Partners are lacking crucial business skills – it is time law firms introduce formal training in project management, says Andrew Sharpe (*That's project management training)

I have had two careers. For a short time, I was a military engineer before turning to law via the qualifying law degree route to become a solicitor within a City law firm, eventually becoming a partner.

In the military I worked in a highly motivated, highly trained team and task-orientated environment with a clear, largely meritocratic, hierarchical management structure.

In law firms, I've worked in environments that have aspired to be, and in some cases have claimed to be, all of those things. In reality, law firms have solid claims to being staffed by highly motivated people who are task-orientated. Any other claims are more difficult to make.

In particular, I take issue with the notion that lawyers are highly trained. We may have our academic background, with a 2:1 degree almost universally the current entry standard into the legal profession.

For solicitors at least, we complete our academic stage of training with some practical training in the application of law in the legal practice course and the training contract.

It is at the training contract stage that the claim to training starts to become stretched. Even the Solicitors Regulation Authority (SRA) Handbook only calls for trainees to receive "adequate training".

Trainees do have to complete the Professional Skills Course, but even the core module – 'Financial and business skills' – can be seen as a misnomer, given that it only requires trainees to learn some basic accounting and introductory level Financial Services and Markets Act 2000-related law.

Once qualified, formal training in anything other than structured legal training for CPD requirements is optional.

So it is possible to become a solicitor with some formal legal training, but little or no formal training in many business skills, in particular for financial management.

Over time, those solicitors who stay in private practice can rise to become the owner-managers of businesses with annual turnovers of anything up to £1bn.

This has never ceased to amaze me. In the military, at almost every level any soldier, sailor or airman given new responsibilities or tasks nearly always went on a training course or exercise first. No one relies on on-the-job training for deployments to Afghanistan.

An intensive two-week course into health and safety law and practice before taking up a secondary role as a health and safety officer was my introduction to non-military law.

In private practice law, this does not appear to happen. Why is this important? Before military procurement was tightened up, many contracts were priced on a cost-plus basis.

As the customer at the end of a procurement chain, I saw many examples of the disastrous consequences of this form of contracting, the most extreme being a contract for million-pound test equipment abandoned because it became too expensive to conduct the acceptance tests.

Yet cost-plus is essentially the law firm business model, with a modified version of cost pricing based upon the old rule of thirds: setting hourly rates for fee earners so that, at the expected billable hours, one third of the revenue from those fee earners covers the fee earners' salaries, one third the fixed overheads and the remaining third the equity partners' profit.

As a true value pricing model continues to be elusive, the only alternative to the pure hourly rate appears to be variations of fixed-price contracts.

In the absence of formal methods or databases, in my experience fixed prices are set by partners using their experience of similar matters or deals to estimate the fixed price.

This in turn continues to rely on the hourly rate, being in most cases the estimate of how much fee earner time will be required times the relevant fee earners' hourly rates.

This 'finger in the air' approach to fixed pricing is crude and unreliable. Law firms can get away with it for a while. But as general counsel and clients more readily conduct reverse auctions with panel or other law firms required to provide services, proper estimating and costs management will be essential.

However, there are no equivalents of costs engineers, quantity surveyors or contract management specialists within law firms.

Many techniques and methods to estimate and manage matter (or project) costs, timescales and delivery are readily available. Yet how many times have you seen a matter partner use an industry-recognised work breakdown structure or resource allocation method?

Surely there needs to be formal training in project management within law firms? PERT diagrams and Gantt charts should be commonplace, with full post-matter analysis of cost overruns and outturns to manage out inefficiencies and fine-tune costs estimation.

This suggests that for many legal areas, there is more scope for process-based management tools than the case management or bulk conveyance systems currently being deployed, as well as pure project management.

I'd like to set up a law firm run entirely as a PRINCE2 project, but that dream will have to wait.

Andrew Sharpe (pictured) is a commercial lawyer and head of LexisPSL Commercial, a division of LexisNexis