time disrespect people, we have not acted in a lean way. Imagine a law firm that delivers value to its clients by having associates work 12-hour days doing mostly mundane tasks. Even if those tasks were done efficiently, the process does not meet the lean philosophy. Lean thinking means respecting people. Asking people to do mundane tasks for long periods without input on how to improve the process isn’t respecting people.
Imagine a different environment where the mundane tasks are moved on to computers. The associates spend far fewer hours accomplishing the same tasks as before, and they focus their time on activities computers can’t perform. The associates are able to accomplish in eight hours what formerly took 12 hours, and 80% of the associates’ time is value added, while before only 20% was value added. The associates are encouraged to find other ways to improve the process and eliminate more of the mundane work. The second environment meets the lean philosophy much better than the first.
If lean was simply a cost cutting exercise, it would not be worth much. Once we understand the philosophy, we know that it takes us far beyond cost cutting. In addition to looking at how to improve existing processes, we start looking for ways to eliminate entire processes.
For in-house counsel, the best lawsuit is the one that never happened. Lawsuits are wasteful, even when handled efficiently. It is better to find ways to avoid lawsuits than to handle them efficiently. Think of this as a product design issue. If we design business processes with risk in mind, we should be able to minimize the chances that a process will lead to litigation.
Lean practitioners in other environments focus on product design to eliminate waste in the earliest stage. One common example is your car key. Many of us can remember car keys that had one flat side and one cut side. If you were not paying attention, you might try to put the key into the lock with the flat side down rather than the cut side down. You had to stop, turn the key over, and insert it correctly. Modern keys are cut on both sides. You can’t put the key in upside down. By improving the product design, we eliminated the waste of trying to put a key in the wrong way. The product design approach was much better than re-designing the key insertion process so that the key would go in correctly each time.
Of course, the next step back is to ask about the key itself. Newer model cars use a push button start (an old invention re-imagined for today) rather than a key. As technology progresses, we may see retinal scans as the mechanism for starting the car. Or, we may have a biometric scanner that senses whether the person sitting in the car is authorized to use the car (e.g., a heartbeat scanner). Each step along the way eliminates a process. The push button eliminates processes around having a key. The retinal scanner eliminates pushing the button (though you still have to put your eye in the correct place for the scanner). The heartbeat scanner eliminates any action on your part – the car does all the work.
Lawyers need to be cost conscious, but being cost conscious should not be the central reason for what we do. Today, we are spending too much time on cost and not enough time on value. We are spending that time on cost because most lawyers are still fighting against efficiency, technology, and change. They are acting like the five year old asked to clean up his room. Rather than just getting on with the task, the five year old argues with his parent about the task. Finally, the exasperated parent points out that if the child had simply cleaned his room when first asked to do so, he would have finished long ago. Instead, he wasted time arguing and still must spend the time cleaning his room. As a result, he won’t have time to watch his favorite TV show (the reward for cleaning up his room) before going to bed.
To become lean, lawyers need to stop arguing about being efficient, using technology, and changing. They need to get on with improvements and focus on what is really important – serving their clients. For those who can’t get to this point, don’t expect clients to continue rewarding you with work.