The Cost Estimate Notice - powered by Legal Project Management

A spook called “Cost Estimate Notice” has been haunting the legal fraternity in South Africa since the new Legal Practice Act surfaced. Not yet entirely in effect, Section 35 (7) – (11) of the Act impose a new way of liaising with clients on attorneys and advocates before the actual start of the matter. Cost transparency and forecast, and “an outline of the work to be done in respect of each stage of the litigation process, where applicable” are the cornerstones of a professional framework that considers non-compliance as “misconduct” and, accordingly, stipulates a client’s right to refuse payments.

Why Legal Project Management is the only response

Nowadays, it will be the attorney’s responsibility to provide the client with a cost notice estimate when he or she “first receives instructions” or “as soon as practically possible”. What appears to be a revolutionary step for the legal profession in South Africa, has long been a widely accepted activity for other Professional Services. Accountants, auditors and management consultants, just to name a few, work with so-called “engagement letters” on a daily basis. That in mind, the only way to draft an engagement letter that comprehensively addresses the three constraining dimensions of any professional advice, which are scope, cost, and time is introducing project management methods and tools to your practice.

The first step toward success is taken when you refuse to be a captive of the environment in which you first find yourself. – Mark Caine, American writer

Applying “Legal Project Management” (LPM) in your, the attorney's daily client matter management will greatly benefit you and your client in drafting and accepting a cost estimate notice/engagement letter, and subsequently managing the matter:

1)    Scoping is a core element of LPM. It is all about getting information required to start a matter, and considering aspects that are of relevance and interest to clients and stakeholders. An identified and agreed scope drives the joint understanding of resources required and obligations of all parties to meet the scope, as well as risks, which may impact the course of the matter progress. Exercising this structured approach to scoping will assist in clearly articulating the services a client can expect in the cost estimate notice and ring-fencing them to later change requests.

2)    Thinking in phases, deliverables and milestones mitigates complexity. Trying to predict the course of a matter from beginning to end and, subsequently, estimate efforts will be in most cases literally impossible. However, by dividing each matter into phases with corresponding deliverables and milestones for each phase, assumptions, inter-dependencies and potential options can be much easier identified, highlighted and explained to clients.

3)    LPM is about repeating proven practices. How do you determine the best fee for a matter without historical comparisons and relevant points of reference? Applying LPM techniques allows attorneys to identify repeatable tasks and develop precedents, all of which will not only expedite the costing of a matter but drive efficiency in handling matter.

4)    Managing a matter than being driven by the situation. LPM with its built-in mechanisms to monitor and communicate progress of a matter empowers attorneys to guide client expectations. The genuine risk of alternative fee arrangements is a lack of responsiveness to changing context, something which is fully addressed by LPM’s constant monitoring.

You cannot stop change, but you can prepare for it

Those are just a few basic aspects of why adopting LPM will be of immediate value to any attorney, a sole practitioner or partner and associate in small or large firms. Needless to say, that many more features, such as “Kanban” and “Scrums”, will change the way of matter management.

Susan Lambreth (2014) concludes: "LPM applies to all types of legal matters — large and small, with large firms and small firms or solos. In today’s legal market, small matters, whether handled by a small or large firm, must be handled very efficiently. That is difficult to do if the lawyers and their clients are not on the same page about expectations and objectives, the scope of the work and the plan to complete the work. For a small matter, these simple steps can be done in a relatively small amount of time, but if they are not done, lawyers typically find they have write-offs — and therefore significantly reduced matter profitability — or they have less-than-satisfied clients if the legal bills don’t meet expectations."