Managing a complex project with multiple interested parties and specialists, often across borders and time zones, while subject to time and budgetary pressures, is a challenging exercise. It demands special skills, techniques, and tools. Just ask any manager involved in developing the next jetliner, or smart phone, or power plant. Or you can ask an M&A lawyer.
The fact of the matter is, however, that most M&A lawyers do not see themselves in such a light. Until recently, most business lawyers had not even heard the words “project management” uttered in connection with M&A.
The Old Way
There is little wonder why this is the case. Under the “classic” approach, a lawyer would receive a hurried (and sometimes harried) phone call from the client reporting that a business deal had been struck, providing the lawyer with only a skeletal outline of terms. Along with such bare bones information, the lawyer would be asked: how quickly can you turn out the documents? Sometimes, the client would also ask an important, but uncomfortable question: how much will it cost?
With the classic approach, there was little discussion regarding business objectives, priorities, allocation of responsibilities, optimum resources, deal and operational risks, budgeting, and so on.
Why the Old Way No Longer Works
Such a modus operandi might have been the accepted, even prevailing practice in the last millennium. However, in the still evolving new age of deal lawyering, such a seat-of-the-pants approach can place a lawyer at a serious competitive disadvantage, make the work unprofitable and even risk the loss of the client relationship. A number of factors are converging to fundamentally transform the legal landscape and make legal project management techniques essential in handling M&A transactions, including the following:
increasingly sophisticated clients who demand more transparency, better communication, effective containment of risk, and more predictability with fewer surprises;
heightened sensitivity to the size and variability of legal fees;
an oversupply of lawyers relative to the amount of available work; and
disaggregation of legal services, with increasing use of outsourcing and alternative service providers.
In Altman Weil’s 2014 Annual Survey of Law Firms in Transition, 94 percent of law firm leaders surveyed agreed that a focus on improved practice efficiency will remain a permanent feature of the legal market. That same survey noted that partners have only a “moderate” awareness of the challenges of the new legal market and a corresponding level of adaptability to change. The same survey found in firms of over 250 lawyers, legal project management is one of the primary ways firm management is responding to the client’s mandate for value and efficiency.
Lawyers are relatively late adopters of project management practices. For example, the medical profession has for some time embraced these techniques with excellent results. In his ground-breaking 2009 bestseller, The Checklist Manifesto: How to Get Things Right, Dr. Atul Gawande promoted the use of checklists (such as those used by pilots as standard operating procedure) in hospital operating rooms. To be sure, there was initial pushback from veteran surgeons who regarded checklists as undercutting their autonomy and questioning their judgment. However, the approach was validated when hospitals saw adverse event rates plummet following the adoption of checklists.
When lawyers first hear of legal project management, or LPM, they react much like those surgeons who resisted operating room checklists: “Why do we need to do this? This is not the way that I have always practiced. This encroaches on my autonomy. I know all these punchlist items already – this is a colossal waste of time.”
Increasingly, however, sophisticated general counsel and purchasers of legal services, either individually or through their organizations, have become converts when it comes to LPM and are insisting that firms adopt and adhere to LPM techniques and protocols. It is evidenced by the RFPs they circulate and their responses to client satisfaction surveys.
Benefits of the New Way
What are the objectives of those adopting LPM? Among other things, they wish to accomplish the following:
reduce errors;
improve efficiency and reduce “deal friction”;
better allocate resources;
increase accountability, transparency, consistency, and predictability; and
establish a basis for more accurate budgeting and predictable reporting.
