TOTAL QUALITY MANAGEMENT IN THE LAW FIRM

WHAT IS TOTAL QUALITY MANAGEMENT?

Total quality management ("TQM") is a program of continuous improvement of service quality. It is not a static goal to be achieved. Rather, it is an ongoing process of evolution and affirmative change to meet variable market and client expectations. Over the past few years TQM has ceased to be simply the latest "buzzword" in a long line of management fads and has gained the respect of successful businesses (both large and small) as a necessary component of their strategic planning.

According to the leading legal management consulting firm, Altman Weil Pensa, the basic concepts of TQM include:

• A firm-wide, top-to-bottom institutional (instead of individual) approach to quality.

• Having the client define what constitutes quality in work product and services, not the legal department or law firm.

• Use of statistical methods and controls to track progress in quality improvement.

• "Empowering" all workers, on all levels, to actively participate in quality improvement.

• Redesigning operations to restructure business processes to function as they should, unconstrained by existing methods, people, or designs.

• "Benchmarking" performance in discrete areas of operations against top performers in those areas to identify ways to improve.

• "Partnering" with suppliers and clients to facilitate communication and perceptions of improvement.

• Consistent, enduring focus on continuous improvement of client perceptions of quality.

BENEFITS OF TOTAL QUALITY MANAGEMENT

• Improved performance and productivity throughout the firm.

• Increased client satisfaction and loyalty.

• Increased lawyer and staff satisfaction and loyalty.

• Improved communication at all levels of the firm, both internally and externally.

• Improved competitive position.

• Improved profitability.

TOTAL QUALITY MANAGEMENT IN THE LEGAL ENVIRONMENT

The law firm environment is the perfect forum for applying TQM because of the TQM focus on the client. TQM looks to the client to provide the definition of "quality" and then creates a management environment and organizational structure to meet client-defined expectations.

Of course, all businesses are client-centered in that they depend upon the goodwill and satisfaction of their clients to survive. The practice of law differs, however, in that lawyers are something more than simply providers of a service. They are counselors, business advisors, advocates, sometimes psychologists, and often mentors. The law firm client does not simply receive a standard service that the firm provides to all of its clients; the law firm client receives a service that is unique because every client's needs must be individually assessed and met. This type of service involves the client (or should involve the client) to a more intimate degree than most other businesses because the client and the client's specific needs and goals define the service to be rendered.

TQM teaches the lawyer how to relate to his/her client to determine what the client seeks to achieve and the kind of result the client desires to obtain. This prevents the lawyer from gathering the facts and forging ahead with his/her own agenda thinking that the client would want what the lawyer would want if the lawyer were in the client's shoes.

For example, a client may ask that a business document be drafted to serve a minor, functional purpose. His lawyer spends long, expensive hours drafting an elaborate, airtight document providing for a thousand contingencies which, in the client's real-world business life will never occur. The lawyer thinks that she has done a top-notch legal drafting job (and may, indeed, have done so) but the client sees a large bill and has no appreciation or need for such a detailed document.

TQM also teaches the lawyer how to relate to other members of the firm and to work as a team player with his/her practice assistant, legal assistant, associates and partners to meet client needs. At the same time, TQM teaches the other members of the firm to focus on and be responsive to client needs.

WHY SHOULD YOU IMPLEMENT A TOTAL QUALITY MANAGEMENT PROGRAM IN YOUR FIRM?

1. Clients want it.

Results of surveys done by Altman Weil Pensa in 1992 and 1994 show that a "significant" number of managing partners had been asked by their clients if they will implement a TQM program.

Many surveys show that clients' unmet needs and expectations often have little to do with a lawyer's competence. Client dissatisfaction is a result of the insensitivity of the lawyer to the client's needs. Clients are sending a message : "Change the professional-oriented process you use to run your law firms to a client-oriented process." A lawyer must go from "How can I apply my legal talents to solve this problem?" to "How can I respond to the needs of my clients?"

2. Quality is increasingly important because the legal market is a mature service market.

Look at today's legal market and you will find:

• More sophisticated clients.

• All market niches being served by more than one firm giving clients a choice of many law firms to provide needed services.

• Intense price competition.

• Clients who can obtain "legal" services from non-legal providers such as accountants, banks, insurance companies, etc.

• Local markets being served by branch offices of large firms headquartered elsewhere.

Quality is becoming more and more the differentiating factor between law firms.

SUCCESS STORIES

In 1993, the American Bar Association set up a TQM task force with ten test firms agreeing to work with the task force to implement quality programs and report their results. All of the progress reports have been positive. The following are a sampling of the results thus far.

Turner, Padget, Graham & Laney

Turner, Padget, Graham & Laney is a general trial practice firm with 41 lawyers. One of its trial lawyers attended the ABA's training and was inspired by the reading material, particularly Stephen Covey's The 7 Habits of Highly Effective People. As part of its overall TQM strategy, the firm worked to incorporate the 7 habits detailed in Covey's book into its culture and systems.

For example, the fourth "habit"-"think win-win"-was used as a basis for introducing a win-win compensation system for stockholders at the beginning of 1995. In early 1994, the firm had formed a committee to study the way it compensated partners to make certain it treated them fairly, encouraged teamwork and promoted client service. After a year of study, the company created a new compensation system. Under the new system, the firm's partners created their own win-win agreements, each detailing what he or she intended to do in 1995 (i.e., his or her commitments for the year in terms of client service, marketing, management, mentoring associates, revenue generation, etc.) and what his or her expectations were in return.

A management committee then reviewed the submitted agreements to ensure that the partner proposals were in sync with the firm's goals. According to R. Wayne Byrd, a leader of the firm's quality efforts, the compensation system has proven to be extremely valuable. The system has eliminated the quota-based performance measurement (i.e. number of billable hours per year). According to Byrd, a compensation system that measures performance by this standard industry quota is ineffective in promoting quality service because it rewards lawyers for inefficiency by encouraging them to spend as much time as possible on cases to increase their total billable hours.

In 1996, a compensation committee was established to develop a similar win-win compensation system for associates and paralegals.

Phillips, Lytle, Hitchcock, Blaine & Huber

One structural change made by another of the ABA test firms to work toward its quality goals was the establishment of quality improvement teams. The 150-lawyer general practice firm of Phillips, Lytle, Hitchcock , Blaine & Huber created 46 teams to address problems identified in internal and client surveys.

The team leaders received a three-day training course from an outside consultant, learning TQM principles and tools, teambuilding skills, listening skills, and a ten-step problem-solving approach. A subsequent one-day training session was held for the entire firm.

After the training, the teams studied various issues, such as the preparation of documents and the process of delivering certain legal services to clients. For instance, a commercial lending team was created to study the preparation of binders for loan-closing documentation. In the team's initial discussions about why the preparation of closing binders took as long as it did, three points quickly became evident. First, the responsibility for the task was never clearly delegated between the junior associates and the legal assistants. Second, the junior associates did not enjoy the work involved and attempted to put it off onto the legal assistants who didn't like doing it either. Third, the secretaries wanted to be involved in the process but had only been given the task of copying documents. They could not render greater assistance because they did not completely understand the process. Once a flowchart for the process was created, the secretaries could see where they fit into the process and could offer ideas for simplifying it.

Quality teams also helped to improve other processes. The firm's mailroom staff developed a streamlined system for mail sorting that resulted in mail arriving at lawyers' desks 30 minutes earlier each day. Teams also developed new forms and processes for condominium closings, real estate closings, and certain types of billing transactions. Other quality teams reviewed systems for opening files; file indexing, organization and closing; fax receipt and delivery; and relocating printers, fax machines, and copiers to minimize interruptions to secretarial workflow.

THE FIRST STEP TO TOTAL QUALITY MANAGEMENT

The essential first step to implementing a TQM program is to conduct a quality audit to determine the state of quality within the firm as a starting point from which to begin making changes. An audit is a time-consuming task that requires commitment from and participation at all levels within the firm. Therefore, it is helpful to conduct a preliminary diagnostic analysis prior to beginning a full-blown audit in order to raise participant consciousness concerning the quality problems that the firm faces so that skeptics can see the potential benefits of investing time and energy conducting a true audit.

Altman Weil Pensa has created a "Total Quality Service Preliminary Checklist" to serve the purpose of identifying preliminary areas on which the TQM audit should focus and to serve as a basis for early discussions concerning whether or not to commit to a TQM program. The checklist is reproduced below.

TOTAL QUALITY SERVICE PRELIMINARY CHECKLIST

The checklist is divided into five sections:

Client Relations

Practice Management and Service Delivery

Administrative Management

Profitability and Financial Performance

Total Quality Service

A. CLIENTS

On a scale of 1 to 10 (with 10 being the highest), how do you rate the overall timeliness and responsiveness of attorneys in returning client telephone calls?

Rating _____

Comments:

1. On a scale of 1 to 10 (with 10 being the highest), how do you rate the timeliness with which the firm responds to inquiries from prospective clients?

Rating _____

Comments:

2. How would you describe the firm's client base (check one):

_____ Growing

_____ Staying the same

_____ Shrinking

Comments:

4. Looking objectively at our firm and at our competitors, what particular strengths does our firm have that will help us to secure our client relationships?

Comments:

5. What do our clients tell us that they value the most (may vary widely among clients)? How do we know?

Comments:

6. Of clients we have lost in recent years, if any, have there been any patterns and reasons for their departure(s)? (examples would include our firm is too expensive, lost a case, services too slow, "chemistry" problems with an attorney, etc.)

7. Have we conducted client surveys and if yes, how recently? What did the survey(s) tell us and how well did we implement changes to address these results?

Comments:

8. For our firm, considering our geographic location and existing practice areas, do we expect competition for "our" clients and new business to:

_____ Increase

_____ Stay the same

_____ Decrease

B. PRACTICE MANAGEMENT AND SERVICE DELIVERY

1. On a scale of 1 (lowest) to 10 (highest), please indicate your opinion of the effectiveness of the firm in the following areas:

_____ Properly staffed with associates

_____ Associate training

_____ Utilization of and delegation to associates

_____ Equitable and even work distribution

_____ Supervision of associates

_____ Communication with (to and from) associates

_____ Evaluation of associates

_____ Quality control over associates' work

2. Do you fell the firm uses its lawyers (both partners/shareholders and associates) effectively?

_____ Yes _____ No

Comments:

3. How would you assess the firm's overall processes for consistent preparation and review of legal work?

_____ Overall excellent

_____ Overall very good

_____ Overall good

_____ Overall fair

_____ Overall poor

_____ Varies too widely to give a single response

_____ Don't know

Comments:

4. On a scale of 1 to 10 (with 10 being the highest) rate the success of the firm and its system of work distribution in "getting the right work in the right hands."

Rating _____

Comments:

5. Do you feel there is enough coordination among different practice areas, specialties or subspecialties?

_____ Yes _____ No

Comments:

6. Do you feel there is enough coordination within individual practice areas, specialties or subspecialties?

_____ Yes _____ No

Comments:

7. On a scale of 1 to 10 (with 10 being the highest), how do you rate the firm's training program?

Rating _____

Comments:

8. What needs to be added to or deleted from the training program to improve it?

9. Are lawyers given regular feedback on how to further develop their capabilities and improve their performance?

_____ Yes _____ No

Comments:

C. FIRM MANAGEMENT

1. Overall, profits for income distribution and reinvestment are:

_____ Improving

_____ Staying about the same

_____ Decreasing

Comments:

2. Is our current profitability satisfactory? Does it require:

_____ Maintenance

_____ Slight improvement

_____ Major improvement?

Comments:

3. Agree or disagree with this statement:

If we basically "stay the course" and look to maintain our personnel, service quality, work product, profitability and so on, our firm will be satisfactorily secure and profitable for the foreseeable future.

_____ Agree _____ Disagree

Comments:

4. Does the firm's time-keeping, billing and collection system assist in, or detract from, the firm's positive quality image?

_____ Assists

_____ Detracts

_____ Neutral factor

D.TECHNOLOGY USAGE

1. On a scale of 1 to 10, (with 10 being the highest), how fully and effectively are we utilizing technology to:

_____ Produce legal work?

Comments:

_____ Assure, control and improve quality of legal work?

Comments:

_____ Reduce cost of producing legal work?

Comments:

_____ Otherwise increase value to clients (such as faster response , more appealing/functional work product, fewer errors, etc.)?

Comments:

2. How would we assess overall teamwork between lawyers, between lawyers and between administration, lawyers and secretaries, etc.?

Comments:

E. TOTAL QUALITY SERVICE

1. Should we proceed with further review in the form of a Total Quality Service audit or more defined TQS review of identified areas?

_____Yes _____ No

Comments:

RESOURCES TO ASSIST YOU IN IMPLEMENTING A TQM PROGRAM OR TO PROVIDE YOU WITH ADDITIONAL INFORMATION ABOUT TQM

Internet Resources

Consultants:

Altman Weil Pensa
Bradley-Huggins Consulting Group Law Firm Management Counsellors
Joel A Rose & Associates, Inc.
John P. Weil & Company

ABA sites and publications:

What Every Law Firm and Corporate Department Should Know About TQM
Law Practice Management and Development Library
The Section of Law Practice Management

Law Office Management Sites:
Law Office Management (library)
Law Office Management (practice)

Other Resources

Books:

RICHARD C. REED, ED., APPLYING TOTAL QUALITY MANAGEMENT TO THE LAW OFFICE (1993).

SUSAN D. SJOSTROM, ED., THE ALTMAN WEIL PENSA ARCHIVE ON STRATEGIC PLANNING AND MANAGEMENT FOR LAW FIRMS AND CORPORATE LAW DEPARTMENTS (1996).

JOSEPH V. WALKER AND BARBARA L CIARAMITARO, TOTAL QUALITY MANAGEMENT IN ACTION: ONE FIRM'S JOURNEY TOWARD QUALITY AND EXCELLENCE (1994).

Articles:

Balano, Richard M., The 10 Commandments of Quality, Quality Progress (1994).

Catherine Brennan, TQM Gets Courtroom Tryout, Daily Record, Baltimore, MD (1995).

Stephanie B. Goldberg, Quality vs. TQM: A Gallup Poll, ABA Journal, Section of Law Practice Management (1993).

Stephanie B. Goldberg, The Quest for TQM: love it or hate it, it's impossible to ignore, ABA Journal, Section of Law Practice Management (1993).

Robert L. Haig and Steven P. Caley, Complex Litigation: Can Total Quality Management (TQM) Help You Win?, West's Legal News12999, 1996 WL 694939 (1996).

Rolf Hoexter and Mariesa Julien, Legal Eagles Become Quality Hawks, Quality Progress (1994).

John J. Hurley, In Search of the New Paradigm: Total Quality Management in the Law Firm-A Case Study, 43 Emory Law Journal, 521, Spring 1994.

Lisa Marshall, Firms Turn to TQM to Protect Bottom Line, San Diego Business Journal (1994).

Ronald M. Martin, Total Quality Management; The Empowered Law Firm-Driving Empowerment: Reengineering Our Context, ABA, Law Practice Management (1994).

Ellen Joan Pollack, Grudgingly, Lawyers Try Total Quality, The Wall Street Journal, December 2, 1992.

Toby Pound, Flying the Kite for Quality, The Independent (1993).

Mary Beth Pratt and Robert W. Denney, Quality Service: How to Implement a Quality Service Program, ABA, Law Practice Management (1995).

Irving R. Stubbs and Edward R. Parker, A Total Quality Management Model for the Law Practice, ABA, Law Practice Management (1993).