LEAN in Law Firms: “Have you met “TIM WOODS”? (Part 2)

5 - Tim Woods Waste

Last week we introduced the key concept of reducing waste within the Lean methodology.  We also introduced an acronym; TIM WOODS, to help identify potential sources of waste within your processes.

Having discussed the first three of these; Transportation, Inventory and Motion within Part 1, this blog focusses on the remaining five; Waiting, Over-Processing, Over-Production, Defects and Skills.

Waiting

‘Waiting’ refers to the delay experienced by a piece of work between steps within a process and is closely related to the concept of ‘Inventory’ discussed in Part 1.  Given the years of conditioning caused by the ‘Billable Hour’, this concept is often misunderstood in professional services.

To understand it, you must understand the difference between ‘Throughput time’ and ‘Processing time’.  Throughput time is the amount of elapsed time it takes for a firm to produce a product or deliver a service (e.g. it will take us 5 working days to review your contracts).  ‘Processing time’ relates to the amount of time spent on producing the product or delivering the services (e.g. it will take us 5 hours of Associate time and 1 hour of Partner time).

If it does in fact take 5 working days to turn these contracts around (or 120 hours) and we assume that 100% of the time spent on the contracts was adding-value (we’ll come back to this later!), then the proportion of value-adding time in the process is still only 5% of the overall time.  The other 95% of time was actually ‘waiting time’.

I appreciate that this is an obscure concept to fully appreciate, particularly when we’ve all been conditioned throughout our careers to focus on the 6 billable hours.

Over-Processing

Most firms we talk to are guilty of this one.

I’m not judging here, as we can be just as guilty of this one.  It’s closely related to wanting to do the best possible job for a client.

The important thing is ‘does the client value this’?  An even better question to ask is; “would the client be willing to pay for this?”  Within Lean, this is a common technique to assess if something is value-adding or not (in the eyes of the client).

However, over-processing relates to polishing the bits that the client doesn’t care about.  It’s obsessing over the font size on the powerpoint pack of multi-million pound M&A deal.  It’s spending an hour crafting a beautiful piece of bespoke prose to accompany the £250 bill for a piece of work (which you possibly did as a loss leader anyway).

Lean is all about focusing on the value-adding aspects of a process and eliminating the rest (i.e. the waste).

Over-Production

Over-production is often related to a build-up in inventory (discussed in Part 1) or work-in-progress.

Whereas over-production of widgets is highly visible within a manufacturer; you can actually see the build-up of physical inventory, imbalances between teams within a law firm can be difficult to spot as work is often intangible; there isn’t necessarily a visible pile of paper within the intray that flags the potential issue.

Fortunately, disciplined and detailed process mapping and data analysis can help identify these potential issues.

Within law firms, over-production tends to happen at specific points within a process and can be seen where one team passes work to another, at a rate quicker than that at which the second team can process the incoming work.

For example, let’s say team A is responsible for collating data from a variety of sources and team B is responsible for analysing the data and writing a report to the client.

If team A can complete each piece of work in 1 week, but team B requires 2 weeks to complete the report, team A will be over-producing work and team B will generate a backlog.

Line-balancing is key to reducing this type of waste, for example, by increasing the scope of team A’s work such that they now take 2 weeks, or decreasing the scope of team B’s work so that they can complete the report within 1 week.

Defects

This is probably the most visible, and most commonly cited type of waste.  It’s the cost associated with re-working and re-reviewing work that doesn’t meet the required quality standards.

“Right, first time” is another key mantra of Lean management.  Any re-work is waste.

It’s also the cost to the client relationship if you inadvertently issue a defective piece of work to them (as well as the potential professional negligence or regulatory costs in more serious cases).

Whilst the cost of defects can be significant, there can be a temptation to over-compensate for the risk of defective work, which is in itself a cost or waste.

For example, multiple reviews of the same piece of work by different people, or (worse!) multiple reviews of the same piece of work by the same person, can all add cost and waste to a process.

Prevention is better than a cure.  Key to resolving defect-related issues is to identify the root cause of the issue and seek to address it at source (i.e. ideally making it impossible for that defect to arise).

This is known as error-proofing and is far more effective than introducing review stages into a process which will only identify defects after they have occurred.

Skills

This refers to wasting the skills, or talents, of your employees.  In professional services, such as law firms, this is probably one of the more important sources of waste as often a key differentiator between law firms is the people they employ.

The cost can manifest itself in high staff turnover rates, key staff members leaving and lower morale leading to under-performance.

This doesn’t refer to under utilised staff whereby a more aggressive billable hours target will reduce the waste.

Rather it refers more to the scenario in which your highly paid, highly experienced fee earner is spending a significant amount of their time trying to get the photocopier to work; they’re not working on the things they’re good at (and presumably are motivated by) and are wasting time on things that other people are better at or could be done in a more cost-effective manner.

Aligning the different elements of a job to different employees, according to the required skillset can achieve substantial process efficiency improvements.

Summary

Over the past two blogs, we have introduced you to “Tim Woods” and the 8 forms of waste; Transportation, Inventory, Motion, Waiting, Over-processing, Over-production, Defects and Skills.

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

Last week we asked you to think about Transportation, Inventory and Motion waste within a process that was familiar to you.  Take just 60 seconds to revisit that process and now consider Waiting, Over-processing, Over-production, Defects and Skills forms of waste discussed within this blog.  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?
Waiting Do pieces of work end up sitting in your process without being worked on?  E.g. in someone’s in-tray or on their electronic case management to-do list?
Over-processing Would your client be willing to pay for every aspect of work that takes place in your process?  If not, what bits would they not be willing to pay for?
Over-production Are there common ‘bottle-necks’ in your process?
Defects What elements of the work in your process need to be re-done because an error has been identified either by some internal review step or, even worse, by your client?
Skills Where are people’s skills and talents being wasted within 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?  That means one of two things; 1. Your process is 100% efficient and cannot possibly be improved.  Or, 2. You’ve missed it and it might be worth a second look.

As a hint here – I’ve only ever seen processes that are ‘efficient enough’, I’ve never seen one that is perfect.

Perhaps, use the comments section below to add your thoughts.

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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