Lean and law: a map for process and progress - part twoPosted on Apr 23, 2015
Not many lawyers would consider themselves masters of process. When lawyers talk about their work, they typically focus on high-value activities such as advocacy and counselling. But the truth is process is a significant part of what lawyers actually do on a day-to-day basis.
Process in the practice of law, stated simply, comprises collating information, packaging it (applying judgement) and delivering it to the client as a legal product. It seems obvious that good process is critical to the effective practice of law – it’s just that lawyers don’t think about it so much.
Historically, lawyers have been known as resistant to change and being slow to adopt initiatives and ideas from outside the profession. Efficiency and standardisation is looked upon with suspicion, many holding a perception that there is some kind of trade-off between efficiency and quality, and that the law is somehow too complicated to be standardised. Hardly fertile ground for introducing LSS one might think. However, a deeper consideration of the principles and motivations behind LSS demonstrates that it has a natural synergy with law and, applied with thought, can deliver significant benefits to clients. In this article we consider the application of one particular technique, process mapping, in the context of the production and review of commercial contracts.
The relevance of LSS and process mapping
LSS is the coming together of two methodologies with a combined focus on:
- Understanding the customer’s perception of value;
- Improving process flow to reduce defects and waste;
- Using data to fuel continuous improvement in a systematic way.
It can be said lean is about identifying and removing unnecessary process steps and reducing delays and six sigma is about consistently getting products and services right for the customer. It provides a toolkit for analysing and improving any process, whether that be production of automobiles, financial transactions, customer service centres, sales and marketing campaigns, HR processes such as recruitment – or production and review of a contract.
Process mapping is one tool for understanding how work actually gets done. It provides a visual representation of every step, task, input and resource used to complete a business process. Production and review of a contract is just a process with a beginning (taking instructions and understanding objectives), a middle (exchange of contract drafts) and an end (finalisation and sign-off).
Benefits of process mapping
One of the key benefits of process mapping is better resource management through:
- Identifying duplication and wasted effort;
- Providing opportunities for disaggregation of tasks to ensure the right level of legal resource is used at each stage;
- Better understanding of business relationships and the handoffs and dependencies.
Lawyers are commonly criticised for over-resourcing matters, usually leading to higher fees. Clients can be left wondering whether it was really necessary for the highly paid (and expensive) partner to complete a given task, or whether a more junior lawyer could have achieved the same result. Pursuing that line of argument further, a client may well question whether a lawyer was actually needed at all? Or whether the task even needed to be done?
The opportunities for legal departments and law firms to gain efficiencies through a more transparent process are clear. The elephant in the room, however, is that in the case of law firms, they are often incentivised to duplicate effort (eg. have multiple lawyers attend a meeting) or aggregate tasks (have the lawyers proof-read) as they charge their clients by the hour.
Process improvements in contracting also leads to more consistent outputs by taking the art out of contract reviews. This in turn reduces risks as process becomes standardised with clarity of steps.
William Edwards Deming, the father of quality evolution, placed enormous emphasis on the importance of process to minimise defects. He said: “Eighty-five percent of the reasons for failure to meet customer expectations are related to deficiencies in the systems and process… rather than the employee. The role of management is to change the process rather than badgering individuals to do better.”
Finally, mapping assists in identifying where the value lies in a given process. Typically only 10-15% of the steps in a process add value, and usually these steps represent as little as 1% of the total process time (taking into account delays and the time where the product or service is static).
LSS provides the following definition of a value-added step:
- The customer would be interested and care about the step;
- The step must change the product or service in some way, or be an essential pre-requisite (more generously, does it move the matter forward?);
- The step must be actioned right first time and is not being carried out as a result of an earlier failure.
When to process map
Process mapping will challenge the status quo, and the way we’ve always done it. When done well, it will illustrate new and innovative ways of working. It is ideal for long-term relationships, both with legal departments and external lawyers.
According to Deming: “The result of long-term relationships is better and better quality, and lower and lower costs.” If you add faster turnaround to that, you get closer to the holy trinity of products and services delivered at the right quality, time and price. For legal departments, mapping facilitates onboarding of new staff more quickly as they can see and understand how work gets done. For law firms, it also assist in pricing matters more accurately due to the certainty it provides.
How to process map
Process maps can take a number of different forms and, depending on complexity, involve numerous subprocesses. Commonly used forms include swimlane diagrams, value stream maps, organisational process structures and the more comprehensive SIPOC models (which details the interplay between suppliers, inputs, process steps, outputs and customers).
Regardless of the type of map deployed (and it is usually beneficial to deploy more than one), it is important to start by mapping the current contract process, warts and all. As tempting as it is to sketch out the ideal state, it is vital to understand the current state and set the baseline to get the most out of the exercise.
Getting off a blank page
One popular method used by LSS practitioners to get off a blank page and start to understand the current state is called process stapling. To do this, simply imagine yourself being stapled to the thing that goes through the process and follow it each step all the way through to the end.
In the context of producing and reviewing commercial contracts, the first major step in the process is likely to be intake; how, and by whom, is the legal team instructed? For many legal departments, the form of instructions varies wildly depending on who is leading the deal for the company, which may be a contract from the sales, procurement or other business team. Does the legal team receive all of the instructions it needs to begin the process in one fell swoop, or are the background and business requirements relayed over a series of disjointed calls and emails attaching out-dated or incomplete documentation? After the matter has landed in the legal department, how is the work triaged so it is undertaken by the right level of resource?
Next, examine how the work gets done. Likely sub-processes include:
- selecting the correct contract template / playbook and completing the first draft;
- marking-up and negotiating the terms (multiple drafts);
- capturing and escalating outstanding issues;
- proofing the final wording and tidying the contract.
When the content and wording or the contract are settled, there will likely by further sub-processes including:
- internal approvals, signature and exchange of executed versions;
- extraction of contract data for management reporting;
- uploading the contract to contract management system and related administrative efforts (such as filing related emails).
Each of these steps must be documented.
Focusing on value
Once you have mapped out the steps in your current process, turn your focus to the qualitative aspects of those steps. Which actually add value? As stated earlier, this is typically only 10-15% of steps, and these may represent as little as 1% of the total process time (taking into account delays and the time where the product or service is static).
LSS practitioners use various acronyms to remember the categories of waste in a process, such as TIM WOODS or DOWNTIME. In the context of production and review of contracts, waste may commonly include:
- Transport: movement of contract parts between stakeholders (eg for input or approval);
- Inventory: WIP and completing contract parts ahead of time;
- Motion: looking for information (eg due to a poor contract management system or contract template library);
- Waiting: waiting for stakeholder inputs and approvals;
- Over-production: too much volume and detail beyond that required;
- Over-processing: too many turns of the contract and double checking;
- Defects: use of inappropriate contract template, unclear drafting or invalid sign-off;
- Skills: using senior lawyers when talented juniors (or non-lawyers) could deliver to requirements.
It is not the case that every step in a process that does not add value should be automatically deemed to be waste and discarded. There will be some steps which, although not value add according to the strict LSS definition, are nevertheless essential. This may be for regulatory, policy, vhealthportal.com health and safety, or similar reasons. For these steps, consider if they can be moved to a separate process, or at least how to complete them in the most efficient way.
Remember that it is the customer’s perception of value that is important. Will the customer care (or even notice) if a step is undertaken by a different resource, is automated, or is removed altogether?
Getting the most from your map
Process mapping will often draw out areas of ambiguity and misunderstandings around handoffs and dependencies between various
business functions and stakeholders. For example:
- When is the legal team involved in drafting the services description and service levels?
- Is it the responsibility of the legal team or the business team to obtain necessary approvals from the IT security team?
- Who is accountable for getting the contract signed?
Use your better understanding of the process to not only remove waste, but also to build more transparent and sustainable working relationships. It may be useful to develop a RACI chart to sit alongside the new process.
The process map can also serve as a data point for making investment decisions aimed at minimising defects and improving overall quality. For example, should the legal department be spending more on its contract template library, both in terms of content and accessibility?
Process mapping is one tool in the LSS toolkit for process improvement. Its power lies in the benefit for the user in having a visual depiction of a process, end to end. Whilst individual steps may seem sensible on their own, this holistic view quickly demonstrates how waste, rework and unnecessary movement can so easily creep into any process over time, resulting in inefficiency and unnecessary cost as well as increasing the likelihood of defects.
In the production and review of commercial contracts, a process in which quality of output and quick turnaround are at the heart of client needs, it seems only too right LSS methodologies and process mapping is now on the map.