In this post on my brand of Legal Project Management I seek to explain the imposition of Goldratt’s Theory of Constraints to the actual practice of law.
The Theory of Constraints is an overall management philosophy introduced by Eliyahu M. Goldradtt in his 1984 book, The Goal, apparently a business school staple, which was originally geared to help manufacturing organizations continually achieve their goals – i.e. making money. The Theory of Constraints views any manageable system as being limited in achieving more of its goals by a very small number of constraints. A constraint is anything that prevents the system from achieving its goal. A constraint in manufacturing is in evidence when the market demands more from the system than it can deliver. Examples of constraints in manufacturing are bad equipment, unskilled people, or a faulty policy.
In the Theory of Constraints, when a goal has been articulated and its measurements defined, the focusing process goes like this:
1. Identify the system's constraint.
2. Decide how to exploit the system's constraint.
3. Subordinate everything else to the above decision.
4. Elevate (i.e. Eliminate) the system's constraint.
5. If in the previous steps the constraint was eliminated, go back to Step 1, do not allow inertia to cause a system's constraint.
In addition to manufacturing, the focusing steps have been applied to project management and supply chain/distribution generated specific solutions. There are also Theory of Constraints applications in the fields of marketing, sales, finance, construction and technology development.
As far as I know, I am the only person actively applying the Theory of Constraints and its thinking process to the actual practice of law -- i.e. my brand of Legal Project Management.
My observations suggest that when other law firms talk about legal project management, they are typically using non-lawyer, project management consultants to superimpose project management principals upon large e-discovery or due diligence projects that are, indeed, like assembly lines. That is not what I am doing. Rather, I am attempting to apply the Theory of Constraints and classic project management principles to the actual legal work.
For Alex Rogo, Eliyahu Goldradtt’s protagonist in The Goal, the system was the plant, and he was trying to get the plant to achieve the goal of making money. For me, the system is a particular legal matter, and the goal is up to the client.
Alex Rogo spent the first six chapters of The Goal identifying the goal of a manufacturing plant as “making money”. He had been convinced by the world around him that many other things might have been his goal – employing people, making good products, etc. In the end, he could not deny that the goal of a plant is to make money. If Alex needed six chapters to get there, you will forgive me if I think identifying the client’s goal in a particular legal matter is not always so immediately apparent.
I am working on a case right now where a franchise-tenant stopped paying my landlord-client. Many property owners’ attorneys just automatically assume that the goal of the landlord-client is to regain possession of the space, and/or to get paid by the tenant. In this case, neither is the goal of my client. After discussing the matter at length with the client, he and I both now understand that his goal is to get the franchisor to come in and take over as the tenant of the store. This is better for my client than creating a vacancy and its better than continuing on with the franchisee-tenant who can’t seem to run the store right. Goal identification is a major priority in my system of Legal Project Management.
We run a Legal Project Management analysis in every case at the beginning of and at every major juncture of the matter. The analysis is always in writing and it is always a collaborative effort between more than one lawyer in the firm and the client. We always meticulously reiterate the facts, the procedural posture of the case, the relevant law, the elements of each cause of action, the status of discovery, and any other material topics. Then, for each option, we distinctly explore in writing the option's pros, cons, costs, time frame, and risks. Lately, I think of this first stage as disassembling a case into its indivisible parts, and inspecting each carefully. As we then mentally rebuild the case, we are able to clearly understand the true weak links in the chain. Only then can we attempt to exploit those problems.
In the case I began speaking of above, the case of the “non-paying franchisee-tenant”, the biggest constraint (thing that prevents the landlord-client from achieving its goal) happens to be a fact, an infirmity in a particular document. Once we identified this constraint, we were able to attempt to think our way around it. More on Step 2 in the next post. The point, for now, is that unless a lawyer understands a client’s goal and is then able to rigorously identify the true and biggest constraints (impediments) to the goal, the goal cannot be efficiently achieved.
Let me know your thoughts.
Labels: Ch. 22 - Theory of Constraints