Partner Nightmares: Trapped by the Cap

In this article, we examine this problem from the perspective of law firm partners and suggest some steps for handling cap issues in an effective manner.

The Scoping Dilemma for Partners

When we consult with law firm partners about scopes and caps, we frequently hear about the problem of matters that have gone way beyond scope. This problem leaves the partners with a wonderful choice. They can simply keep their mouths shut and later fight with their partners over profitability and write-offs. Or, they can start arguing with the client over the need to expand the budget and risk losing the client down the road. In the latter situation, the partners also face the chance of losing all the time and resources they spent on acquiring the client in the first case.

In this article, partners can discover tips for limiting the risk of scoping disputes. In particular, we discuss methods for improving the scoping process via the collection of important information at three stages of the matter acquisition process.

The Challenges of Scoping

Before we introduce our proposed solutions, it’s important to understand the underlying expectations and challenges of scoping.

Clients understandably expect law firms to take responsibility for scoping matters because the external lawyers are deemed to have the expert knowledge for handling a matter. 

However, law firms suffer two major disadvantages when dealing with matter scoping. First, many partners are not comfortable with scoping due to:

• Their lack of skills in project management;
• Their firm’s failure to collect historical information about similar past matters to help with the scoping; and
• The mere fact that scoping involves a great deal of uncertainty, thereby making it impossible to completely reduce the risk of going beyond scope.

Second, law firms typically do not have access to all the client information that would be necessary for properly scoping a matter.

Law firms cannot solve the first disadvantage in the short term as it takes substantial time to develop the skills and collect the data in order to make partners comfortable with scoping. However, law firms can still make substantial improvement in the short term if they focus on improving their collection of crucial scoping data from clients.

Enhanced Scoping via Data Collection

Law firms can best collect data if they not only focus on the types of questions they ask clients but also address the timing of such collections. In our experience, this question of timing should focus on the following three preliminary stages:

• Pre-Pitch
• Pitch
• Kick-Off Meeting

In the below explanations, we focus our advice on the situation of law firms responding to RFPs. However, law firms can apply a similar approach when independently pursuing work from a client.

Pre-Pitch

Once a law firm receives an RFP, they should immediately start to conduct a preliminary scoping of the work. As part of the preliminary scoping, partners should respond to RFPs by contacting the client to ask questions regarding not just the content of the RFP but also the background business drivers for the needed work. For example, you should probably investigate the following questions:

• How does the proposed work relate to the client’s strategy?
• What business goals are the client looking to achieve with the proposed work?
• What issues/concerns does the legal department have regarding the project?
• Who are the key decision-makers? What are their roles in the RFP decision-making process?

Pitch

If the client permits the law firm to make its pitch in person, the law firm should use this time to not only introduce itself but to also impress the client by engaging in a further discussion about the matter’s scope. This discussion should focus on major issues that are likely to be of concern to both the client and the firm. For example, we encourage firms to investigate the following topics:

• Are there certain activities that are especially important to accomplishing the client’s goals? Who will be responsible for these activities?
• How does your firm envision the timeline for its work, including intermediate timelines for each stage? How do your timelines match the envisioned timelines of the client?
• Does the client require any special resources for the matter? 
• Does the client face any particular constraints (e.g. obtaining difficult approvals) that will substantially affect the matter?

If possible, the pitch team should also develop customized questions for each of the key decision-makers. These questions should be aimed at trying to uncover the goals of each decision-maker and the work required to reach such goals.

Kick-Off Meeting

As a final step, law firms are advised to have one final scoping discussion prior to starting work in order to (i) confirm the client’s understanding of the matter’s scope, (ii) ensure that all project members are on the same page regarding the scope, and (iii) agree on procedures for effectively resolving potential scoping disputes. For this purpose, we recommend that the firm organize a kick off meeting with all of the participants who will work on the matter. 

During this discussion, the external lawyers might find it useful to clarify with their internal counterparts the following work-related topics:

• The main stages of the project, including the deadline for each stage.
• The tasks for each stage, including the responsible party for each task.
• The deliverables for each task.

Furthermore, the participants should work together to set up a crisis communications plan for identifying and addressing potential disputes. This plan would address the following topics:

• For each side, the responsible person for discussing scoping issues.
• The triggers for discussing potential issues. For example, the parties can discuss the main scoping risks for the matter and select triggers based on the likelihood of such risks.
• The methods for discussing scoping issues. For example, should the discussion be over the phone or in person? How frequently should they be discussing matter scope developments?

Conclusion

We hope that our above scoping tips will help partners sleep a little better at night - not only because they will have less concerns about scoping disputes but also because they will become more successful in their pitching due to their ability to better address major client concerns about scoping.

By Aaron M. Muhly, Founding Partner of Evelaw

Aaron M. Muhly is a co-founder of Evelaw, an advisor to European law firms on marketing, client development, and business communications. To learn more, visit www.evelaw.eu.