With Validatum Pricing Espresso® we aim to bring you your regular pricing 'shot' - the best, most interesting, thought provoking and informative material we can find globally which will be of interest, relevance and help to you in your legal services pricing challenges. [Note: we don't always agree with the content of others that we post but the philosophy of Validatum Pricing Espresso® is shared perspectives, not a personal 'soap-box']
Fixed Fees: Here Be Dragons!
Let us say at the outset that we are strong proponents of fixed fees, even in areas of work where they have not been particularly prevalent such as dispute resolution. We believe that they should be used much more than they are to the benefit of both firms and clients.
However, two articles hit our inbox recently, which both in their own way reaffirmed the widespread misunderstanding on the part of law firms as to how best to deploy fixed fees, and an equally profound lack of understanding on the part of many clients as to how fixed fees must be structured. Read more...
Run it Past the Firms’ Pricing Manager – Who?
In 2016 Forbes magazine ran an article entitled, ’10 Jobs That Didn’t Exist 10 Years Ago’. It’s a bit of a cliché but everyone understands the concept that jobs which could not have been conceived of a few years ago, emerge from the employment primordial ooze to address the needs of the day.
The article cites examples such as: app developer, market research data miner, educational admissions consultant, millennial generational expert, chief listening officer (I kid you not!), cloud computing consultant, elder care consultant, sustainability expert, user experience/user interface designer and social media manager. Read more...
‘The Anatomy of a Billable Hour: A Way Forward’
In this series, we have explored three problems inherent to the billable hour system. The first, in Part 2, was that despite the rapid advance of legal technology, the legal field has yet to adopt a rigorous system for ensuring that such technology – so long as it is secure and cost-effective (read: makes sense for both the law firm and the client) - achieves widespread adoption in service of the client. This is in part, we posited, due to the inverse incentives imposed by the billable hour system.
It is also, however, a result of the fact that clients have for too long treated their in-house legal departments, and by extension the external counsel with which they contracted, as afterthought cost centers. That sentiment seems to be fading, however, as evidenced by the rapid increase in the prevalence of the “legal operations” role within corporate legal departments. (See, for example, the explosive growth of CLOC, the Corporate Legal Operations Consortium, from 40 members in 2015 to 1,300 today.) Read more...
Billable Hour ‘Makes No Sense’ in an AI World
Artificial intelligence (AI) is transforming the practice of law, and “data is the new oil” of the legal industry, panelist Dennis Garcia said at a recent American Bar Association conference.Garcia is an assistant general counsel for Microsoft in Chicago. Robert Ambrogi, a Massachusetts lawyer and blogger who focuses on media, technology, and employment law, moderated the program.“The next generation of lawyers is going to have to understand how AI works” as part of the duty of competence, panelist Anthony E. Davis told the audience. Davis is a partner with Hinshaw & Culbertson LLP in New York.
Davis showed the audience a slide quoting Andrew Ng, a computer scientist and professor at Stanford University: “If a typical person can do a mental task with less than one second of thought, we can probably automate it using AI either now or in the near future.” AI can “automate expertise,” Davis said. Because software marketed by information and technology companies is increasingly making it unnecessary to ask a lawyer for information regarding statutes, regulations, and requirements, “clients are not going to pay for time,” he said. Instead, he predicted, they will pay for a lawyer’s “judgment, empathy, creativity, adaptability, and emotional intelligence.” Read more...
Clients Pay Their Highest Rates to These Law Firms – and They Are Worth It
Clients are slimming down the list of firms to whom they pay their highest rate. This can help explain why the top rate hasn’t budged in 3 years—at a lofty $2,000 an hour. And, only 56% of clients say these firms are truly worth it.
Clients pay the highest rates when they need deep insight, understanding, and unflinching confidence in the ability to deliver. This presumes the firms bring unique knowledge and understanding of the risk. The following firms stand out above all others for: 1) Being identified as the firm clients pay the highest rate; 2) Clients sharing this high rate with BTI; and 3) The firm was well worth this highest rate. Read more...
Largest, Most Pedigreed Firms Underperform on Service Quality Compared to Other Firms
AdvanceLaw offers its second major finding out of its GC Thought Leaders Experiment.
We write today with what may become the most controversial finding from the GC Thought Leaders Experiment. Based on in-house evaluations of over 1,400 legal matters, the largest and most established law firms lag the rest of the Am Law 200 in delivering high quality client service. There are exceptions, but this overall finding holds, and it is statistically significant.
More specifically, the Am Law 21-200 is outpacing the Am Law 20 (the largest 20 firms by revenue) on several key service metrics, including responsiveness, efficiency, quality of work, and solutions focus. Likewise, when we look at firms with high revenue per lawyer (an even better indicator of a firm’s prestige and ability to charge premium rates) we see a similar storyline. Read more...
Law firms will have to publish certain prices, but not complaints data, SRA decides
Law firms will have to publish their prices for a range of consumer and business services, the Solicitors Regulation Authority (SRA) has decided, but they will not have to put their complaints records in the public domain.
It comes alongside research commissioned jointly by the SRA and Legal Ombudsman (LeO) that found 85% of consumers said they needed information before choosing a legal services provider, mostly relating to price (53%) and quality (37%). Read more...
Flat Fee or Hourly? Pros and Cons of Billing Options
I’ve been practicing law for nearly seven years, both as a solo and with a firm. During this time, I’ve tried different billing arrangements with varying degrees of success and learned plenty of lessons (often about what not to do). Here is my take on the pros and cons of various billing options I’ve used.
When I was a solo practitioner, I used flat fee billing for almost all of my work. I did not lift a finger on behalf of a client until I had a signed engagement agreement and their check cleared. My engagement agreement stated that fees were earned on receipt so I could deposit it directly into my operating account and bypass the trust account. Read more...
Lawyers worried for future - but few doing anything about it
Complacent lawyers are ignoring their own concerns about the changing legal market and settling for the status quo in their firm, a regular survey has found.
The 2018 bellwether report compiled by LexisNexis UK found that three-quarters of professionals across the legal profession believe the sector is changing faster than ever, yet just one-fifth acknowledge that significant change is needed within their own firm.
The survey’s compilers say the results overall raise concerns over the relaxed attitude of law firms in the face of the rapidly evolving legal landscape and growing challenges. Read more...
LEGAL PROJECT MANAGEMENT
How to Execute a Legal Project
Establish what's critical, and then focus on that, applying the appropriate resources to every necessary task.
In the Lean Law Program, the Execution Stage has three components—looking for what matters, working on those aspects in a lean way, and creative problem solving. These three components are akin to using the eyes, then the hands and then the imagination. At least that analogy makes sense to me, and I like to think it has a Japanese resonance about it.
So in this lesson we’ll look at the first of those components, which I call Just What Matters. Read more...
Law Firm Panels, Part I: Are They Designed to Fail?
It's really not panels that are the problem, but how they are executed and managed, according to the latest finding in AdvanceLaw's GC Thought Leaders Experiment.
The law firm panel starts with good intentions: the GC of a large company looks at the number of firms retained each year, realizes how fragmented the company’s spend is and reacts by kicking off a firm consolidation initiative. Everybody jumps on board, sweeping in the head of legal operations, senior lawyers, support staff, and perhaps finance and procurement. Several months (or a year) later, the legal team anoints a “preferred provider panel” of a smaller number of firms, and looks forward to deepening relationships, marked by eager and responsive service and across-the-board savings. Read more...
Law Department Operations Professionals Are Flexing Their Purchasing Power
LDO professionals have changed the way law departments buy things, which has ripple effects for law firms and legal tech companies.
Back when I ran Corporate Legal Times in the late 1990s, I worked with a lot of the early in-house technology companies. Many of the first matter management, entity management and e-billing companies advertised with us, and law firm technology providers were awakening to the in-house market all the time. When they did, I often got a call with a question: “Who buys technology in corporate law departments?
It was a tough question, but I had a stock answer: “It could be anyone. It may be the general counsel, if she’s tech savvy. It could be an IP attorney with a computer science background. Sometimes, it was a paralegal who knew how to unjam the copier, so ‘hey… you’re pretty good at tech, right?’” Read more...