WHEN MEASURING ACHIEVEMENT OF LAWYERS, SHOULD HOURS OR RESULTS MATTER MOST SHOULD SIX SIGMA PLAN APPLY TO LAW FIRMS
Posted Apr 25, 2013 By Patrick J. Lamb
Not long ago, I was speaking before a group of law firm managing partners who were curious about how we ran a firm without keeping track of hours.
One manager asked how we handled associate reviews considering we don’t track billable hours. Before answering, I asked how many used hours as part of their review process. All acknowledged they do. When I asked for other review criteria, the consensus seemed to be work quality and citizenship factors also weighed in during reviews.
Then I turned to client representatives who were in the room and asked if they also had a review process for lawyers. They did. But none of them used hours as a factor during reviews.
Why not count hours when measuring achievement?
They agreed that hours weren’t relevant.
Law firms have considered themselves “special” for so long that they routinely try to figure out solutions to problems that businesses have long ago resolved. Rather than learn from what businesses, including their clients, have done, firms want to try to figure out a solution anew. My fellow columnist Paul Lippe has described this as using the Lewis & Clark method of figuring out where you’re going instead of Google Maps.
The point, however made, is clear: Law firms are business enterprises and should build on the success of other business enterprises rather than simply solving problems from scratch or using other law firms as sources of solution insights.
Let’s look at a few examples. How do law firms view productivity? Most measure productivity by the average number of hours worked by the number of full-time equivalent lawyers. Yet no business uses a similar measurement. In the simplest manner, businesses determine the number of outputs in a given time period, controlling for variables such as the number of workers and so forth. The key is the focus on results.
Since Jack Welch popularized Six Sigma in his days at General Electric, the many GE vice-presidents who soon were CEOs in other companies have made Six Sigma a mainstay of business. It has evolved over time, and now many businesses combine Six Sigma with the principles of Lean. How do law firms score in that area? Poorly at best. Only Seyfarth Shaw stands out as a firm of any size that has even attempted to make Lean Six Sigma an integral part of its culture.
Marketing? Branding? Sales? Law firm efforts in these areas are infantile in comparison to business.
Leadership development? Law firms look to their best salespeople (almost always men) and make them department heads or managing partners. The implicit assumption is that accomplishment in sales and business development makes one a leader. Businesses know that leadership skills are honed in a number of ways, but they know most importantly that leadership skills don’t just happen.
Law firms, by contrast, are built solely on the hope that they do.
Finally, there is the very fundamental question of business model. Is there any business based on a model that jettisons people after they have spent years learning the business and become extremely valuable to customers? Do any businesses choose to structure themselves on the partnership model so many law firms use? If there are any businesses that do, they do a great job of disguising their success.
Part of the New Normal is the application of business tools and techniques to the business of law. One of the most critical tools is self-critical analysis—not assuming that we have right answers simply because we are lawyers or our practices previously were successful.The best businesses are building themselves for 2020 and beyond. Law firms should be doing the same.
Patrick Lamb is a founding member of Valorem Law Group, a litigation firm representing business interests. Valorem helps clients solve their business disputes and coping with pressures to reduce legal spend using nontraditional approaches, including use of nonhourly fee structures, coordination with LPOs or contract lawyers, joint-venturing with other firms and implementation of project management tools to handle lawsuits or portfolios of litigation.
SIX SIGMA EXPLAINED BY WIKIPEDIA
For Sigma 6, the six-piece band that became Pink Floyd, see Pink Floyd.
The often-used Six Sigma symbol
Six Sigma is a set of tools and strategies for process improvement originally developed by Motorola in 1985. Six Sigma became well known after Jack Welch made it a central focus of his business strategy at General Electric in 1995, and today it is used in different sectors of industry.
Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization (“Champions”, “Black Belts”, “Green Belts”, “Orange Belts”, etc.) who are experts in these very complex methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified value targets, for example; process cycle time reduction, customer satisfaction, reduction in pollution, cost reduction and/or profit increase.
The term Six Sigma originated from terminology associated with manufacturing, specifically terms associated with statistical modeling of manufacturing processes. The maturity of a manufacturing process can be described by a sigma rating indicating its yield or the percentage of defect-free products it creates. A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects (3.4 defects per million), although, as discussed below, this defect level corresponds to only a 4.5 sigma level. Motorola set a goal of “six sigma” for all of its manufacturing operations, and this goal became a byword for the management and engineering practices used to achieve it.
Like its predecessors, Six Sigma doctrine asserts that:
• Continuous efforts to achieve stable and predictable process results (i.e., reduce process variation) are of vital importance to business success.
• Manufacturing and business processes have characteristics that can be measured, analyzed, controlled and improved.
• Achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management.
Features that set Six Sigma apart from previous quality improvement initiatives include:
• A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project.
• An increased emphasis on strong and passionate management leadership and support.
• A special infrastructure of “Champions”, “Master Black Belts”, “Black Belts”, “Green Belts”, etc. to lead and implement the Six Sigma approach.
• A clear commitment to making decisions on the basis of verifiable data and statistical methods, rather than assumptions and guesswork.
The term “Six Sigma” comes from a field of statistics known as process capability studies. Originally, it referred to the ability of manufacturing processes to produce a very high proportion of output within specification. Processes that operate with “six sigma quality” over the short term are assumed to produce long-term defect levels below 3.4 defects per million opportunities (DPMO). Six Sigma’s implicit goal is to improve all processes, but not to the 3.4 DPMO level necessarily. Organizations need to determine an appropriate sigma level for each of their most important processes and strive to achieve these. As a result of this goal, it is incumbent on management of the organisation to prioritize areas of improvement.
Six Sigma is a registered service mark and trademark of Motorola Inc. As of 2006 Motorola reported over US$17 billion in savings from Six Sigma. Other early adopters of Six Sigma who achieved well-publicized success include Honeywell (previously known as AlliedSignal) and General Electric, where Jack Welch introduced the method. By the late 1990s, about two-thirds of the Fortune 500 organizations had begun Six Sigma initiatives with the aim of reducing costs and improving quality.
In recent years, some practitioners have combined Six Sigma ideas with lean manufacturing to create a methodology named Lean Six Sigma. The Lean Six Sigma methodology views lean manufacturing, which addresses process flow and waste issues, and Six Sigma, with its focus on variation and design, as complementary disciplines aimed at promoting “business and operational excellence”. Companies such as IBM and Sandia National Laboratories use Lean Six Sigma to focus transformation efforts not just on efficiency but also on growth. It serves as a foundation for innovation throughout the organization, from manufacturing and software development to sales and service delivery functions.
The International Organisation for Standards (ISO) has published ISO 13053:2011 defining the six sigma process.
Six Sigma projects follow two project methodologies inspired by Deming’s Plan-Do-Check-Act Cycle. These methodologies, composed of five phases each, bear the acronyms DMAIC and DMADV.
• DMAIC is used for projects aimed at improving an existing business process. DMAIC is pronounced as “duh-may-ick” (< ˌdʌ ˈmeɪ ɪk>).
• DMADV is used for projects aimed at creating new product or process designs. DMADV is pronounced as “duh-mad-vee” (< ˌdʌ ˈmæd vi>).
The DMAIC project methodology has five phases:
• Define the problem, the voice of the customer, and the project goals, specifically.
• Measure key aspects of the current process and collect relevant data.
• Analyze the data to investigate and verify cause-and-effect relationships. Determine what the relationships are, and attempt to ensure that all factors have been considered. Seek out root cause of the defect under investigation.
• Improve or optimize the current process based upon data analysis using techniques such as design of experiments, poka yoke or mistake proofing, and standard work to create a new, future state process. Set up pilot runs to establish process capability.
• Control the future state process to ensure that any deviations from target are corrected before they result in defects. Implement control systems such as statistical process control, production boards, visual workplaces, and continuously monitor the process.
Some organizations add a Recognize step at the beginning, which is to recognize the right problem to work on, thus yielding an RDMAIC methodology.[
One key innovation of Six Sigma involves the "professionalizing" of quality management functions. Prior to Six Sigma, quality management in practice was largely relegated to the production floor and to statisticians in a separate quality department. Formal Six Sigma programs adopt a ranking terminology (similar to some martial arts systems) to define a hierarchy (and career path) that cuts across all business functions.
Six Sigma identifies several key roles for its successful implementation.
• Executive Leadership includes the CEO and other members of top management. They are responsible for setting up a vision for Six Sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for breakthrough improvements.
• Champions take responsibility for Six Sigma implementation across the organization in an integrated manner. The Executive Leadership draws them from upper management. Champions also act as mentors to Black Belts.
• Master Black Belts, identified by champions, act as in-house coaches on Six Sigma. They devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts. Apart from statistical tasks, they spend their time on ensuring consistent application of Six Sigma across various functions and departments.
• Black Belts operate under Master Black Belts to apply Six Sigma methodology to specific projects. They devote 100% of their time to Six Sigma. They primarily focus on Six Sigma project execution, whereas Champions and Master Black Belts focus on identifying projects/functions for Six Sigma.
• Green Belts are the employees who take up Six Sigma implementation along with their other job responsibilities, operating under the guidance of Black Belts.
Some organizations use additional belt colours, such as Yellow Belts, for employees that have basic training in Six Sigma tools and generally participate in projects and ‘white belts’ for those locally trained in the concepts but do not participate in the project team.