Lean Legal How the Lean Canvas Can Benefit Your Firm

8/19/2019 Lean Legal How the Lean Canvas Can Benefit Your Firm

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LEAN LEGAL: HOW THE LEAN CANVAS CAN BENEFIT YOUR FIRM

CLIO.COM PAGECLIO.COM

Lean Legal:How the LeanCanvas Can

Benefit Your Firm

Jason Moyse and Aron Solomon


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“The way to the ocean was found

by conquistadores who sought

silver and gold, not oceans.”

- John Kay


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Lean Legal: How theLean Canvas CanBenefit Your Law Firm

For lawyers, the process o evaluating and launching a new

business or initiative within your existing law firm can be

extremely challenging. Fortunately, today, the traditional

laborious business plan has been supplanted by new,

innovative tools in business planning and creation.

One o these tools is the Business Model Canvas, a creation

o Alexander Osterwalder. During his Ph.D. studies at

the University o Lausanne, he imagined the notion o a

lean startup template or developing new or documenting

existing business models. Te Business Model Canvas he

created is a means o mapping customer segments and values to a business’ resources and activities. Using this

canvas, you can create and weigh a business or project

plan beore implementing it. Further changes created the

modern Lean Canvas that can greatly benefit the “New

Law” vertical.

Lawyers are smart and certainly can be creative, but

they are not always capable o “hanging in the question”.

Te Lean Canvas is a means o testing hypotheses—and

eedback on the starting propositions may lead to you

having to let go completely and start rom scratch. Te

purpose o the canvas is testing and validating whether

you have a problem worth solving—rom there, you

can build out the minimum solution to address a set o

problems - hence - the Minimum Viable Product (MVP)

Tis is a very different approach than most lawyers utilize

who typically like to solve problems on behal o clients.

Lawyers want an approach based on deep research and

experience and rom a place o as much certainty (and

knowledge) as possible. Lawyers are trained to considerALL o the potential outcomes and traditionally preer

to provide memoranda which could border on treatise

when giving advice. And getting a lawyer to commit to

a final recommendation? Substantive strategic decisions

are lef to clients, with both lawyers’ training and ethics

regulation requiring obtaining “inormed consent” in

many scenarios.


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Because o this, ofen lawyers can be uncomortable

having to tell someone to pick A over B. Tere’s just so

much…uncertainty.

Lawyers have a tendency to ear the ‘wrong decision’.

However, i you are building a business--the only measure

o a bad decision is i you are causing harm to others or not

making profit. In proessional practice, you may have the

objective o building a great real estate practice. But, i you

keep getting reerrals or commercial work & end up bringing

in way more revenue, would you consider that ‘ailure?’

Entrepreneurial lawyers should become comortable

with the concept o “obliquity,” which is achieving goals

indirectly rather than directly. Tis concept is outlined

beautiully in a book by John Kay who among many adroit

quotes mentions that, “Te way to the ocean was ound by

conquistadores who sought silver and gold, not oceans.”

The concept of obliquity:

recognizes that complex (or uncertain)

objectives are best tackled through a process o

experimenting and discovery and in act, the

objectives may change as more inormation

becomes available; acknowledges that there

may be no predictable connections between

intentions and outcomes. Tereore, problem

solving becomes iterative and adaptive rather

than a well known route where all one needsto do is execute what has been done many

times beore; and is necessary because we live

in a world o uncertainty and complexity and

our goals are not always clear—especially as

circumstances change quickly and ofen so that

direct approaches are ofen unimaginative.

A

B


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rue leadership, entrepreneurship and captaining just

about any other type o ship requires one to make decisions

not so much by the a superior vessel o knowledge, but bybeing honest about the extent to which that knowledge is

limited. Tat is not how lawyers are used to sailing - but

the winds are indeed shifing.

Te Lean Canvas works as an approach because it allows

or obliquity. It is minimally sufficient in precision and

adaptable as more inormation, inputs, metrics and

milestones become known. In short, you don’t have to

see the whole staircase beore taking the first step.

PROBLEM UNIQUE VALUE

PROPOSITION

CUSTOMER

SEGMENTS

UNFAIR

ADVANTAGE

CHANNELS

REVENUE STREAMSCOST STRUCTURE

SOLUTION

SERVICE MARKET

KEY METRICS

So let’s take a run at the Lean Canvas.

For clarity, the Lean Canvas is split into two sides: the lefside is about your product (or service), while the right

side ocuses on your market.


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Let’s break the canvas into its segments:

Customer Segments

Who are the users o what you’re building? Can we try to

urther break them down? For example, local banks vs.

regional banks?

Solution

Clearly show why the product or service you’ve build

solves the problem you’ve identified.

Channels

All o the channels you can possibly use to reach your

customer.

Problem

Describe the problem. Ideally, break this down into more

than one problem you’re solving.

Cost Structure

All o your fixed and variable costs.

Revenue Streams

Here’s a quick guide to revenue models, describe whichapplies to your business idea.

Unfair Advantage

Your unair advantage is your secret sauce. It’s what you

have that someone else can’t copy, steal, or just go and buy

Unique ValueProposition

What is the reason that your product is different. Whyshould I buy yours instead o someone else’s?

Key Metrics

What do users o your product need to do or you to make

money? What activity drives revenue?


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Lean Canvas Applied toContingency Fee Firm

Let’s take a look at what a Lean Canvas might look like orlaw firms with a contingency ee practice. Te value o the

Lean Canvas here can be huge.

In a plaintiff ’s employment law practice, we can use a

Lean Canvas to build out the business line:

Problem

For the plaintiff ’s employment lawyer, the problem is that

it is difficult to predict which contingent ee clients will

win their cases. Tus it is difficult to know which clients’

cases the attorney should accept.

Customer Segments

Te users are all plaintiffs with a contingent ee

employment law claim,

Unique Value Proposition

My expertise is plaintiff ’s employment law, including a

strong record o winning judgments and settlements or

my clients, is my UVP.

Solution

(note: here is where creativity matters - so, in our

example, the attorney has a method or a ast track to

settlement). My ast-track method allows me to invest

less time than another attorney over the lie-cycle o

the matter, to arrive much more rapidly at settlement or

judgment, or to decide more quickly to drop the case

and the client, investing no urther resources.

Key Metrics

Here the key metrics o users is ull participation in thestreamlined litigation process. Clients/users must see

your time deadlines as important as you do - as important

to the process and their desired result.

Channels

raditional and non-traditional avenues through

which clients are attracted, including print and online

advertising, client inormation sessions, and more.

7 Cost Structure

All o your fixed and variable costs.

Revenue Streams

he sole traditional revenue stream in a plainti’semployment practice is your ixed percentage o a

client award. You, however, have also ound that clients

may be willing to pay a ixed ee or work that leads to

a very ast settlement using your unique skill set and

techniques, thereby creating a new revenue stream and

allowing you to intake more clients at the top end o

your recruitment unnel.

Unfair Advantage

Your new ast-stream technique is your unair advantage

as is your experience and track records, as compared with

competing attorneys in your space in your locality.


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So how does all o this actually help you make more

money as a legal practitioner? First, it’s actually better than

what you have now and that shouldn’t be underestimated.

Lawyers generally ocus only on top line revenue, whichis the value o their time. Working through a Lean Canvas

allows them to think more about margin specifically and,

generally, more creatively about their entire business.

Also, increasingly, attorneys are leveraging technology,

contract automation tools, document assembly, virtual

services, and ractional service providers to the law firm

So by using the Lean Canvas they can think more ullyabout what the canvas embraces, such as their channel

partners, and much more.

While not always thinking in terms o the Lean Canvas at

a conscious level, some lawyers have carved out practices

organically which clearly fit within the model.


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Consider as an example Ben Carter o Louisville,

Kentucky who is a consumer advocacy lawyer in the “low

bono” space. While he has an exemplary background

and experience having served on behal o the Legal Aid

Society o Louisville, these days, he is running his ownlegal practice and producing a nify podcast “Let’s Start a

Law Firm”.

Upon taking a walk with Ben through the Lean Canvas,

you can see how it applies and also conronts the

challenges o making money in a low margin, yet very

important, market. Te concept o obliquity is definitely

at play as successully running a money making practice

attending to this particular constituency requires

something other than a direct approach.

Problem

Ben’s practice bridges the gap between legal aid cases and

personal injury or consumer law. Tese types o cases do

not qualiy or legal aid and yet, the vast majority o the

population needing these services do not have significant

resources to hire a lawyer.

Tese cases are unique in that there are not a lot o lawyersthat would necessarily accept them because on their own,

they represent either low margin or high risk in terms

o achieving outcomes that result in repeatable and

predictable revenue.

Customer Segments

Ben serves two segments

Te traditional personal injury cases (car accidents)

or legal negligence cases where contingency ees

are the likely route to payment.

Aggrieved consumers who have no idea where else

to turn with their problem.

Ben is not serving price-insensitive large enterprises

Rather, his customer segments involve clients rom a

particular socio-economic background which, like most

o the population, would not normally be able to afford

legal services.

Unique Value Proposition

Tis is pretty straightorward. Ben takes on cases that

other lawyers do not wish to accept, while at the same

time, given his unique background, he is ideally situated

to execute.

Tat’s what it is to play Moneyball -- spotting value

rom places that others either overlook or in some cases,

actually avoid.

Solutions

Ben’s experiences with cases beyond his current

constituency are actually what allow him to serve his

current clients so well. Afer the 2008 financial crisis, Ben

began work with national consumer law groups which

brought him exposure working along side some o thebest lawyers in the state on multi-million dollar cases. It

was this exposure to the routines and approaches on those

more sophisticated and large stakes cases that provided

him with a training ground or the practice he ultimately

developed on his own. Smaller financial stakes cases can

require the same level o skill as larger cases, but with

ewer available resources to utilize in execution.

In his words, Ben takes a “plaintiff’s bar approach to

consumer cases”.


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Key Metrics

From his past experiences with Legal Aid, Ben noticed

that tracking the number o intake calls or people served

was a key metric. Now that he is in the or-profit space,

the metrics tend to be the realization rate in terms o the

number o billable hours provided and invoiced versus the

amount collected. Regrettably, Ben has experienced those

hollow victories (financially speaking) where he obtained

excellent results, but ultimately the opposing party could

not pay the judgment. In some cases, Deendants have

sought to avoid paying his clients by filing bankruptcy.

Another key metric is the amount o retainer requiredup ront rom his clients. Serving clients with limited

means, but real legal problems, and potentially significant

financial recoveries rom litigation, requires a calculation

in almost every case. Ben asks or something “meaningul

and non-trivial” rom his clients based on their current

financial situation. Te client has to be serious about the

case and also have some skin in the game.

At the same time, payment or the legal ees incurred

are likely to be derived rom the judgment awarded in

avour o Ben’s client, so he also has to do a cost/benefit

analysis on whether he thinks his client’s case is ultimately

a winner.

Over time, using enough data points, some orm o risk

analysis template will assist Ben in choosing his cases by

something greater than simply a gut eeling. For example

i he knows it will take 500 hours to win a $5,000 case, it

is not a good bet.

Given his penchant or detail and love o the nerdier side

o practice--Ben may develop just such a test i he can find

the time. He admits that the cycle time o considering

which cases to accept has shortened considerably as he

has ound the sweet spot o the type o cases he preers

versus those he would reer elsewhere.


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Channels

Having a clean and inormative website, not to mention a

podcast, serves Ben as one potential channel to reach hisclients. He also has opportunity to continue to speak on

substantive areas o consumer law including the National

Association o Consumer Advocates. Public directories

such as a lawyer reerral service are also useul, particularly

as there so ew other lawyers in the practice area.

7 Unfair Advantage

Ben’s unair advantage is that he is an expert in an area

o law that other lawyers don’t want to tackle. His path

or getting there is a testament to the concept o obliquity.

Originally, Ben worked on behal o people trying to

navigate the home buying process. Ten, 2008 happened

and the pivot through the agency where he was working

at the time was to deend oreclosure proceedings. Tat’s

where Ben became a visible expert.

He also has credibility as an authority rom all sides

relating to consumer law. From grass roots cases on behal

o legal aid, to learning and lecturing on the ar reaching

consequences o Wall Street Asset Backed Securities and

mortgage oreclosure laws and back to serving “regular

people” with real legal problems--Ben has served the

entire gamut.

Prior to his own practice, Ben also had the advantage o

working cases without a requirement to earn a profit--which

meant he could learn the most effective advocacy possible.

Most importantly, afer working with the best attorneys in

the state and lecturing throughout Kentucky on issues relatedto the oreclosure crisis, Ben is the first person that comes to

mind or many other attorneys. For example, his primary

presentation on the oreclosure crisis was conducted close to

100 times throughout the state. So the reerrals that come in

today are rom those that knew him in 2009.

I it’s a consumer law case - other lawyers simply tell their

clients “Call Ben.”

Revenue

Te traditional ee or service model is at play in Ben’s

practice, but with a podcast and excellent inormation

or consumers, it is at least possible, or him to draw

revenue rom inormation products and advertising on

his podcast. For now, retainer and collected money rom

cases are the revenue source.

Cost Structure

Tis is where Ben has proven himsel to be very savvy out

o necessity. It certainly helps that he has a lot o interest

in tools, workflows and technology in running a practice

as set out in his podcast and through his blog. Check out

his posts echnology or a Law Office: 60 ips in 120

Minutes or Law Office Equipment Guide and you will see

that he has thoughtully considered his options and made

sensible decisions that keep his monthly expenses low. Asa small firm lawyer, Ben is keenly aware that his personal

and business expenses require attention and he has been

conservative and practical on both ronts. As an example

where he used to utilize an outsourced bookkeeper -- today

he uses Xero because it provides more value and control

or his business. He also acknowledges that making a big

expense investment in his law firm takes away his ability

to draw income to support his personal lie.


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Conclusion

Te Lean Canvas is a tool o great utility or lawyers

seeking to re-imagine their practice and create new

revenue streams. Te Lean Canvas is a current and

visceral reminder that the practice o law is a business as

the canvas itsel helps you build your business. While it’s a

sweeping generalization, lawyers are good at many things

but aren’t great at setting up and running businesses. Teywant to practice law.

Te Lean Canvas provides an opportunity to flesh out

business using a reerence mode, not unlike the EDRM

the reerence model or e-discovery. It allows or a simpler

way to think about the business than the antiquated

“business plan.”

A key problem with the existing law firm business model is

that lawyers have no retained earnings - they leave nothing

in the business or reinvestment. Te canvas reminds us

that being strategic in our practice is significantly better

than always being hungry or new revenue.

While a Business Model Canvas might work best orcommoditized work, the Lean Canvas can extend its

rational application to bespoke work and that’s critically

important.


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P R O B L E M

U N I Q U E V A L U E

P R O P O S I T I O N

C U

S T O M E R

S E

G M E N T S

U N F A I R

A D V A N T A G E

C H A N N E L S

R E V E N U E S T R E A M S

C O S T S T R U C T U R E

S O L U T I O N

K E Y M E T R I C S

S E R V I C E

M A R K E T


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YEAR END PLANNING FOR LAWYER

Aron Solomonis a globally-recognized expert on innovation in the legal

and education verticals. A serial entrepreneur, Aron has

traveled three million miles and visited China close to

60 times in the business o learning how to do and make

things better.

A Montrealer by birth, Aron is multilingual and counts

Reykjavik, Seattle, Stockholm, and Amsterdam as his

avorite places to create and recreate.

Aron is Innovation Lead or LegalX as well as a SeniorAdvisor in IC at MaRS Discovery District in oronto.

Jason Moyse

has served on global teams implementing major customer

experience initiatives as a connector/doer/spark and key

trusted advisor to the C-Suite, Senior Leadership and

Governance eams or legal and business matters.

With a depth o experience leading and acilitating crossunctional teams, Jason has served as a core or extended

team member on numerous change management projects

impacting legal, finance, I.. and customer experience,

ofen via a Lean Six Sigma methodology.

Along with his partner, Aron Solomon, he has written

articles (www.lawmade.com) and hosted events ocused

on #legallean, startups and the NewLaw usion o

technology, design, process improvement, document

automation and lean strategy as applied to legal and

advisory services.

A lawyer and Lean Six Sigma Black Belt, Jason is Manager

o Legal Business Solutions on behal o Elevate Services

- a next generation legal service provider helping law

firms and corporate legal departments improve efficiency,

quality and outcomes through consulting, managed

services, technology and talent.

Lean Legal How the Lean Canvas Can Benefit Your Firm

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