This blog explains how process improvement can be used as a strategic tool – it’s far more than just tinkering with the way things are currently done.
First, we’ll look at the way in which Legal Process Improvement can have a strategic impact on the firm, i.e. can make a substantial difference.
Second, we’ll look at the strategic imperative for undertaking process improvement and couple of options as to how strategically significant levels of change can be delivered.
1. The Strategic Impact of Legal Process Improvement
We have seen two main areas in recent years where process improvement can have a strategic impact.
To transform the firm’s operating model
Along with the rest of the world, the legal sector has had to grapple with the one of the largest, and longest recessions in living memory.
On top of that, there is the very real threat of new competition in the form of Alternative Business Structures introduced by the Legal Services Act 2007, and certain practice groups have seen their business models swept away by the Legal Aid and Sentencing of Offenders Act (LASPO) 2012.
The pressure on law firms to change is huge, and it encompasses more than just the operational aspects of delivering a piece of work; it affects operations, customer service and the back-office, administrative aspects.
Strategic legal process improvement (as opposed to tinkering around the edges) is an absolutely critical tool for the holistic re-engineering of a firm’s operating model.
Only by considering the end-to-end service delivery, which cuts across the different functions or practice groups within the firm, can the Senior Management Team be confident that the operating model is robust.
To support the firm’s growth agenda
How often are your clients, or your target clients, asking how will the service be delivered? Or, how is your service different from other law firms?
We’ve seen an increase in the number of law firms reporting these additional demands from their clients.
These questions can raise two issues:
- Often law firms don’t have robust, documented processes in place that can be referred to in order to explain the method of service delivery within a pitch pack
- Even when partners can articulate clearly how service is delivered, they can’t always articulate why the service is delivered that way, or why it’s the best fit for the client
Any good legal process improvement project should seek to document the current state processes (addressing the first issue) before considering a range of possible service delivery options (addressing the second issue).
A strong grasp on the processes underpinning the service delivery within key areas can be an invaluable tool in winning new work for the firm.
2. The Strategic Imperative for Legal Process Improvement
The chart below illustrates two different improvement initiatives and compares them to ‘no improvement initiatives’:
What does this show? At least three things:
- Contrary to popular belief, process performance will decline over time without improvement initiatives. Clients tend to think that performance will be consistent, but research (1) has shown that inputs change over time and the components used within the process deteriorate, resulting in a reduction in performance (2). There is therefore a strategic imperative to periodically review the performance of your key processes to ensure that they are delivering the required performance.
- Business Process Re-engineering (BPR) is characterised by large, step-changes in performance. It is typically disruptive and requires time for the changes to embed and for the organisation to be willing to approach further BPR projects.
- Continuous Improvement, in contrast to BPR, is characterised by lots of small, incremental changes. In the short term these do not have the high impact on performance of BPR, but cumulatively, over the longer term, the performance improvements can be significant. Importantly, Continuous Improvement is embedded culturally, which significantly reduces the change fatigue within the organisation, compared with a series of BPR initiatives.
Both BPR and Continuous Improvement programmes can deliver strategically significant benefits to the firm; the key difference is the timescale over which these are realised. BPR delivers benefits in a shorter timeframe, whereas the benefits from Continuous Improvement programmes accumulate over time.
Whilst the ongoing change fatigue associated with a Continuous Improvement programme is typically lower than with BPR, the initial change required to establish such a programme is significant, and shouldn’t be underestimated.
Legal Process Improvement can have a significant impact on the strategy of the firm, the two examples discussed above were:
- In transforming the firm’s operating model; and
- To support to the firm’s growth agenda
There is a strategic imperative to review and improve processes within the firm as, without this, process performance will decline over time.
Law firms that need to achieve significant results in the short term are possibly more likely to find Business Process Re-engineering suitable, but firms that are willing and able (i.e. there is no short term pressure) may benefit from implementing a Continuous Improvement programme to deliver similar strategic benefits over a longer timeframe.
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(1) There are three empirical studies typically referenced as evidence of performance deteriorating over time:
Bender, A., Statistical Tolerancing as it Relates to Quality Control and the Designer, Automotive Division Newsletter of ASQC, 1975.
Evans, D. H., Statistical Tolerancing: The State of the Art, Part III: Shifts and Drifts, Journal of Quality and Technology, April 1975, pp. 72-76.
Gilson, J., A New Approach to Engineering Tolerances, Machinery Publishing Co., London, England, 1951
(2) Within the six sigma methodology this is known as a sigma shift and, as noted in a paper here, this is really the statistical application of the second law of thermodynamics; that entropy increases in all systems returning them to a random state.