Legal Project Management scoping: Why is this so vital?

Australian Corporate Lawyer, 01 March 2014

Allygroup’s CEO Joanne Rees explains why scoping is so important in this first in a series of articles on Legal Project Management.

Scoping of a legal project is possibly the most critical and influential element in determining the project’s success in terms of volume of work, costs incurred and stakeholder engagement.

Scoping is closely aligned with budgeting for the execution of large commercial transactions or complex litigation, but goes beyond budgeting into the realm of legal expertise.

Vitally, scoping enables a legal project manager to retain control of a project as it develops – and to satisfy their business or organisation that they have control over the project direction, the amount of work being done and the costs incurred.

Scoping is fundamental both to the successful implementation of a project and to the control of external legal costs. Without effective scoping, there is little deterrent to prevent external firms from engaging in large bodies of unnecessary work and from thereby incurring potentially very large and unnecessary costs.

What is Legal Project Management Scoping?

Scoping is the first stage in the project management process. It is “primarily concerned with defining and controlling what is and what is not included in the project.”

Scoping is an establishment phase with several main points of focus. In this phase of a project, risks to the project are identified: generally legal, financial, reputational and political risks. Desired project outcomes are determined, with attention to objectives, case theory and negotiation options.

Scoping also involves the development of a project plan, including necessary, likely and possible streams of work; and the establishment of a project team or steering committee.

What are the benefits of Legal Project Management Scoping?

Focus on the client’s desired outcomes

From the initiation of a legal project, scoping enables the project manager to identify the key stakeholders, their interests and objectives. This brings the major benefit of enabling concrete goals to be set by the people with the most interest in them. It also brings clarity to the determination of what success is measured against. When advising clients, external legal service providers can become immersed in legal process, and lose sight of the end goal or the core issues in the dispute or transaction. Lawyers are trained to be the ultimate risk managers, which of necessity leads to a narrow, process focussed approach. Scoping provides stakeholders with a global view of a matter and a strategy that is based on engagement with both the core issues and the client’s desired outcomes.

Clear project direction through early scoping

Scoping ensures that a strategy is determined at the outset rather than after a great deal of unnecessary research and work has been conducted. Without scoping, strategy formation is often completed a long time into the project, at which point costs are already high and the opportunity to drive savings has been lost. Scoping early removes the uncertainty around what the core issues are, provides a clear project direction, and a plan with regard to how many resources will be required.

Controlling costs

Defining project objectives and key issues at the scoping stage of a project provides a framework in which to develop a resourcing plan and budget. This provides an ongoing basis for management, monitoring and reporting, which, in turn, is a rigorous control on external spend.

Effective project scoping helps to control costs by clearly delineating the strategic direction for the project that legal service providers can pursue, as well as necessary, likely and possible costs that will be incurred. Lack of scoping combined with a billable hour costing model fails to provide an incentive for an efficient, bare bones approach to running a project. Firms are able to reactively pursue every angle of a matter or transaction, recording significant fees along the way.

Scoping at the outset will save costs and minimise stress. It will even allow parties to plan for the possibility of unforeseen issues arising, and to put flexible strategies in place to address them. Most importantly, it gives the client control of the strategic direction and project risks. The diagram below outlines how scoping can reduce cost.

Effectively managing risk

Early scoping of a project allows for the identification of risks including legal, financial, reputational and political. Each are crucial considerations as a project develops. More generally, but very importantly, scoping of a project leads directly into an increased ability to control stakeholder engagement and confidence.

Effective scoping not only saves money by controlling what firms can charge, it empowers clients by allowing them to determine how they wish to address the various risks inherent in major litigation and commercial transactions.

The scoping exercise ensures that the client remains in control of the work to be undertaken, and that the work to be completed is targeted and appropriate.

The main considerations when scoping a project

Identify the organisation’s strategic objectives

The overriding imperative to keep in mind in legal project management scoping is the objective of the project. Related to this is the consideration of how the project furthers the business or organisation’s strategic objectives.

Identify the project structure

These two fundamental considerations lead in turn to more specific considerations of structuring the project. At the initial stage of a project it is possible to decide how the project should be structured and how each stage of the project could be broken down further.

Identify the relevant internal and external stakeholders

It is an imperative to identify early in the project the internal and external stakeholders who will need to be consulted throughout the course of the project. Failure to do so could lead to a detrimental impact on the progression of the project.

Identify the internal and external resource requirements

Without effective project management, it is impossible to know what level of internal and external resourcing is required to ensure the effective delivery of project outcomes.

Who should be involved in the project scoping?

Generic project managers bring expertise to a project in terms of strategic alignment and resource allocation. However, large commercial transactions and complex litigation specifically require legal project management expertise. Knowing what to ask for from legal service providers is vital to the extraction of maximum value.

One of the biggest strengths a legal project manager can bring to a large commercial transaction, or complex litigation, is the combination of legal and project management expertise.

Often in-house legal teams have the legal experience but not necessarily the project management expertise to effectively manage a legal project. Another common problem is that in-house counsel often have a commercial or corporate background and don’t have the expertise to manage large litigation projects. Finally, and very commonly, in-house legal teams are very busy and don’t have the necessary time to devote to legal project management. We all know that inadequate project management generally means that the external legal firms’ scope of work is determined by the firm, rather than the client.

It is possible to outsource the legal project management function to an experienced legal project management organisation, if the requisite expertise or resources do not exist in an organisation.