The Importance of Legal Portfolio Management

I first introduced the concept of legal project management for lawyers in 2014 in my book, "Legal Project Management," published by LexisNexis. I am recognized as one of the pioneers of Legal Project Management. As the law sector experiences radical changes and increased client pressures, many law firms and legal departments struggle to implement innovative strategies like Legal Project Management (LPM), Legal Process Improvement, and Portfolio Management.

This article aims to inspire lawyers, legal teams, and law firms to understand how Legal Project Management and related procedures, such as Legal Portfolio Management, can drastically transform their work. The paradigm shift is more than necessary — it has become a "change or die" situation for the legal profession.

Over the past decade, I have engaged with thousands of lawyers as a leading global expert in legal innovation. My work involves raising awareness and developing abilities in Legal Project Management, Legal Portfolio Management, and Legal Process Improvement. These disciplines all fall within the Legal Operations framework but are differentiated by large law firms and the Corporate Legal Operations Consortium (CLOC). 

A significant realization occurred for me in 2012 during a professional development seminar for the Australian Capital Territory Law Society. While presenting on "Introduction to Legal Project Management," I noticed that the concerns raised by some experienced lawyers were more closely related to legal portfolio management rather than legal project management. This led me to research further the differences, which ultimately became part of my book.

Reflecting on numerous Legal Project Management sessions, around 20% of the participants primarily require portfolio management. These attendees often express confusion when they discover the significant differences between Legal Project Management (LPM) and Legal Project Portfolio Management (LPortM). However, they continue to attend the sessions and incorporate the discussed ideas when they initiate portfolio management in their legal affairs. 

The difference between Legal Project Management and Legal Portfolio Management can be explained in the following ways:

Thus, the distinction lies primarily in the scope, perspective, and application, with legal portfolio management offering a comprehensive approach to managing multiple interrelated projects or cases.

The benefits of the portfolio management approach are widely acknowledged in traditional project management. The Project Management Institute's recently published report illustrates this. Legal Portfolio Management (LPortM) introduces a framework, tools, and techniques that allow lawyers to understand milestones across matters, manage client expectations, balance competing priorities across teams, and ensure all commitments are met.

Solo practitioners and individual lawyers can reap LPortM rewards such as identifying significant milestones across all client cases and evenly distributing the work effort based on client commitments. They also enjoy the prevention of accidental overallocation and slippage of delivery dates.

LPortM offers substantial advantages to external law firms, which must juggle multiple matters for various clients. Benefits include improved management of client expectations, fulfilling portfolio-based reporting for clients with significant legal matter cases, facilitating workforce planning predictions for future demand and hiring decisions, and reducing write-offs due to overlooked deliverables that have exceeded time or budget. 

Additionally, law firms frequently deal with sensitive client information, making well-structured non-disclosure agreement (NDA) a vital part of the portfolio to ensure confidentiality and maintain client trust.

Legal Portfolio Management brings significant benefits to in-house teams by ensuring the availability of legal resources to meet delivery timeframes and critical milestones for all legal projects. It also facilitates the identification of additional resourcing requirements which may need to be filled externally or temporarily.

In-house legal teams can leverage Legal Portfolio Management to monitor all legal matters across the organization, including matters handled solely by in-house teams and external counsel, legal work streams as part of major organizational projects, and legal work outsourced to external counsel.

The concept of Legal Portfolio Management plays a pivotal role in resource allocation and prioritizing a multitude of legal matters.

In legal project management, a portfolio refers to a collection of legal projects or interrelated cases that will benefit from centralized oversight. Grouping legal projects and employing legal project management techniques can facilitate the efficient and effective delivery of legal project outcomes. The fundamental reason for managing legal projects as a broader portfolio is that it empowers lawyers to achieve more than handling individual cases.

Factoring in the characteristics of traditional projects, applying Legal Portfolio Management to a set of legal projects would lead to more successful outcomes for individual legal matters. Due to the relatively low understanding and capability of legal project management, adopting legal portfolio techniques could enhance lawyers’ case management abilities more than traditional project management methods.

The main principles of Legal Portfolio Management are borrowed mainly from traditional project management and refined for better understanding and application in legal project management.

The capabilities (skills, knowledge, tools, and techniques) needed to create and manage a portfolio of legal projects and matters include Portfolio Planning, Portfolio Analysis and Reporting, Workforce Planning and Resource Allocation, Legal Project Management Methods, Practice Management, People Management, and Stakeholder and Client Communication.

As we delve deeper into Legal Portfolio Management, it's critical to consider external and in-house counsel's distinct roles and priorities. These practices vary between these two categories, and understanding these differences is essential to maximizing their effectiveness.

Legal Portfolio Management is pivotal for external law firms and practice teams that need to delegate team members across multiple matters with varying priorities and deadlines. It provides a clear overview of all issues, milestones, and resource allocations. By executing these disciplines, law firms can maintain balance while meeting all client needs without neglecting tasks or last-minute cramming to meet deadlines.

The connections between Legal Portfolio Management, Legal Project Management, and organizational strategy are significant for in-house legal teams. The efficient execution of legal projects is essential for achieving organizational outcomes. The larger an organization grows, the more crucial concepts like portfolio management become.

In-house legal teams can rely on Legal Portfolio Management to efficiently use resources across all legal matters and projects. The teams should focus on areas like contributing to strategic planning, understanding legal resource requirements, becoming informed purchasers of external legal services, developing legal project management capabilities, and incorporating legal portfolio management practices.

The concept of Legal Portfolio Management offers extensive benefits to attorneys, legal teams, external law firms, and in-house counsel. This innovative approach drastically transforms the legal profession's day-to-day operations from facilitating better resource allocation and streamlining workflow to enhancing client communication and case handling. Thus, promoting its adoption across the industry has become more critical than ever.

Whether you're an individual practitioner or part of a more prominent firm, refining your legal portfolio management skills could significantly enhance your practice's efficiency and effectiveness. As the landscape of the law sector continues to evolve, it might be high time to find a lawyer who incorporates Legal Portfolio Management into their practice, ensuring they are prepared to navigate the increasingly complex world of legal affairs.