April 09, 2008

Your Inbound Client Call Deserves Premium Attention

This post from Seth Godin, marketing genius extraordinaire, reminds us how far away we've gotten from paying attention to the client who takes the time to contact us on the telephone:

An inbound phone call is the ultimate in short-term permission. The customer or prospect is taking the time to call you. She's focused, interested, paying attention and willing to trust you.

Think for a minute about how much you spend (and how high up in the organization the discussions go) when it's time for a new logo or a new Super Bowl ad.

And yet, even though the rules have changed, the lowest-paid, least-respected, highest-turnover jobs in the organization now do the most important marketing work.

While the way we market has changed, the principles never change.  We are marketing/advertising/leveraging to bring in business.  Business means we are reaching out to potential consumers with real problems.  When someone calls your office, made the decision to contact you, differentiated your services, came as a referral, responded to your ad or blog, the first physical contact is the phone call (yes, sometimes a contact e-mail).  How they are greeted, whether in person or mechanical, falls under the axiom, "we don't get a second chance to make a first impression."

How are your clients greeted, 'real' person, voice mail?  What is being said, what is the tone?  Do your potential clients (and current clients) feel valued, their problems important, acknowledged if you can't speak with them now they will be contacted shortly as you appreciate them?  Don't assume a live person makes it a better experience if they are not trained to 'care' for the caller.  Don't assume because you have an automated response it is worse.  It is all in tone and choice of words and follow-up which will make the client feel their time was regarded and they made the right choice.

How do you make your current and potential clients feel valued?

April 02, 2008

All-in-One SaaS Solution for Solos - Rocket Matter

( Periodically I post about products or have guest posts about products or services  or books I believe are intriguing and worth exploring by solos.  I derive no financial benefit for doing so.  Nor do I do paid advertising on Build A Solo Practice for an important reason (although I am solicited constantly).  I only want to discuss the concept of these products or services I think would be really beneficial to new solos, different, exciting, cost-effective and forward thinking so readers can explore on their own and make the best decision for themselves.)

What I find intriguing about Rocket Matter is its time and cost-efficiency for the solo.  Instead of patching together different products, accounting software, time management software, file management software, the training on each, the different customer support departments for each, etc...this is one service and product which does it all, one training, one customer service department.  This saves time and money and endless frustration for an overwhelmed attorney and this is a concept worth exploring.

Guest Blogger:  Larry Port, a software developer specializing in web applications and a Founding Partner of Rocket Matter, LLC. 

A little over a year ago, my business partner and I began noticing the trials (no pun intended) and tribulations a number of our attorney friends were encountering with automating their firms.  They were in small and solo practices, and required some way to keep their practices in order, track time, bill clients, maintain their calendars, manage to-do’s, and organize clients and matters.

At the time, there were a couple of options.  The first was to string together a hodgepodge of software the firm already owned, such as Address Book and iCal for the Mac, or Outlook for the PC. Then, a time and billing package would have to be added to the mix.  And then one would have to try and wedge their matters into a project manager like Basecamp. But having to switch between these multiple applications seemed like a sure-fire way to lose time—in a business where time is a commodity.

The second option would be to invest in a practice management solution that ties these functions together in a legal software package.  But the problem was that none of these programs available at the time had the clarity or simplicity we like to see in user-interfaces.  They all had more buttons, screens, and tabs than any software we had ever seen.

Worse yet, both options presented the following expensive challenges:  How and where would data be backed up? How would security be managed?  What would the disaster recovery plan be if the office were destroyed or unusable? How should the office be configured so data can be accessed from anywhere?  What about applying security patches and paying for and installing product upgrades?

So, after studying the software options available to lawyers, my partner and I then researched and examined the activities of local small and solo law firms. We learned what they would really want in their dream system.  Our answer for them was to design and engineer Rocket Matter, a hosted, web-based practice management solution. It’s an all-in-one application designed to manage a small law practice, soup to nuts, built from the ground up with the sole purpose of optimizing our client’s time, money, and productivity.

Initially, we integrated contact management, matter and client management, calendaring, and to-do’s.  Then we realized most firms desperately needed a total solution, so we rolled in time and billing as well.   We like working on Macs, so we wanted firms to be able to have a choice of which hardware to use.  Web-based access makes Rocket Matter usable from a Mac, PC, or Linux machine.  And it also allows for access from mobile devices, fully functional from an iPhone or Pocket PC with SkyFire.

We came to understand the singular importance of time, and witnessed how too many lawyers were losing their billable minutes and hours due to inefficient systems.  The math is alarming: If a lawyer earning $250 an hour loses even .1 hours of time a day, over the course of the year that comes out to $6,250.  So we built a technology that actually traps time as you go about your day, to prevent you from losing this precious commodity.  We call this “Bill-as-you-Work”.

Our design emphasizes simplicity, so that the learning curve is minimal and usage intuitive, reducing training expenses and encouraging staff to actually want to use the product.  The web-based access eliminates up-front and continuing IT expenses, providing expert security, intraday backups, and an instant disaster recovery plan. 

Question: “If I have my data locally, its security is my problem. If you have it, to whom do I complain if it is compromised? Are you saying that online banking is completely safe? What about the customers of online access services whose information has been compromised?“

Security is a very serious issue in the practice of law. Confidentiality is key. The security measures we included in Rocket Matter are comprehensive. Every request is encrypted with 128-bit secure SSL, the same encryption used by many major banks and financial institutions. Passwords are hashed (stored in an encrypted format) and known only by you. Threat Modeling, which is the practice of identifying and countering attacks, is a fundamental part of our development process. There are a host of other security measures we have taken to lock down and isolate a firm’s data, and will be conducting ongoing audits with independent security specialist firms.

You should be aware that there is risk to any system and should base your business decisions accordingly. The odds of your data being compromised from a well-designed web-based application are lower than less sophisticated security breaches, such as data being physically stolen from your premises. Consider that if you do not take appropriate security precautions, whether on a server in a remote location or in your office, a computer can be vulnerable to attack. Another thing to think about, especially when running Windows machines, is maintaining up-to-date security patches.

Not all web applications are created equal, unfortunately. Ultimately, it is up to the consumer to ask questions to find out how seriously the software firm considers security. A responsible SaaS firm will incorporate security design as a fundamental part of their design process. They should be able to answer your questions about security, and specifically, have answers about data isolation, encryption, and threat modeling.

So if you’re ready to finally find that one system that works, take a look at Rocket Matter

A few things I would like to point out, as law firms move to paperless offices which imply a significant amount of their files and work product will be digitized as well as hosted off-site, it is becoming increasingly obvious one will have to purchase cyber-insurance.  As you construct your business plan and determine how you will build your solo practice include this insurance in your insurance package.  And for those who remain skeptical remember, even if you have files on your premises and own a fireproof safe, one still gets insurance for loss, right?   In my opinion, hosting off-site through a trusted provider with the added security of cyberinsurance is no different.

What I would suggest is discussing with your clients the way your office functions if it is or is going to go paperless, the security protections in place and have them initial their approval within the body of your retainer agreement.

If you would like to read more about Rocket Matter from legal tech gurus across the blogosphere you can do so here.

March 24, 2008

Why Solos Can Profit From Public Relations

This is a colorful story which is also a lesson for the new lawyer (and not so new lawyer).  Today, even the new solo needs to understand one of her core competencies must be fundamental knowledge on how to handle a high profile case and the media, why solos need to understand the fundamentals of public relations.

This is the story behind the story of how two new solos (just four months after passing the bar) saw the PR value of doing pro bono work on a case which captivated the local media, got hired, then fired, not because they couldn't do the work...but because they didn't have PR experience.  This is the case of the 'pink poodle'.

Joy Douglas, the owner of Zing beauty salon in Denver, Colarado had a white poodle, Cici, which she stained pink.  The stain was perfectly safe, organic beet juice so there is absolutely no harm to the poodle whatsoever.  She did this to support breast cancer awareness, pink being the color popularized by the cause, to create conversation to raise donations for the walks for breast cancer.  Many well-meaning but misguided animal lovers thought she was abusing the dog and reported her to the Humane Society of Denver.  The police, after numerous complaints, fined her $1,000 under a statute enacted five years ago to prevent dying of animals, primarily to prevent baby chicks and ducks being dyed at Easter.

In her wisdom, she sought out counsel because of the media interest in the case. She also hired two new lawyers who saw the PR value to their firm and wisely were going to defend her pro bono in exchange for the positive publicity.  One lawyer had many years during law school working in the Denver prosecutor's office so the experience and connections were there despite his new lawyer status.  The lawyers, in turn, contacted more experienced counsel to assist on the case because they had public relations experience. The experienced counsel declined (you'll learn why in a bit).  As a result of the experienced counsel declining they contacted me to ask if I knew of anyone who could assist them with fundamental PR and to make sure they came across professionally.  It was very wise to recognize they needed PR assistance.

I immediately contacted my friend Paramjit Mahli of The Sun Communications Group who does this for a living, educating lawyers on how to work with the media, creating strategies and systems before they are needed, kind of like practicing fire drills before the real fire.  They were scheduled to speak with her two hours before meeting their client for an interview at the local FOX station.  The consult never happened because the client called them and told them she hired another firm with more public relations experience.  The firm: the one the young lawyers had asked to co-counsel with them on the case. (We won't get into the actions of the other firm.)

What happened to these young lawyers is more common then you may believe.  Cases which have media value and the ability, if handled correctly, to propel new lawyers into the spotlight and garner more business (or cripple their reputation) are quite common.  Why?  Because many of these newsworthy cases are clients with little or no money and they seek out public defenders or hungry young lawyers or those who will do it pro bono.  A smart lawyer who is starting out today must understand they need fundamental knowledge on how to handle the media, especially today with blogging and social media permitting everything to travel at the speed of light.

This is why I encourage you to read Paramjit Mahli's Profiting with Public Relations, put it in your RSS feeder, subscribe to her newsletter and, hopefully, she will be coming out with a primer on the basics of handling the media in the form of a white paper or e-book.

Regardless the years of experience, every lawyer should know the fundamentals of handling the media. To help you get started, a one or two hour consultation with Paramjit is a very wise investment.  And those who work with me know I don't encourage clients to spend money unless it is a very smart purchase.

March 21, 2008

In a Weakening Economy Will Clients Trade Big Law for Innovative Small Firms?

I related to this article, "In a Weakening Economy, Americans Swap Steak for Chicken" because less discretionary income affects all purchases, including legal services.   It's called, "Trading Down."

Stung by the housing slump, tightening credit terms, and rising inflation, U.S. households are finding ways to cut back, putting a damper on the consumer spending that is the driving force behind the economy.

Retail sector analysts call it "trading down" when consumers seek out cheaper alternatives, and it is increasingly evident across chain stores and restaurants. Even gasoline consumption has slowed in recent weeks.

"With the burdens of the housing downturn broadening under the weight of tightening financial conditions, coupled with surging energy costs, 'trading down' and 'trading in' behavior should spread, especially as the labor market weakens,"

But unlike cattle farmers, who will have a hard time trying to become chicken farmers to save their business, solos should not trap themselves with one practice area, pricing structure or crushing overhead.

If you are married to one niche or pricing structure or have so much overhead you cannot afford to learn other practice areas or innovate with pricing models or packaging of your services then you are making a critical mistake.  (There are exceptions such as you are a 'lawyer's lawyer' meaning other lawyer's are your clients and they require your special area of expertise or you are already established as the go to person for a particular niche or you are in a life and death practice area where clients will sell their homes for your services.)

Others can and have argued with me on this point.  They say law is so complex you cannot be good at multiple areas.  I don't share their opinion.  I think you can be highly competent in two to three areas of the law even if ultimately want to only practice in one area of law.  But going into business for yourself and sustaining yourself requires you to be adaptable and talented and ready to do what you have to in order to sustain your practice.

Use Big Law as an example.  When a Big Law firm realizes the economy is changing they simple divest themselves of the associates working in the practice they've determined is no longer profitable.  They don't go out of business. Similarly, as a solo you need to divest yourself of unprofitable practice areas, not go out of business.  This means you need to be competent in more than one area or willing to learn quickly in order to not practice an area of law where clients are few or incapable of paying you.

Or, in the alternative, if you want to stay in your particular practice area you need to be prepared to change how you deliver services to work with clients who are now buying chicken instead of steak. (Yes, everybody and their brother talks about premium pricing, selling your value, etc.  It's valid.  As Big Law divests non-profitable practice areas there are still those steak buyers who now have nowhere to go. But if every lawyer is only going for the steak crowd, it becomes a buyer's market. Remember, there are alot of chicken and fish eaters out there as well as vegans who would make excellent clients.)

A new solo, (and many experienced solos) need to adapt to the economy, not expect the economy to adapt to them.  It's also not your gross sales which matter.  It's how much of each dollar you take home.  So, imagine finding a way to meet your client's needs through innovative delivery of your services by cutting overhead, providing pricing structures which work for the client and actually netting more of each dollar.  This is a business model you should be striving for...bad economy or good.

February 29, 2008

Dennis Kennedy's 8 Technology Trends for 2008

From Dennis Kennedy's recent article on Technology Trends for 2008:

I have written recently about how to make prudent technology choices in a negative economy. The key idea is not simply to cut spending, although you might, but to think clearly about the economic justification for each technology decision that you make. You should be doing that anyway, but the importance of good decision-making gets highlighted when times are tough.

It's not rocket science. You look for technology that either helps you cut costs or enhances your opportunity to earn revenues. Better said, you want technology that makes it easier for fee-earners (and, increasingly, other revenue generators) to generate more revenue and makes it possible to reduce costs without making it more difficult to generate revenue. It takes some analysis, some thinking, and often some tough decisions.

In recessionary times, technology decision-makers must focus on good planning and on even better execution. Costly technology mistakes can have a direct impact on a firm's bottom line and its ability to retain staffing levels. Since technology budgets have crept up in recent years to become one of the larger line item expenses at many firms, we'll definitely see a movement toward getting tighter control of those budgets.

******************************************

As a general rule, I expect that we'll continue to see solos and small firms driving innovation in the practice of law. Firms that are good at technology will take advantage of opportunities to widen their technology advantage over their competitors and position themselves well for the time when economic recovery comes.

Take a look at this popular technology soothsayer's list of 8 here and join the conversation.  True?  Not True?

A quick overview:

1. Making Better Use of What You Already Own.

2. Lawyers Win Round 1 in the E-discovery Battle . . . by a Wide Margin.

3. Security Begins to Matter . . . Really.

4. The Death Throes for Email?

5. Going Mobile.

6. Opening Audio and Video Channels.

7. Dancing with a Recession.

8. Smart Ways to Work Together – Collaboration Tools.

The Greatest American Lawyer said a year ago, "by the end of 2007 we will see a great digital divide between law firms".  Those who are technology forward will take the lead in all manner of law practice.  I happen to agree.  The technology-forward solo has the opportunity to capitalize on many trends, even the playing field and provide wonderful service for their clients while unshackling themselves from the office.  When unshackled, the elusive work/life balance can either become more balanced or it can encourage a greater form of shackling creating a 24/7 work week.  It's your personality and time management style which will dictate this but either way, advanced technology in the solo' s law office is here to stay.

February 06, 2008

"You Ask....I Answer" - I Want to Fire A Pro Bono Client. What Say You?

Question: Thank you so much for your website. I hung out a shingle, scared to DEATH, and then I found you. You have helped me draw many deep breaths since I went solo as a brand new attorney, and I am so grateful for your help.

If you have any time to share some thoughts with me, I would appreciate it. I am struggling with my decision to fire a pro bono client. I’m sure I’m not the only new attorney/solo who takes on pro bono clients because I 1) have the time and 2) want to help. How do I fire a pro bono client who is resisting my best efforts at client control? I represent a domestic violence survivor pro bono and she’s disrespectful and hard to work with. I’ve gone from feeling really good about what I’ve been able to do for her to dreading her calls. I’ve finally grown a spine and started strongly defining (to her) what I can and cannot help her with, but I’m not getting anywhere. I’m starting to get resentful, and I know this makes me a less effective advocate for her. I know there are many low income DV victims in my community who need my help and who will not be as difficult. But I just plain feel guilty contemplating firing this client because I know she has a very small chance of replacing me, and opposing counsel will take full advantage of her pro se status. I also fully anticipate some very ugly words if I fire her in person or over the phone. She’s started taking her frustration out on me.

Any thoughts?

Answer:

Thank you for your kind words about my blog.  I'm glad I give you the kind of support you need.

Whether this woman is paying you or not doesn't change your exposure to malpractice, doesn't change your professional obligations to her OR her obligations to you as a client.  You are entitled to respect and cooperation. Whether pro bono or not, I'm sure you have a clause in your retainer agreement which states you have the right to terminate representation pursuant to the Rules of Professional Conduct in your state and/or any local customs of your courts IF the client does not cooperate or makes it difficult for you to represent her.  She needs to be reminded that just because she isn't paying for your services doesn't mean that your services are not worth paying for.  And you need to remember this, too.  This type of client, although you sympathize with her plight, is:

  • dragging you down professionally;
  • eating up your time which you could be using to market your services and educating yourself on how to get paying clients;
  • making you regret your generosity;
  • In making you regret your generosity, you may feel disinclined to do pro bono work for "many low income DV victims in my community who need my help."

Do not turn over your "power" to one bad client regardless their personal situation.  Pro bono work poorly handled from a business perspective could very well put you out of business. (It would be interesting to see how many hours you could have billed to see the dollar value of the time you generously donated.)Pro bono work is a gift you give back to the community and it is part of a well-designed business plan.  Understand its place in the worklife of a solo practitioner. 

If you need to fire her, make sure you do it properly (get advice from a more seasoned lawyer) and for your safety, make sure you have someone present.  Let her understand she has created this situation, and while you sympathize with her plight, she has made it impossible for you to work with her.  If she is indigent, find out if there are other legal aid services or other attorneys who do similar pro bono work and provide the names of the agencies and the attorneys with telephone numbers so she has some direction.

Again, just because no money has changed hands does not mean you should treat her any differently than a paying client who is disruptive or uncooperative.  If you make a mistake, your license to practice is still on the line.

Let us know how it works out.  And if others have a suggestion, please add to the discussion.

Links of Interest:

Don't Let Pro Bono Work Put You Out of Business.

If Your Clients Don't Add Value To Your Legal Services Business...Fire Them!

January 21, 2008

Virtual Law Office(VLO) - It's Not Your Mother's Law Office - Guest Blogger, Stephanie Kimbro

(UPDATE:  1/22/08 - A nice addition to this particular conversation)

Guest Blogger Stephanie Kimbro is an attorney practicing in Wilmington, North Carolina.  I asked Stephanie if she would guest post on Build A Solo Practice because she represents, in my opinion, the law office of many future solos.  She operates her office completely virtual.  And she offers unbundled legal services and publishes her prices on her site. While there might be others out there doing this or attempting to do so, Stephanie's is fully operational. 

Virtual Solo - Stephanie Kimbro

My solo law practice is a completely virtual law office (vlo) which operates from a web-based application. More specifically it is a secure (https), hosted, software as a service (SaaS) application. I access my entire office wherever I can access the Internet and the same goes for my clients.

My vlo is my entire law office. My client files, client data, billing, invoices, accounts receivable, other accounting and administrative tools, calendars and other data management tools are located in the backend of the office. I have a central point where all of my cases are organized and it shows me the status and priority for better time management.

Unlike standard law firm websites, I do not use email or “fill in the form” requests with my online clients. Email is most often not encrypted so it is not as secure as https communication. My vlo is also not a legalzoom.com or nolo.com website where the public can purchase form-generated legal documents.

On my client’s side, they have access to their own homepages where they may view all of our online communications, pay me online, download and upload documents, and update client data, among other features. My clients feel like they can communicate with me 24/7 and on weekends which is a convenience to them and helps them feel like they are kept current on the status of the legal services they have asked me to work on.

The vlo is a convenience to me because I do not have to respond only during business hours but can set my own schedule. I have a 24 hour policy of responding to clients on the website even if it’s just a quick “thank you for contacting me….” I have a folder of standard responses for certain requests that come up on a regular basis so it takes a minimal amount of time to handle client intake. The new or updated client feels attended to and then I can better allocate my time towards actual legal research or drafting based on the priority of the cases I have lined up. ….” If I take a vacation or a few days away from work, I let my existing clients know through their homepages that my response time will be longer than usual.

Why did I decide to run a solo vlo and provide services on a fixed price basis?

There were two reasons for creating the vlo: the personal (wanting a better work/life balance that I could control) and the practical (law school loans must be repaid). Necessity is the mother of invention.

As for the practical, a virtual law office that runs on a web-based application means minimal overhead and minimized startup costs. To open the doors to my solo, so to speak, I did not have to invest in computers, hardware or software and could use the equipment and internet connection I already had.

With a virtual law office, I tap into the online consumers and broaden my client base to the entire state where I am licensed and even to clients in other states with N.C. legal issues. This allows me to compete with larger firms, especially those that have planted branches of their Biglaw firms in our small town. Having access to a larger potential client base also lessened the amount of startup time that it took for my solo to get a decent client base and get off the ground.

Before I started the vlo, I spent a couple years researching the feasibility of offering unbundled legal services online and how that would work for a solo. From my previous experience in a larger firm, clients do not always “get” the billable hour even after signing retainer agreements. I also noticed a large segment of the public who need transactional legal work handled but who want to do the footwork themselves. That is a significant market need that the right technology could be used to fill.

As far as billing practices, I actually keep my billing options flexible. I list sample prices on my vlo website to give potential clients an idea of the price ranges, but I provide them with a price quote based on the information they give me in our communications after they register with the vlo. I occasionally use the billable hour with clients when they come back to me and want additional work handled that extends beyond our original, agreed upon project. I also offer payment plans for clients if from our communications I think that it would be easier for them to budget.

I handle billing on a case by case basis and the software application allows for that flexibility. If I wanted to revert to a billable hour only method I could do so but I would be giving the client that billable hour to accept rather than a fixed price. Their acceptance of the quoted fee along with the terms and conditions that they accept and our initial communications all make up the equivalent of a traditional retainer agreement. In some cases, I do require a retainer fee before starting work. Again, as in a physical law office and in any small business, how I decide to structure the fees depends on multiple factors, including the client’s legal matter, who referred them, etc.

About the Technology

For over two years my programmer husband and I have worked on developing the vlo software application. A patent was filed for the vlo technology in the summer of 2007. We formed a company called Virtual Law Office Technology, LLC (VLOTech) which will serve both as a company to provide vlo technology to other attorneys but also as a portal for the public to find or be referred to vlos offering the legal services they are seeking.

In developing the software application, security was our primary concern so it has been designed with this as the primary foundation. As new concerns in technology security arise, new protections or modifications are made. My husband has ten years of experience in writing security programs, including those for state government and court systems. We are bootstrapping our company and doing something we believe will make a positive difference in the lives of others in the legal profession and for those in the public seeking a more accessible and convenient way to obtain legal services.

We have a handful of attorneys who will begin using the release version of the virtual law office technology this year. Most of these attorneys are solos who have contacted us wanting to set up virtual law offices similar to my practice.

I certainly do not think that vlos will ever replace brick and mortar law offices but I think they will provide another option for attorneys wanting their own solos or for existing law firms that want to tap into the online market to generate additional client revenue. The public is ready for this form of communication with attorneys, and in my opinion, the public will ultimately be what drives the profession into this method of practicing the law.

Kimbro Legal Services, LLC
Stephanie L. Kimbro, Esq., M.A., J.D.
(910) 762-3698 office
(910) 619-5530 cell
P.O. Box 4484
Wilmington, NC 28406
Featured in Lawyers USA and NC Lawyers Weekly.
Winner of the 2007 Wilmington Parent Family Favorite Award.

January 09, 2008

The "What is Value Billing" Discussion Continues....

In response to "The Billable Hour Bash-a-thon Continues" post (you may want to click through to refresh your memory and put the Q & A below in context) I received a thoughtful comment from Per Gynt, a 49 year old law student, which I wanted to publish.  I also asked my friend and value billing 'guru' Allison Shields of LegalEase Consulting to answer Per's question.  I thought maybe others could benefit from the question and answer.

Per Gynt:  What we are talking about is giving the customer more control over her money, not control over our companies. In the case of Cisco it is a case of the latter. I object to this kind of behavior the same way I object to "low ball" bidding for construction projects.

It's not good for the industry. Efficiency and reasonable pricing are certainly desirable, but companies that want to force me to reduce my price on a yearly basis aren't desirable customers because it disallows me the flexibility I may need to train new people or make decisions about the priorities of my own operation, not to mention the allowances for inflation and cost of living. It also suggests that my current price is not fair. What sense does that make? I want to be their lawyer, not their dog. Lastly, I have expenses that are best calculated in relation to time. Monthly, daily, hourly, etc. The expression of the cost of services as an hourly number is very appropriate. Now, I can see being new and inexperienced and not being willing to bill a client for learning how to do something, but I see nothing wrong with billing a fair price and providing a series of stopping points so that the client can make decisions about future expenditures. Is that not what we are talking about anyway? The "value billing" process seems manufactured and somehow removed from the actual value of the work, and therefore somehow less credible than a simple statement of minimum fees for simple procedures. Is value billing the equivalent of estimating the hours required and bidding the job accordingly? If so, why not just say so? I don't see how this would work in complex litigation, but tell me how I'm wrong. Please.

Am I wrong? I am seeing this from the perspective of a former construction professional, currently in law school.

Thanks.

P

Allison Shields responds:

Susan –

Thanks for giving me the heads-up and the opportunity to chime in and comment on this post. While I agree that clients will be a big driving force in changing the legal profession and getting more lawyers away from hourly billing, I don’t necessarily agree with Lerer’s view of the future. And while I haven’t looked into Cisco’s system, the way Lerer describes it in her post, I’d have to agree with the commenter, “P,” that forcing a firm to cut their total charge by a specific percentage each year without regard to what work is performed and how it’s performed is too simplistic an approach that’s bad for both lawyers and clients.

But lawyers and law firms have to keep in mind that the needs of clients are ultimately what control their business; the key is to choose your clients carefully. If a particular client is requesting that the firm perform work at a fee that is economically not viable for the firm, the firm has two choices – target other clients or find a way to make the work economically viable for the firm. As P notes, a client that wants to force a firm to reduce fees on a yearly basis may not be a desirable client for a particular firm (or lawyer). But remember that clients aren’t the ones responsible for ensuring that lawyers and law firms can train people, prioritize their business needs and ensure that the firm is covering inflation, etc. Those are business decisions that need to be made by the law firm. One of those decisions, as mentioned above, is the clients you choose to work with. Another one is how you structure your fees.

Many lawyers like P claim that they have ‘expenses that are best calculated in relation to time.’ Lawyers today are accustomed to making calculations in terms of time, but that doesn’t necessarily mean that’s the best method of making those calculations. What expenses are actually best calculated in terms of time? Even if the lawyer thinks that the best method of calculating their expenses is time, that doesn’t necessarily mean that’s the best way of calculating fees. The ‘cost of services’ is something a law firm needs to take into account when pricing their services, but it isn’t the only factor – the value of those services to the client is the real measure of the appropriateness of the fee.

The issue of ‘value billing’ is getting a lot of attention lately, but the definition of ‘value billing’ isn’t fixed, which causes some confusion among professionals. Value billing doesn’t mean that the client has total control over what the lawyer charges. But no matter how you structure your fees, the client must value the work performed enough to pay the fee charged.

P’s comment says, “I see nothing wrong with billing a fair price and providing a series of stopping points so that the client can make decisions about future expenditures.” That’s really the answer to P’s later question about how value billing would work in a complex litigation context. The big question is how you determine what a ‘fair price’ is. And complex litigation or not, time isn’t the sole factor that determines whether a fee is appropriate or fair.

There isn’t only one way to value bill, because every law firm is different, every client is different, every case is different, and different practice areas require different legal skills, etc. Sometimes it’s appropriate to provide a ‘flat fee’ up front for ‘simple procedures’ (as P calls them) or for predictable work. Other times, what P suggests about a series of stopping points is appropriate. By quoting a fixed fee for specific work outlined in an agreement, advising the clients of variables that would change that fee, and providing ‘stopping points’ at which the client determines whether to move forward and what additional services might be required or appropriate based on the client’s desired outcome and values (as well as the fee), alternative, value-based billing can even work in a litigation context.

Lawyers need to start thinking about the value that they provide to their clients in terms of the services that they provide, rather than the time it takes to provide those services. A lawyer’s most valuable assets are the lawyer’s intellectual capital - skill, knowledge, expertise, ability to argue, to see the issues, to creatively represent their clients’ position- and their ability to provide their client with the kind of experience the client is looking for in their legal representation. Time is NOT the lawyer’s most valuable asset. Lawyers do themselves and their clients a disservice by continuing to assert that time (a limited asset, the same amount of which is available to everyone) is what the lawyer is ‘selling’ to a client. Value billing is NOT billing based on estimated hours – it is billing based on the value provided by the lawyer to the client. Time is (or may be) a factor that the lawyer considers when calculating the lawyer’s cost to provide the service, but it shouldn’t be the sole basis for the lawyer’s fee.

The bottom line is that more and more clients are getting frustrated with hourly billing and are calling for alternatives. Lawyers that can learn to structure their fees in a different way will be more attractive to those clients – assuming that those are the clients the lawyer wants to work with. And experience has shown that that lawyers who are no longer tied to the billable hour find the law firm culture, legal work, enjoyment of the practice, employee and client relationships and profits all improve.

Allison C. Shields, Esq.
Legal Ease Consulting, Inc.
www.LawyerMeltdown.com

January 07, 2008

A Look Into The (Legal) Office of the Future?

If this is the Office of the Future....bring it on! 

Welcome to the office of 2020 or so. If you still go to one, that is. Thanks to instant wireless communications and encryption technology, remote working -- from home or anywhere else on Earth -- will be commonplace 10 to 15 years from now. But an office in the traditional sense will still come in handy for working on team projects as well as for meeting clients and suppliers.

What follows is a glimpse into a typical office-of-the-future. What the heck -- imagine that it's yours.

Electronic wallpaper covers the walls. When you're not using it to show charts, graphs and other business presentations, it will be easy to switch to between pictures of the kids or some other pleasing images. Office chairs will have built-in sensors to detect your stress level. Depending on the result, the chair can then gently suggest a brief nap or exercises to help decompress.

The "office computer" is just a wide, high-definition laptop monitor with a wireless connection to a central server. If a keyboard is needed, the monitor can project one on the desk or a soft pad for virtual typing. But, more often than not, you'll typically bark out voice commands to the machine. Say "Display the Perkins account," and the computer will oblige with a slew of information about the client: Financial numbers, past orders, a video of a recent meeting, information the client has posted on the Internet recently and more.

Actually, many of us who work from home or telecomute and are trying to stay on top of technology are pioneering the change in the legal profession.  The bit in our mouth remains the unimaginative, threatened, insecure organizations which feel the need to stifle legal creativity and our own inability to educate the clients as to the benefits of the technology.

Solos have always led the charge in technology in the legal profession.  The next 15, 20 years will be no different...just incredibly exciting and very fast-paced.  Stay open, innovate, create, share your ideas but recognize it is happening and there is nothing one can do to stop it. 

January 03, 2008

The Billable Hour Bash-a-thon Continues Courtesy of Slate

This article was forwarded to me by a reader known as Blueb73.  Author Lisa Lerer of Slate Magazine writes a compelling piece called How to Kill the Law Firm Billable Hour in which she states the following:

The criticisms lobbed by academics, associates, and bloggers have had a negligible impact. Making such a significant change takes a more powerful force in law firm life: the client. And now, finally, the companies that pay millions in hourly rates are striking back, forcing their law firms to cut some tough, nonhourly fee deals. If anyone can tame the billable beast, it's the clients who feed it.

She further describes what she believes to be the future of law firm culture:

If this is the future of the legal world, then the business will eventually spilt into three fairly autonomous markets. The top end of the spectrum will remain largely unchanged. Companies will still pay hourly rates to hire white-shoe law firms for specialized, bet-your-company kinds of work. On the opposite end, however, clients will stop taking their rote legal work to law firms altogether. Companies already outsource relatively simple matters like document review to consulting services. And as technology improves, more programs will let companies handle their own contracts online.

In the murky middle between one-of-a-kind advice and dime-a-dozen contracts, the push for alternative arrangements will prevail. Cisco, for example, already pays a fixed fee to law firms for filing patents at the Patent and Trademark Office. The firm's total charge must decrease by at least 5 percent each year, as a firm becomes more efficient; if not, it is replaced with a smaller one willing to take the work.

Solos, take note.  Where will you fit into this structure and how will you capitalize on the opportunity presenting itself.

Links of Interest:

The Billable Hour "Cockroach" is Being Extinguished

The Cockroach of the Legal Profession - The Billable Hour