The Process Engineering Rule: Optimising and re-engineering legal business processes

Part of the lpc series The New Economic Rules

 

Re-engineering a legal process can increase profitability manyfold - up to EIGHT times in an audited comparison. Additionally the ability to deal adequately and consistently with a large volume of work is greatly enhanced, fundamentally restricting the negative impact of the law of diminishing returns. The rewards in applying process re-engineering at any time are considerable; in the current environment the benefit is correspondingly greater.

The benefits of process re-engineering regrettably do not appear by magic; they are the result of alternative or lateral thinking. This article will provide an insight into these thought patterns.

The best starting point is the conventional handling of work; the exacting standards expected of the legal profession often result, even in smaller practices, with fragmentation or compartmentalisation of the business - conveyancing, family, commercial etc. Despite good intentions, such divisions are often unrealistic and the cause of economic inefficiency.

The graphic above describes the relationship between conventional work methods and those which have been process re-engineered. As important as the substantially lower marginal cost of carrying out the work is the much lower management overhead in dealing with larger volumes of work. Traditional methods involve small management units - re-engineered methods allow much greater volume of work throughflow for a given size of management and control infrastructure. In simple terms much greater amounts of work can be processed before control and quality issues prevail.

Most practices will see the obvious sense of using a less costly person rather than an expensive solicitor. Businesses will also recognise that the expensive solicitor will frequently be actually less able on heavily administrative matters than a person who is unqualified but has good administrative capabilities.

None of this is rocket science and, before the advent of paralegals, many solicitors relied heavily upon his or her secretary carrying out administrative issues such as the completion of forms. What is much more scientific is the re-engineering of work to maximise those aspects of the work that can be carried out according to "rules" and refining (and indeed improving) those "knowledge" elements carried out by qualified practitioners or paralegals.

So how is this done? Legal practices can benefit from looking entirely afresh at the way they carry out their operations. Rather than divide the work according to long standing "natural" divisions, they analyse the content of the work according to its knowledge content.

Such deliberation requires examining the areas of work within the legal practice and breaking it down into "knowledge" and "rules" based elements. As might be expected "rules" based elements are tasks that can viewed against a set of definitive repetitive rules. "Knowledge" based activities are those which depend upon the intellectual capabilities of the lawyer or paralegal; these are generally complex or sensitive tasks. Generally speaking the cost of fulfilling "rules" based tasks are substantially cheaper than those of "knowledge" based tasks. Utilising computer systems can make "rules" based tasks much more efficient, but even in the absence of substantial computerisation, "rules" based tasks can be effected far more efficiently with the benefit of re-engineered processes.

Understandably, the complexity of the original legal function does have a bearing on the results that can be achieved. The following graphic provides an insight of the variation in likely returns in re-engineering an inherently straightforward process such as debt collection against an inherently complex process such as conveyancing. This makes sense in that the complex process is likely to have more "knowledge" elements though re-engineered such a process will still be far more profitable.



Intuitively this is logical because conveyancing involves a very important event in people's lives and answers of "just press 1 and we will get back to you in a maximum of 24 hours" to questions about the whereabouts of keys will get short shrift from the client. But profitability will still be amplified where the complex task can be split into a number of more simple tasks. And indeed such an approach works well with conveyancing.

A number of points need emphasising.

Legal process re-engineering IS NOT just:-

• employing paralegals and training them to do what a solicitor does - that may help but the paralegal is a replacement for the "knowledge" based person rather than changing how the work itself is done.
• using more technology and computers
• being on the internet
• buying and using case management software

Legal process re-engineering IS:-

• analysing and synthesising a legal or client process into distinct elements which together comprise the whole legal or client process.
• allocating to each of those elements an attribute that details whether it is "knowledge" or "rule" based and the relevant required technology, control processes and verification procedures
• re-arranging the legal practice so as to maximise the efficiency of carrying out of the work remembering that it is often the case that the "components" of the process engineering may be able to be used for several different areas of work in the same business. (so as an example an advanced communications capability can be used by several diverse work areas within a practice)

This sounds quite complex and certainly there is an investment required to make the change. But the return to the business can be remarkable, completely revolutionising the levels at which profits can enduringly be achieved. Legal process re-engineering can be effective at many different levels including medium sized firms, through large firms, to in-house and public authority legal departments.

There is no limitation on the types of work to which process engineering can be applied. It is NOT just applicable to the normal volume areas of remortgage, debt and the like. Process Engineering can be applied to any legal - or indeed knowledge based - work with often stunning results.

lpc personnel are experts in the area of legal process engineering; they have not only been deeply involved in this area for nearly twenty years but were the acknowledged pioneers in utilising these ideas, establishing their successful application in a wide area of legal and quasi-legal disciplines.

Such experience is impossible to acquire on the open market. Vendors of software systems claiming to provide process engineering "out of the box" are simply wrong. Computer systems are an important factor in process engineering but there are other far more important elements. Speaking to lpc will not only assist a legal practice to achieve major improvements to its bottom line but also allow that practice to substantially reduce the re-engineering timescales avoiding the pitfalls that would otherwise be inevitable.