Lean Thinking In A Law Firm Is As Easy As Riding (Or Building) A Bike
Bringing legal services delivery into the 21st Century
THE LEAN LAW FIRM
Run your firm like the world’s most efficient and productive businesses
By Larry Port and Dave Maxfield
238 pp. American Bar Association, 2018.
$79.95 (non-members), $64.95 (ABA members),
$49.95 (ABA Law Practice Section members)
Lean thinking, a philosophy expressed through simple methods, has become the leading way for organizations throughout societies to improve. It traces back to the philosophical work of Charles Peirce in the late 1800s. He began developing — working for a brief period with Oliver Wendell Holmes, Jr. and other lawyers — the philosophy of pragmatism. Sakichi Toyoda, the “King of Japanese inventors” and founder of Toyota Industries Co., Ltd., began developing some of the core methods of lean in the 1890s. Henry Ford, Frederick Winslow Taylor, W. Edward Deming, Taiichi Ohno and others associated with the Efficiency Movement contributed to lean thinking’s development.
It was the post-WW II confluence of social and business challenges in Japan that gave lean thinking its boost. Kiichiro Toyoda, one of Sakichi’s sons who took over running the family business before WW II, had added automobile manufacturing to the company’s portfolio of businesses. After the war, Japanese manufacturing companies including Toyoda faced money, labor, and raw material constraints. Kiichiro tasked Taiichi Ohno, a Toyoda engineer, with overcoming those constraints.
Ohno pulled together several engineers and named the team the “Toyota Autonomous Study Group”. Over the next 30 years they and their successors created the basic methods of a new way of manufacturing. In the early 1970s, Toyota named this new approach the “Toyota Production System” or simply TPS.
Expanding the Reach of TPS
In November 1990, James P. Womack, Daniel T. Jones, and Daniel Roos published The Machine That Changed The World: The Story of Lean Production — Toyota’s Secret Weapon in the Global Car Wars That Is Now Revolutionizing World Industry. It told the story of Toyota and how it had used TPS to create a new way to manufacture cars.
In 1996, the author’s second book Lean Thinking: Banish Waste and Create Wealth In Your Organization hit the shelves. Recognizing that other car companies would not want to use something named after Toyota, the authors had looked for a different name for TPS. One of Womack’s graduate students came up with the generic name “lean thinking.” The second book gave a new boost to the philosophy and methods that were now working their way through car manufacturing and many other industries. Lean thinking, along with Six Sigma® (developed at Motorola), and other operations improvement approaches, became part of the broader management field of operational excellence.
According to the Process Excellence Network, 75% of organizations currently use lean thinking with another 14% planning to implement it. Further, 70% of organizations use Lean Six Sigma (a mashup of lean thinking and Six Sigma) with another 21% planning to implement it. Organizations vary which methodology they use by substantive area, which explains why an organization may use multiple methodologies.
As the following chart shows, operational excellence methodologies are used in a broad range of substantive departments within organizations:
Although heavily used by clients, lean thinking has not received a warm welcome by the legal industry. Some legal departments (11%) have explored its values (though often forced to do so as part of corporate-wide initiatives). Law firms have been recalcitrant. Industry secrecy keeps us from getting data, but estimates put its penetration at less than 1% among medium and large firms (many small firms have dabbled with it, but given the large number of such firms the percentage is still low). In the public sector (e.g., courts), lean thinking almost does not exist.
Legal Industry Missionaries
In The Lean Law Firm, the authors take on the task of bringing this old, but widely respected methodology to skeptical lawyers. The legal services delivery part of the legal industry has, as the authors note, remained virtually the same for decades. This should not surprise anyone since the way lawyers deliver legal services is tightly bound to the principal way lawyers in private practice make money: billing by the hour. In other industries, lack of operational excellence punishes companies by reducing their profits. In law, operational inefficiency increases profits. Why change?
The authors show how how a hybrid of process excellence concepts with lean thinking as their core can be used to transform a struggling law firm into an efficient and money making enterprise. The book is not simply a theoretical exposition. Larry Port is the CEO and founder of Rocket Matter. Dave Maxfield is a South Carolina consumer protection lawyer who has practiced in one- and two-person law firms for 25 years. They speak from experience when they talk about how to use lean thinking methods. This is significant, because lean thinking is a practical philosophy. One learns more by doing than by reading.
The authors use the same literary technique Eliyahu Goldratt and Jeff Cox used in the lean thinking classic The Goal: A Process of Ongoing Improvement, and Mitch Kowalski used in Avoiding Extinction: Reimagining Legal Services for the 21st Century. It makes for easy reading and understanding, while taking the reader through what might otherwise seem like dry material.
They tell the story of Carson Wright, a refugee from Big Law who finds himself trying to turn around a three-person law firm that has fallen on hard times. Carson turns to his friend and coach, Guy, from days past who just happens to be a lean thinking aficionado running a bicycle manufacturing plant. Guy acts as Carson’s sensei, guiding him through the concepts of lean thinking and translating those concepts from manufacturing to legal services,
The Lean Law Firm gives a vision of how a lean thinking-based law practice can thrive in the modern world of competitive legal services. Port and Maxfield aim to inspire and to show how the reader, like Carson, can take a law firm from failing to thriving by changing the mindset of the lawyers. As more lawyers and clients realize each year, the billable hour approach puts severe limitations and burdens on both parties. Moving to other fee arrangements and adopting modern operation philosophies, enable lawyers and clients to achieve superior performance results.
A Vision, Not A Primer
For those who want to understand the nitty-gritty of lean thinking concepts, the authors defer to traditional lean thinking texts. This is not a book that will take you through the details of value stream mapping or process mapping. (For those interested, I recommend Karen Martin’s books, Value Stream Mapping and Metrics-Based Process Mapping.) As you dig into lean thinking, you will want to expand your knowledge through reading and expand your skills (a sensei-coach is very helpful).
The Lean Law Firm is targeted at small firm and solo practice lawyers. This makes sense, since both Port and Maxfield have experience with individual and small business clients. Still, the basic ideas, with some modification, apply to larger firms. For example, the authors provide many “Key Performance Indicators” or KPIs the small firm lawyers can use to measure business performance. In a medium or large firm, those same KPIs could be applied on an individual lawyer or practice group, and some could be used firm-wide.
Some of the authors’ advice would run into challenges if picked up by larger firms. For example, the advice to always collect flat fees upfront runs counter to industry payment norms for medium and large firms and would not be well-received by larger clients. The guidance that a lawyer should focus her practice on the most profitable areas also has limitations. For a solo or small firm lawyer, having one specialty area can work quite well. The risk, of course, is that the chosen specialty area falls out of favor (see environmental law). For a larger firm, restricting the practice to one area or client industry is impractical. These practice eccentricities are easy to spot, however, and do not detract from the overall message.
Save Your Practice, Build Your Client Base
Almost every day a new article appears explaining how the legal industry must become more efficient if it wants to meet the needs of its clients. General counsel list increasing law department efficiency as one of their top priorities. Individual clients complain that lawyers charge too much and increasingly skip hiring lawyers and chose instead to represent themselves. The industry is under pressure to remove barriers and permit competition from those without law licenses.
Lean thinking is a proven (and much lower cost than tech) way to remove waste from what we do, reduce costs, increase quality, and improve service delivery times. In short, it helps service providers meet the needs of their customers at lower cost, which pleases the client while maintaining or increasing profit for the service provider. In The Lean Law Firm, Port and Maxfield lay out the path for lawyers. All that remains is for lawyers to get moving.
Ken Grady is an author writing about innovation, leadership, and the future of the legal industry. He is has been featured as a Top Writer on Medium in Artificial Intelligence, Innovation, and Leadership. He received lean thinking training in Japan at Shingijutsu Co. Ltd. by senseis Yoshiki Iwata and Senji Niwa, members of the original Toyota Autonomous Study Group. He has spent 25 years adapting and applying lean thinking to legal services. He is an Adjunct Professor and Research Fellow at Michigan State University College of Law; and on the Advisory Boards for Elevate Services, MDR Lab and LARI, Ltd. You can follow him on Twitter, connect with him on LinkedIn, and follow him on Facebook.
