LEAN in Law Firms: Have you met “TIM WOODS”? (Part 1)

5 - Tim Woods Waste

There is a lot of talk about “Lean” within the legal services industry currently.  A significant number of other industries are reported to have achieved phenomenal results by employing the tools, techniques and philosophies of Lean.

A core concept of Lean is about “reducing waste” within a process or system, but how does you identify, let alone eliminate, “waste”?  Lean originated in manufacturing environments where waste is often more tangible and easier to spot.

However, it is still possible to identify waste in an intangible, service process (such as the ones observed in law firms) and there is one particularly useful (and simple) tool to assist with this:

“Tim Woods” is the reliable friend of most Lean practitioners.  He offers an easy way to remember and then identify the 8 forms of waste within processes:

  • T: Transportation
  • I: Inventory
  • M: Motion
  • W: Waiting
  • O: Over-processing
  • O: Over-production
  • D: Defects
  • S: Skills

Whilst the terminology within the acronym is rooted in a manufacturing context, each of these forms of waste are found in law firms of all shapes and sizes.  This blog runs through the first three (“TIM”) and provides some examples so that you can easily begin to spot waste within your firm and start to take actions to address it.

We’ll follow up with Part 2 covering “WOODS” next week.

Transportation

‘Transportation’ relates to the movement of information or materials from one place to another.  This movement often does not add value to a process.  A Lean process will have minimised the excessive movement of information throughout it.

A review of the document history of an email (from within a process) is often an enlightening experience as it can show how many individuals, departments and organisations information has been transported to.

It can also relate to the hard costs of storing and transporting hard copy files or reports to and from clients, as well as the soft costs associated with re-formatting data to allow different tactical systems within the firm to read and use the data.

Inventory

One of the core principles of Lean is to minimise in-process inventory.  Nothing good happens with excess inventory and it often masks a deeper process problem.  Whilst excess inventory is easy to spot in a car factory (i.e. a factory full of components or a yard full of finished goods), the application to law firms is perhaps less obvious.

However, there are two key areas of waste here:

The to-do pile/the ever-increasing caseload

I.e. the pile of work on your desk that you haven’t got round to starting yet.  This affects your client (because it’s taking you a long time to respond to their requests) as well as the firm (because often the client won’t pay you until the work is complete); this also leads to increased lock-up, the second key area.

Working Capital/Lock-Up

This is a huge cost to law firms.  The PwC Law Firms Survey 2014 showed a deterioration in lock up performance to an average of 120 days for a Top 10 firm and 149 days for a Top 51 – 100 firm.

In contrast, the top 10 accountancy firms (i.e. broadly comparable professional services businesses) have a year-end lock up of around 100 days.  If the top 10 law firms could achieve a 100 day lockup they would release around £20m of working capital.  Each.

The subject of working capital/lock-up is worthy of its own blog, for the sake of brevity, we shall move on here…

Motion

Whereas ‘Transportation’ above referred to movement of information or materials within a process, ‘Motion’ refers to the movement of people within a process.

This can relate to physical motion as well as time spent switching between I.T. applications:

Think of writing a letter to a client and the motion waste in that process:

  • Referring back to the attendance notes in the case management system for key data to include within the letter being written within a separate word processing package
  • Walking from your desk to the printer on the other side of the office to collect the printed letter
  • Updating the case management system to set a reminder to chase for a response

Whilst they can seem small, perhaps only a minute or two, when you think of the hundreds of times you perform those actions over the course of a week or month, and multiply that by all the people doing exactly the same thing, it can quickly add up.

Within a law firm ’Motion’ can also relate to the time you had to travel 3 hours to a far-flung office for a 30 minute meeting.  With the advent of video conference technology, it must be considered whether this type of ‘Motion’ really is necessary or represents a significant waste.

Summary

We’ve introduced the 8 forms of waste and discussed some example of three of these; Transportation, Inventory and Motion.

Once you can identify waste within your processes, it’s easier to develop ways to tackle that waste and improve process performance.

Try it now.  Take just 60 seconds and think of a process that you are familiar with.  What waste can identify in each of these categories now:

Transportation Is there excessive movement of information or material in your process?
Inventory Is there a backlog of cases or matters in your process?  How many days of WIP do you have?
Motion Is time wasted by people having to travel unnecessary distances in your process?

Did you come up with any potential sources of waste?

Yes?  Great – that’s the first step to eliminate that waste.  Imagine how much more you could come up with if you completed this exercise with the teams responsible for completing the process.

No?  Then perhaps your process is 100% efficient and cannot possibly be improved.  Or, perhaps there are other types of waste in your process that we’ll discuss in Part 2 next week…

Don’t forget to hit “Follow” or join us on the Legal Process Improvement group on LinkedIn (at the link below) so that you don’t miss out on future articles.

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Image Credit: Basel Action Network

 

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