Why Codes Matter: A Simple Tool with Many Uses
Any serious attempt to ensure efficiency in legal services requires analysis of reliable data. One approach is to analyze time entries. But anyone who has attempted to review an invoice for legal services with each lawyer’s time narratives will understand that it can be an exercise in mind-reading. The client and matter are clear, and perhaps it is evident that the timekeeper was doing something to reach a goal. Beyond that, however, the narrative will either be too specific or too vague to be illuminating (“work on Smith documents; analyze options for resolution; meet with opposing counsel—6.4 hours”).
Phase codes provide the context for individual time entry narratives within the larger story of the legal matter. When codes are used both to construct a matter budget and to analyze the team’s progress, it becomes much easier to determine if the matter is on track, if the scope of the matter is changing, or if assumptions that were made at the outset continue to be valid. The sooner the lawyer in charge of the matter receives this information, the greater the opportunity to manage the matter efficiently in real time, and to report status with confidence to the client. With accurate data on the work completed and outstanding items, the matter team can make adjustments to better manage the matter to meet deadlines, manage work to budget constraints, and minimize surprises.
Many code sets have been created, and they all describe the work involved in handling a matter from a process perspective with the progression of work divided into phases (e.g., early case assessment; trial; conduct due diligence; negotiate document), tasks (e.g., issue litigation hold: review real estate leases), and activities (e.g., conference call with opposing counsel). Many are difficult to use.
Fewer codes are better, and it is preferable to start by gathering data only at the phase level. This approach is reflected in the UTBMS Codes for Merger and Acquisition Transactions that were developed by the Task Force on Legal Project Management in the Business Law Section of the ABA. The working group that I chaired sought simplicity and completeness in data collection that is aligned with the way practitioners actually handle matters. It is broad enough to cover most deals, regardless of size, complexity or jurisdiction. Over time we expect that well-defined needs for more detail at the task level will emerge. For example, it may be useful to understand how allocating work among different service providers (law firm, law department, accountants) might reduce the cost of due diligence.
Using only phases is a radical departure from the structure of many other code sets that require granularity without regard to the utility of such information. Although interesting information may emerge, it has been at the price of data quality. Many report that in using various litigation code sets 80% of the time is entered in one of three categories and frequently incorrectly. Quality data through accurate and simple time-recording with fewer codes should offset the interest in collecting data for its own sake.
Codes are fundamentally about communication. And only with effective communication can we get everyone on the same page: clients have visibility into the work that is performed, lawyers have insight into what they are doing in the context of the matter, and both law firms and their clients are better able to manage the business of law.