United States: Legal Project Management – Developing And Managing The Scope Of Work, Schedule, Budget And Communications For Legal Transactions And Dispute Resolution

Managing a legal matter, whether it’s a transaction or a dispute, can be equally as important as executing the actual legal work. Attention to both management and execution will help to ensure that client needs and expectations are met in a cost-effective and time-efficient manner. However, recent surveys indicate corporate/in-house counsel are dissatisfied with their outside counsel. Some of the reasons underlying their dissatisfaction (e.g., high fees/costs, lack of responsiveness, and poor communications) suggest that management of legal matters is either done ineffectively or worse, it is not done at all.¹ These business world clients are addressing their dissatisfaction by, among other things, requiring detailed task-based scopes of work, budgets, and schedules, and more frequent and effective communications from their legal service providers.

Managing a legal matter is fundamentally no different than managing a construction project or a pharmaceutical research and development program. The focus of management activities are directed to planning, executing, controlling, monitoring and closing a required scope of work within a specified time period and within a given budget. Project management professionals often refer to the scope, schedule and budget as the triple constraints of a project. It is this author’s experience that communications should be considered as a fourth and equally important element in managing any project

Project management of legal matters is concerned with monitoring the work, not with executing the work. Effective and efficient management involves business skills and tools that are different from the legal skills and tools used by the legal professionals who perform the work. This article discusses some practical considerations for developing and managing the scope of work, schedule, budget and communications for legal matters.

The scope of work (SOW), or the project plan, serves as the written "road map" or core document for how a project or legal matter will be executed. It defines the overall goals and objectives; what work will be conducted; how it will be conducted and by whom; how it will be controlled and monitored; how changes in the work scope, schedule and budget will be addressed, etc.

While there is no standard format, a task-based SOW offers some distinct advantages over a more open-ended, generalized SOW. First, a task-based SOW encourages both the client and the legal team to identify and thoroughly describe the major tasks and associated activities (and their interrelationships) needed to complete the work. Second, a task-based SOW can greatly facilitate the subsequent identification and assignment of personnel resources, the development of a budget and a schedule, and the monitoring and control of the executed work.

As a minimum, a comprehensive SOW should include the following elements or sections:

• General Description. The general description should consist of a brief, concise summary of the purpose of the work, the objectives and expected outcome, the key personnel who will be involved in the work, the major tasks to be conducted and the deliverables to be produced, and the schedule, including the expected completion date.
• Detailed Description. Arguably the most important section of the SOW, this section should provide a detailed description of each task and the associated activities to be conducted, the interrelationships of these tasks, and the expected outcome or output (e.g., the deliverables or work products) from the work performed.

• Resources. The SOW should clearly identify all individuals on the team who will be working on the legal matter. This would include not only the in-house legal professionals (attorneys, paralegals, clerical, and other support staff) but also any outside vendors, consultants or experts. Each individual’s role and responsibilities should be clearly delineated, including who is responsible for oversight and supervision of junior members of the legal team and who has strategic and legal decision making authority (for both the legal team and the client).

• Monitoring and Control. The SOW should specify in detail the methods and procedures that will be used for tracking costs (including reconciling the actual expenses against the budget), reporting progress (through status reports, milestones, and techniques like earned value analysis), and addressing delays in schedule, changes in scope and budget, and changes in project personnel.
• Communications. A formal description of how information should flow within the legal team and between the legal team and the client is important for ensuring that effective and efficient communications occurs during the execution of the work. The frequency, format (e.g., email, telephone, memos, status meetings, etc.) and recipients of any project communications are just some of the parameters which need to be specified. Since a large portion of communications in today’s business world is conducted electronically and since e-discovery has become such a hot topic, the communications section of any SOW may also need to include protocols or guidelines for addressing this potential issue.
• Closure. The SOW should identify what event or endpoint (e.g., deliverables, signed agreements, etc.) will mark the end of the work assignment, what work may remain to be done, and any follow up work that is necessary or anticipated. Closure of a matter may also address what procedures need to be implemented for the disposition of client-sensitive or confidential information.

A schedule is essentially a timeline showing the timing, sequence, durations, dependencies and constraints of the activities and events for a project. The schedule can be presented in a calendar format or on a time-phased graphic. An example of the latter is the Gantt chart, an extremely effective communication and management tool because of its ubiquitous use in the business world. Gantt charts are ideally suited for identifying and tracking tasks along the critical path³, identifying "float" in a task⁴, performing "what if" analyses in the event of delays in the schedule, and for facilitating the management of resources for each task.

A basic Gantt chart lists the names of the project tasks and the starting and ending dates for each task in adjacent columns in a spreadsheet format. A graphical display of each task, its duration, and its relationship to preceding and succeeding tasks is shown in an adjacent horizontal bar chart with a timescale on the x-axis. The basic Gantt chart can be expanded to include resource information (names of individuals responsible for each tasks, their availability or budgeted hours).

Although Gantt charts can be created using spreadsheet or presentation graphics software, Gantt charts created using specialized software such as Microsoft Project offer greater flexibility and ease of use. A Gantt chart created in Microsoft Project allows changes to individual tasks to be made readily and easily and the results on the overall project timeline can be seen immediately.

Many attorneys are reluctant to develop budgets for legal matters out of fear that the client will use them as fee caps, refuse to pay for the budgeting process, or because there are too many uncertainties to make a budget etc. However, an increasing percentage of business clients are insisting on task-based budgets for legal services instead of accepting the more traditional hourly billings and lump sum invoices from their counsel.

A budget should include fee estimates for all legal personnel (attorneys, paralegals and support staff) who will be working on the matter as well as all anticipated expenses (reproduction, document imaging, and travel expenses including transportation, lodging, meals, etc). Fees and expenses for any outside local counsel, vendors, consultants, and experts should also be included. Finally, a good budget may include cost ranges for contingencies, and clearly defined assumptions on which the budget is based to account for unanticipated changes and outcomes in the work performed.

A budget for any legal matter can be easily set up and managed using readily available spreadsheet software such as Microsoft Excel or an electronic billing system which incorporates a budgeting feature. The advantage of using spreadsheet software over an electronic billing system is the greater degree of flexibility in designing a budget template in a spreadsheet format that meets the needs of a particular client and a specific legal matter, while still retaining the ability to make changes and update the budget quickly and easily.

Setting up a budget can be greatly facilitated by using a set of uniform billing or task codes such as the Uniform Task-Based Management System (UTBMS) code sets developed by the American Bar Association and the American Corporate Counsel Association (ABA/ACCA). If these code sets are used consistently throughout the plan, schedule and budget, then budget tracking and reconciliation with bills can be accomplished more efficiently.

More sophisticated analysis of a budget can be performed by coupling a detailed budget to a decision tree which summarizes all of the possible outcomes of a legal matter. This provides a way to quantitatively and iteratively assess how changes in the probabilities of different outcomes impact the expected costs. This can be a powerful tool for assessing risk to the client and allowing the client to make informed decisions whether to pursue the legal matter, how long to pursue the legal matter, or for evaluating the timing and parameters of a potential settlement.

Earlier in this article, the author introduced communications as a fourth critical element in effective project management. Poor communications and lack of responsiveness was consistently cited in the recent surveys of corporate/in-house counsel as major reasons for their dissatisfaction with their legal service providers. The most detailed project plans, schedules and budgets are not enough to guarantee success. Inconsistent, incomplete or non-existent status information, failure to listen to client concerns or solicit feedback, and inappropriate modalities of communication are all indicators of poor communications which can adversely impact the success of a project.

Clients don’t like surprises. Legal services that don’t conform to scope, overrun budgets, and are not delivered on time put the corporate/in-house counsel, who likely were instrumental in retaining outside counsel, in the unenviable position of having to explain these surprises to their corporate management. In today’s 24/7 global business world, computers, the internet (i.e., extranets and intranets), cellular telephones and personal digital assistants leave little excuse for poor communications between a client and their legal services provider.

Simple measures go a long way to establishing solid communications. Specific examples (all used routinely by this author) include weekly teleconference status calls among the legal team and the client (at pre-arranged times and with agendas), biweekly status memos updating the client on schedule and budget, and frequent emails and telephone calls from the case principles to the clients. The key to achieving successful communications is that once the communications protocols are established, they must be monitored as rigorously as the monitoring and control of the scope, schedule and budget.

Managing the scope, schedule, budget and communications for legal matters is equally as important as executing the work itself in terms of meeting the needs and expectations of the client for cost-effective and time-efficient services. Although each client and legal matter is different, there are some basic and practical considerations for developing and managing these four constraints or elements for any client and for any legal matter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.