A recent survey listed lawyers (specifically associates) as the unhappiest occupation in America. This isn't a huge surprise. I know about a kajillion lawyers (which is one followed by a wad of zeroes, or ten to the wad), and way too many of them are fairly unhappy with their profession. When I stopped practicing (escaped?) two years ago, many of my colleagues gave me that look you saw as a kid when you told your friends that you're going to Disney World — you know, that wistful, pleading look that says, "Take me with you. Please?"
In this short talk (just six minutes) at the LexThink Conference in Chicago, I explain why unhappiness abounds in the legal world. Then I give five simple steps for fixing it. And this advice doesn't just apply to lawyers; any professional or creative person can use them to find happiness at work. So take six minutes and watch. See if it can help you find your own professional happiness.
Here is the six-minute "LexThink .1" speech I gave in Chicago in March at the ABA TechShow. In it, I explain the three simple steps you need to take to get someone to do what you want. LexThink follows the "Ignite" speech format: six minutes, 20 slides, 18 seconds per slide, advancing automatically with no control by the speaker.
Enjoy. And if you want the free Result Triangle worksheet, it's right here. You can print it out and use it right now to help solve whatever problem you're facing.
Short post over at the new jayshep.com on how appliance-repair companies and other providers can't seem to schedule appointments. Wow: something lawyers do right when it comes to time.
If you ever spend any time on Facebook or surfing through YouTube videos, you probably know what I'm talking about. In late 2011, singer-songwriter Kina Grannis debuted a video to her song "In Your Arms." It took 288,000 Jelly Belly jelly beans and nearly two years of planning and stop-action photography to create the three-minute video. Since its release in November 2011, 5.4 million people have watched it on YouTube. The video directly led to Grannis's appearances on Ellen and The Jimmy Kimmel Show. At the moment, she's on the European leg of a very busy world tour, and her Stairwells album is currently climbing the records charts.
But none of this success was left to chance. Instead, it has been the result of savvy social-media marketing and a lot of hard work.
There is a truism that success requires three things: ability, affability, and availablity. The ability part is taken care of with Kina's talent and appearance. Those are mainly something you're born with. Sure, you can take lessons and practice to improve your singing and playing, and there are things you can do to burnish your appearance, but if you're born tone deaf and homely you may want to consider another field.
Kina has the ability part down, being possessed of both talent and beauty. She has a sweet, mellifluous voice that well fits the music she plays. And she's gorgeous, with large, liquid eyes and a melting smile. But ability and looks are just table stakes; there are plenty of attractive good singers who never manage to get their careers off the ground.
The second factor, affability, is also a combination of the innate and the intentional. Kina projects a light, infectious charm that makes you feel like you'd enjoy getting to know her. It may be perfectly natural, or it may be partially an act (which I doubt); either way, it comes across as authentic, and that's what matters most.
The third factor, availability, is where the hard work comes in. More than most up-and-coming artists, Kina has worked hard at using social media to make herself as available as possible to as many fans — and potential fans. She has a well-developed blog (kinagrannis.com) where she connects with people to say where she'll be touring, when she'll be on TV, and how people can get her latest music or videos. She has a good Facebook fan page, and she tweets frequently on Twitter.
She does an exceptional job with her YouTube channel, where she hosts more than a hundred videos, including several different performances of the same songs. At the end of some of the performances, she talks into the camera for a bit, addressing her fans directly. Many of her videos are embedded with links that allow for further interaction. For example, if she mentions on camera an upcoming show in Paris, a link will appear that will take viewers to a page on her website where they can order tickets.
And she doesn't just sell tickets and records, t-shirts and tote bags. At most of her shows, she offers fans the opportunity to pay a few bucks extra to receive an armband for a show. The armband covers the fan's admission to the performance, but also lets the buyer come backstage after the concert is over and meet her in person. Now that's availability.
So what can professionals learn from Kina about marketing their services? A lot. Too many accountants, lawyers, and other professionals rely on their abilities alone, expecting that because they're talented at what they do, the world will beat a path to their doors. But ability is a table stake for professionals, just like it is for singers. It's the affability and availability that will bring in the business and lead to success.
Many professionals often ask what the return on investment (ROI) is on the use of social media. The answer is that social media can effectively project to your clients and potential clients both your ability and your affability. Social media gives you the availability, allowing people to learn about you, get to like you, and see how good you are.
Are you a good writer? Clever and creative blog posts can inform the world that you're talented at your profession. Have a comfortable presence on camera? Short, interesting videos posted to your branded YouTube channel can get people to like and trust you. What can you do differently to make yourself more noticeable online — to make yourself remarkable, in the true sense of the word? Think Kina's "In Your Arms" video with all the jelly beans. That video was different enough — remarkable enough — to get 5.4 million people to notice Kina's talent.
What can you do that will showcase your ability, affability, and availability? Figure it out, and start working on it today.
Also check out the seven-minute "making of" video that shows how the jelly-bean video was created.
This week saw the season premiere of the still-successful CBS reality show Survivor. Remarkably, this is the series' 24th season; CBS has aired two seasons every year since 2000. (If you haven't seen the show, well, where've you been? Don't worry, though: I wrote about it over at Gruntled Employees back in 2010 — "Why employment law is like "Survivor.")
An interesting and unfortunate thing happened during the first "immunity challenge" between the two tribes, who this season are split along gender lines. The challenge featured a difficult obstacle course that began with a leap from a 25-foot platform onto a net. One of the female contestants, Kourtney, broke her wrist on the net. Host Jeff Probst suspended the challenge so that the medical team could attend to her. When she had to be airlifted to a hospital, Probst gave the male tribe a choice.
Since the challenge required that all tribe members complete the obstacle course, Kourtney's injury and withdrawal (both from the challenge and then from the game itself) meant that the male tribe would win by default. But if they wanted to earn some goodwill with the female tribe, the men could choose to resume the challenge and finish it without Kourtney.
The men (not unanimously) chose to take the win. In explaining their decision, they focused on the fact that "Survivor" is a game and the goal is to win. Fair enough. But Probst noted that throughout the history of the game, douchey moves (it's possible he didn't say "douchey") like this end up earning paybacks later on. Contestants often forget that "Survivor" is a social game, with the winner being chosen by a jury made up of contestants who had been previously screwed over.
Lawyers make this kind of mistake all the time — especially younger lawyers. They fall into the mistaken mindset that litigation is all about winning, and that your job as a "zealous advocate" means that you need to secure every advantage for your client. But like "Survivor," law is also a social game. Your reputation, and thus your ability to well represent that client and other clients in the future, depends on how others react to the douchey moves you make in the interest of winning.
And this holds true in other areas of the law besides litigation. Contract negotiations, divorce law, real-estate dealings, criminal law … you name it. It's important for lawyers to help their clients as best they can. But that doesn't necessarily mean squeezing every last advantage out of the other side, especially when doing so could lead to payback later on.
Want to know what that one word is? Here are two easy ways to find out:
Go grab your nearest unabridged dictionary. Turn to page one. Start going through each defined word one at a time. You'll get to it eventually. (OK, maybe that’s not so easy.)
Go to the LexThink.1 site and vote for my proposed talk, “One Word That Will Reinvent How You Serve Clients.” Just click on the handy "vote" icon (see image).
Voting ends February 24. There are 23 other proposals from a rogue’s gallery of big legal thinkers, and only the top 12 will be selected. Your vote will make a difference.
Then come to the ABA TechShow in Chicago starting March 28. The LexThink.1 program is Wednesday night at 6:30 CDT. You can sign up for free tickets here.
So what is LexThink.1? Well, it’s an evening of very short presentations with a challenging constraint: 20 slides, 18 seconds a slide (equaling six minutes exactly, or 0.1 to you lawyers who still use timesheets). The speaker has no control over the slides, which keep advancing like sands in the hourglass (or something) every 18 seconds. It forces the speakers to keep it brief and pithy, and to leave home all the boring bits. It’s inspired by Japan’s Pecha Kucha Nights, which allows a luxurious 20 seconds for each of the twenty slides. This is its third year; it was previously called "IgniteLaw."
To see an example, here is my talk from last year: "Quantum Leap: How You Will Practice Law in 2019."
No matter which proposals get chosen, it promises to be an amazing event. Hope to see you there. And thanks for the vote!
Well, not really. In fact, it has a long way to go. Over the past three years, since this blog started, the conversation about replacing the 1919 time-based billing model has snowballed. In many ways, the revolution's initial campaign to discredit the billable hour has been successful. There are now very few people defending hourly billing as an effective and useful practice.
But still, the vast majority of professional-service firms continue to track their time and bill their hours. While many firms pay lip service to so-called alternative billing or alternative fee arrangements, almost none of them have taken a critical step of trashing their timesheets. And until professionals learn to stop keeping track of their time, they will remain trapped inside the burdensome century-old business model.
The very act of keeping track of your time demeans the work that you do. Stopping your clocks and throwing away your timesheets will make your life better.
Until now, The Client Revolution has been geared toward the client-facing issues that go along with billing by the hour. But professionals who already put their clients' interests first justify using the old model by talking about how their clients trust them to bill them fairly and not run up the clock.
But it's not about trust. It's about having a failed business model. And quite frankly, it's about leaving money on the table. Limiting your fees to the number of hours you have available means placing a cap on your income. If you're good at what you do, you'll generally be able to make more money if you price your knowledge instead of billing your hours. Only if you're mediocre does it make sense for you to keep filling in all those point-ones.
So from now on, instead of focusing on the clients and their interests — which most professionals already do — we're going to talk how to improve the business models of professional-knowledge firms. Instead of talking about the Client Revolution, we're going to talk about creating timeless firms.
Toward the end of the book, Hugh talks about his approach to marketing. If you're not familiar with his work, I can tell you that he is the worldwide leader in cartoons drawn on the backs of business cards. (It's entirely possible that he's also the only cartoonist who works in that medium, but whatever.) From this fairly obscure position, Hugh has published two bestselling books, has a very successful blog (gapingvoid.com), and sells his artwork all over the world.
Yet he gives much of his work away for free. In fact, every weekday morning, he sends out an original cartoon — his "gift to the world," as he calls it:
If enough people like the gift, it’ll build up goodwill, they’ll tell their friends, and the list will grow. The more the list grows, the more people discover the trail of breadcrumbs that leads back to the work I actually get paid for.
He does this in a way that doesn't seem like marketing, and it has proven very successful for him. Some of his followers simply enjoy his gift and do nothing more. But enough of them enjoy these gifts so much that they eventually return the favor by buying his artwork, books, or services.
Since tonight is Christmas Eve and the fifth night of Hanukkah, many of us are thinking about gift giving. What gifts can you give to the people who might become interested in what you have to offer? Start looking at your marketing as gift giving instead of "selling."
Most lawyers agree that timesheets and billable hours are terrible ways to measure value, but they don't know how to do it any other way. But amazingly, even as 2012 approaches, there are still some who actually believe that timesheets are necessary.
The simple point is not simply that keeping accurate, detailed and timely time records is not simply the gold standard, it remains the only standard. Yes, virtually every lawyer abhors the notion of justifying his or her daily existence in twelve minute increments, and, yes, we all now know we sell valuable services not hours, time accurate, detailed and timely record keeping still remains with us.
Nonsense. Keeping "accurate, detailed and timely time records" isn't the only standard for measuring the value that the client places on your services. In fact, it doesn't measure client value at all. All it measures is a tiny portion of the time spent by lawyers solving their clients' problems. I say tiny because it only accounts for the hours spent applying the lawyers' knowledge; it completely ignores the years of study and experience that the lawyers accumulated to garner that knowledge.
For example, according to Kowalski's bio, he practiced law full-time from the late seventies until 1992. I'm sure that near the end of his career, his clients benefited much more from his 15 years of knowledge and experience than from a few hours of casework. But none of his knowledge and experience was reflected on his timesheets. (And don't tell me it was reflected in his billing rate. That's not how BigLaw rates work. They're based on geography, firm size, and years since graduation — not knowledge or experience or skill. Jerry's value to his clients was probably underrepresented.)
The notion that timesheets are the gold standard of value is also belied by the fact that all timekeeping firms frequently write down their lawyers' time. At the end of each month, the billing partner reviews the other lawyers' timesheets in the context of the total job performed for the client. If the result seems high — especially if a junior lawyer spent "too long" on a research issue, or if the outcome was unfavorable for the client — the billing partner writes down the total to some arbitrary amount that feels "fair." But how can this be? Jerry says that the timesheet is the only standard of value for a lawyer's work? If that was true, law firms should never write down hours.
Finally, there's the tired, fearmongering refrain that legal pricing (what Jerry calls "alternative fee arrangements" or "value billing") is somehow illegal. As if. I challenge anyone to find me binding legal authority that mandates hourly billing or prohibits pricing. Kowalski and other critics of pricing often point to the rare case where a court has ruled unfavorably on fixed fees. But in the cases where courts have disallowed or reduced fees, the lawyers acted with questionable ethics and tried to defend unreasonable fees. The New York case Jerry cites actually involved made-up time records.
As for the massive fee award in the Southern Copper case, that fee wasn't based on the attorneys' hours; it was based on the result. The lawyers won a $1.9 billion award. They sought a fee of 22.5%; the court granted them 15%, or $285 million. Doing the math and calling it $35,000 an hour is silly. The plaintiffs didn't hire the lawyers for their time; they hired them for the $1.9 billion.
Clutching the Prohibition Era (1919, to be exact) talisman of the timesheet shows the world that you don't have any idea what your clients are buying. Clients don't buy hours; they buy your knowledge. Try measuring that instead.
And sowing fear about the risks of a timeless pricing model is reminiscent of the opposition to horseless carriages at the turn of the last century — not long before the birth of the billable hour.
If you see lawyers with their arms in slings, it's probably from too much patting themselves on their backs. According to a recent survey in the National Law Journal (subscription required), law firms raised their rates in 2011 by "only" 4.4 percent. The story now is that this is the third year of "modest" increases.
From the National Law Journal:
For the third year in a row, law firms showed restraint with hourly rate increases, inching up at a rate only slightly higher than inflation in many cases. The average firmwide billing rate, which combines partner and associate rates, increased by 4.4 percent during 2011, according to The National Law Journal's annual Billing survey. That followed on the heels of a 2.7 percent increase in 2010 and a 2.5 percent increase in 2009 — all of which paled in comparison to the go-go, prerecession days when firms could charge between 6 and 8 percent more each year.
But if you get out the trusty slide rule, you'll see that rates have gone up fully 10 percent since the start of 2009. That's 10 percent during a massive recession. How many clients out there feel like their legal services are worth 10 percent more than they were three years ago?
Many firms had record revenues this year, all the while paying lip service to clients' "being in the driver's seat now." Let's not get ahead of ourselves. Just because firms aren't raising rates by 8 percent doesn't mean that clients are now thrilled.
So it's that time of year again, where lawyers and law firms fall over themselves to remind people that they exist. It used to be that every firm paid for expensive, customized holiday cards. (My firm used to.) But it's very time-consuming to print out contact lists, stick labels on envelopes, and run them through the postage meter. It's also not very environmentally friendly. And although it can look nice when you have dozens of cards taped to your conference room's glass walls or arrayed around lobby, they're up for a couple of weeks and then they get tossed in the trash.
Increasingly, law firms — especially larger firms — are turning to email-based holiday cards. There's this industry of e-card vendors who have convinced lawyers that Flash-based cards are exactly what clients, prospects, and other contacts love to receive. Unlike the paper-based analog greetings, these digital wonders afford the opportunity to use motion graphics (essentially, animated words and pictures) and public-domain holiday music to send a stronger message.
So I should have been happy when I received an email from a big-firm lawyer I know, taking the time to wish me season's greetings. I know that she took the time because she told me: "I just wanted to take this time ...." The only problem is that she didn't actually take any time. I know this because the email didn't come from her.
It came from her secretary.
There it was in the email header: from [her secretary's name], to "undisclosed recipients." I guess I should be honored to be one of the undisclosed recipients, but for some reason I'm not.
The email itself had two generic lines about wishing me holiday greetings, followed by the lawyer's name. Then a big "Click Here" icon. I'm not generally interested in clicking anywhere on these things, but I decided to click there this one time. Solely for research purposes, you understand.
This took me to a browser window with a cartoon of a weirdly deciduous tree. Some generic, unidentifiable piano music starts in — not too Christmas-y, mind you — and then the cartoon tree starts to grow leaves, then lose them in a strong breeze, then grow some more, then lose them again, then grow some fruit, then again with the wind, and so on. While this is happening, words appear wishing me more season's greetings (I guess the tree thing has to do with seasons in general), an expression of gratitude (not sure for what; I'm not a client), and then a pronouncement that the firm has donated funds to unspecified charities. Which is nice, I guess.
The music then continues endlessly. Literally. I turned off the sound on my Mac after a couple of minutes. It's on a Flash loop, with no way to stop it short of closing the page or driving your shoe through your computer. I actually ended up forgetting about it, came back hour later, turned my sound back on, and the piano was still going.
And that's not even my favorite part.
My favorite part is that the law firm's name appears on the page (not including the URL) ten times. (And seven more times in the covering email, not including the return address.) Really, guys? Did you think I'd forget whom to thank for this display of genericness? It's always about you, isn't it?
Lawyers, law firms, other professionals: don't do foolish holiday things like this. No one nowhere wants your motion-graphics holiday card. No one thinks for a second that the purported sender did anything more than tell her secretary to hit "send" to the undisclosed recipients. I certainly didn't think that the lawyer whose secretary sent mine spent a millisecond thinking about me.
If you want to tell people that you were thinking about them, do it in a way that shows that you actually were. A handwritten card or note. A small thank-you gift. Even just a phone call or a personalized email (it's better than nothing). But please don't spam people.
As many of you now know, my new book Firing at Will: A Manager's Guide was published by Apress last week. It's an unlawyerly guide to the riskiest thing you can do at work with your clothes on: firing employees.
So far, so good. Amazon is currently listing it as number 7 on its Kindle list of "Hot New Releases in Business Management & Leadership." (It's right behind the Steve Jobs biography. No, not that Steve Jobs biography. The other one.)
You can order the Kindle version here, the paperback version here (convenient for stocking stuffers), and the Nook version here. If you have any friends or family members who are managers, supervisors, or employers, Firing at Will can make their lives 37 percent easier (that number completely made up; your mileage may vary).
Some of you may have gotten an email or RSS update from Client Revolution that included only previously published posts. (That's hard to say.) Sorry about that. We're having some RSS issues. Should be solved soon.
As for an answer to the question, "Where's the new stuff?": It's coming. I'm in the home stretch of finishing a book about the riskiest thing you can do at work with your clothes on: firing employees. The book, called Firing at Will, is due to be published by Apress on November 22. Which means I better hurry up and finish. You can learn more at the book's Facebook page and at the publisher's page. You can also preorder it directly from Apress or from Amazon.
Pricing is difficult, in any field. Pricing professional services is so difficult that most professionals don't even do it, choosing instead to bill their time. But this problem isn't just limited to professionals. Software designers and app developers face the same problem. Which makes sense, if you think about it, because software is just knowledge in digital form. How a developer prices its applications can make all the difference between success and failure.
One app developer, Japan's Information Architects, has some very sophisticated ideas about pricing, and unlike most developers, has been willing to share those thoughts. You've seen Information Architects' work if you've been to my consulting firm Prefix's site, which was designed using their excellent iA3 WordPress template.
Information Architects recently released a new app called iA Writer for the Mac. It's a beautifully designed writing application with a minimalist style. (I'm writing these words on it now.) IA apparently took some heat for charging $17.99 for an app that has far fewer features than Pages or Microsoft Word.
But instead of ignoring those comments, CEO Oliver Reichenstein wrote an expansive post on IA's site explaining the pricing process. All developers and anyone else who prices their knowledge should take the time to read it. Here's the money quote:
In the eyes of the customer the value of a product is not proportional to its production cost. A beef filet cooked for 15 hours by 30 cooks doesn’t necessarily taste better than a cheeseburger. The customer doesn’t care how long it took you to do something. What customers look at is the exclusiveness and direct benefit of your offer. Or as Neven put it:
Pay $20 if you think you’ll get $20 of use out of the app. That is the only meaningful criterion to use.
If your offer is exceptional, your price can and should be. If you offer an exceptional product at low price it will be perceived and treated as a low value product, no matter how amazing it is.
Longtime readers know that I'm a big Boston Red Sox fan. So whenever I can use the Sox to make a point here, I will. Whatever works.
The Red Sox were supposed to be the team to beat this season. Almost all the pundits predicted them to win the American League pennant this year, given their impressive offseason performance in rebuilding the bullpen and acquiring superstars Adrian Gonzalez and Carl Crawford.
But things didn't start out so well. The team stumbled out of the gate, beginning the campaign 0–6 and 2–11. No team that has started out so poorly has ever even made the playoffs.
But over the past month, the Sox have turned it around. They've won 11 of their last 13, including the last two where they scored 14 runs in each game. They're now in a virtual tie for first place in the AL East (with the hated Yankees).
The Boston Globe's excellent beat reporter Peter Abraham called attention to starter Alfredo Aceves, who replaced injured Daisuke Matsuzaka in the rotation. In his last two games (11 innings), he's only given up two earned runs:
To some, Aceves may seem like an overnight sensation given that this is first season in Boston.
But Aceves, 28, has been around. He first signed with the Blue Jays when he was 19 then spent five seasons in the Mexican League before being signed by the Yankees. After three seasons in New York, he landed in Boston.
“It’s a lot of work, it’s not only two starts. I’ve been working in baseball for 11 years,” he said. “It’s not only two starts. You can see it like that; I don’t see it like that.”
Aceves makes an excellent point. He's saying that it's a mistake to just look at his last two outings and value him on the basis of those 11 innings, instead of on the 11 years of work that got him to this point.
And this is exactly the mistake that lawyers and other professionals make when they bill their work by the hour. In doing so, they're asking their clients to value you only them for the work they just did, rather than for the years of experience and knowledge that enabled them to do that work. If you're only charging for the past few hours, you're leaving money on the table because you can't charge for the value of your accumulated knowledge — your true value.
Here's the video from my IgniteLaw 2011 presentation at last month's ABA TechShow in Chicago. Thanks again to everyone who voted for the proposal.
The event was fantastic, with a terrific lineup of boldfaced names from the blawgosphere. The rules were simple: 20 slides, 18 seconds a slide, and no way to control their relentless advance. It was terrifying and exhilarating. As someone who does a lot of public speaking, I found it far more difficult than preparing for a 90-minute speech. Most of the other speakers had the same reaction.
Here's the summary:
In 2019, your law practice will use cloud computing, a paperless office, and the iPad 10. But those won't be the biggest changes to how you practice law. Instead, the biggest difference will be in the way you value and price what you sell. And before you can make that change, you have to understand what it is you sell. Spoiler alert: It ain't "legal services," and it sure as hell ain't "hours" or "time." Instead, lawyers sell knowledge. How you value and price that knowledge will be the greatest change in your 2019 practice (before you hop in your flying car and head to court).
Here's the video. It's just six minutes, although it felt like 60 seconds at the time. Enjoy!
One of the largest firms in the country, Howrey LLP, voted to dissolve itself yesterday. In an interview with The Wall Street Journal yesterday, the firm’s final CEO Bob Ruyak blamed Howrey’s demise on “alternative fees.” (You know how I feel about that ridiculous term.) He also blamed discovery vendors (those vicious law-firm assassins), impatient partners, and, of course, The Economy. Funnily enough, he failed to blame a creaky, outdated business model or, you know, himself for the collapse of the firm. But trust me when I tell you that the story going forward will be how those dastardly alternative fees killed Howrey dead.
As if.
I mean, give me a break. It’s not as if Howrey was on the cutting of edge of trying to get rid of the billable hour. In a nationwide survey by the National Law Journal showing larger firms’ use of so-called alternative billing, Howrey declined to participate. (See “The numbers behind the lip service: Part One.”) In an article on their own website, their Northern California managing partner Henry Bunsow whinged about how hard it was to do litigation without the billable hour, and doubting whether clients really wanted it:
Howrey bills about a third of its work with alternative fees and is trying to grow that number. But he said it is a somewhat difficult task because “in the highly important types of cases, [clients] probably don’t want a fixed fee arrangement.”
Bunsow’s observation is one echoed by many: Nonbillable-hour fee arrangements often cease to be effective in major litigation, especially in matters that go to trial.
(My emphasis.) Not exactly a revolutionary.
In a November 2010 article in The American Lawyer, “The Story Behind Howrey's Very Bad Year,” writer Julie Triedman explained the problems Howrey had in pricing its services:
Over the past couple of years, notes Ruyak, clients have insisted on more alternative billing agreements, success fees, and extended payment plans, making cash flow lumpier, financial reports more confusing, and projections less accurate. In 2008, some $35 million in contingency fees helped drive profits to record highs, but last year, notes Ruyak, the firm had negligible contingency revenue and was plagued by “poor pricing.” Last year’s dip “was a big swing,” Ruyak says. “I understand many partners’ psychological anxiety. But I can’t really do a whole lot about that.”
(Wow, way to channel your inner Shackleton.) Triedman also says that when Howrey was trying to tweak its old business model, “some experienced and independent advisers would have come in handy.”
In a May 2010 American Lawyerarticle, which discussed how fluctuations in Howrey’s contingency fees affected its bottom line, Ruyak conceded that they didn’t really know what they were doing:
Ruyak says that even with limits in place and years of experience with these types of billing arrangements, the firm is still in the process of “figuring out how to do them well.”
So we’re starting to see the real problem here. It’s not that “alternative fees” killed Howrey; it’s that Howrey didn’t know how to change their business model and price the knowledge that was their stock-in-trade. And you really can’t blame them. The billable-hour model was invented in 1919, and big firms like Howrey have known nothing else. As Triedman pointed out, some experienced advisers would have come in handy.
Let me put it to you another way: When I first played golf, I sucked at it. But I didn’t blame golf. And over the years, if I tried a different approach to my swing and it didn’t work well right away, I didn’t decide that the new approach was bad. Just that I hadn’t figured it out yet. (And never actually did.)
When it came to alternative fees, Howrey was a duffer.
Changing a hundred-year-old business model isn’t easy, but done right, it can work. And I’m here to help.
I take no pleasure in yet another BigLaw firm shutting down. A lot of excellent lawyers are now out of work. And changing the way you've always practiced is scary. But just because the change is scary and difficult doesn't mean you shouldn't do it.
If Howrey had learned how to price, it would be atop the Am Law 100 list today, instead of being its latest casualty.
What do you think? Do you think “alternative fees” killed Howrey? Or that video killed the radio star? Share your thoughts in the comments.
If there's anything that can get a New Englander through another brutal winter, it's the phrase "pitchers and catchers report." Even though the season doesn't start for another 48 days, the fact that baseball activities are beginning in Florida and Arizona tells us that we've almost made it.
While I'm here pondering baseball, the debate continues in legal circles (and other professional circles, too) about "alternative fees" versus hourly billing. And it's good to have the debate, since lawyers have quietly plodded along with this business model since it was invented in 1919. Debate clears the way for change. But with that said, many who claim to be advocating for change are actually riding off in the wrong direction. They may mean well, but they have overlooked the big-picture problems that are crippling the profession. You can spot them by some of their buzzwords.
project management
Six Sigma
Lean Six Sigma
Big-Boned Six Sigma (I may have made that up)
fee caps
hybrid fees
risk collars
blended rates
timesheets (to see if their jobs are "profitable")
realization rates
and my personal favorite:
efficiency
Wait ... what? How can efficiency be a bad thing? Don't clients want their lawyers to be efficient?
Newsflash, people. Clients don't give a flying something through a rolling donut about whether their lawyers are efficient. (Unless they bill by the hour; then it's all about efficiency.) No: Clients want their lawyers to be effective. Am I quibbling about words here? Of course I am; I'm a lawyer. Words are my hammers and nails.
According to the New Oxford American Dictionary (the only US dictionary worth a damn), efficient means "achieving maximum productivity with minimum wasted effort or expense." Effective means "successful in producing a desired or intended result." Which do you think clients care more about?
Look a little deeper at NOAD's usage entry at effective, where it says that the words are not interchangeable:
Use effective when you want to describe something that produces a definite effect or result ….
When applied to people, efficient means capable or competent (: an efficient homemaker) and places less emphasis on the achievement of results and more on the skills involved.
What I am not saying is that lawyers and other professionals shouldn't try to work efficiently. Hell, if I could train a service monkey to type this for me instead of bashing it out with my two clumsy index fingers, my Blog-Writing Project-Management Efficiency Index would go up an entire Sigma. (Yeah, I have no idea what that sentence means either.) But that would have absolutely zero impact on whatever (questionable) value you the reader get from reading this post. The value is in the result, not the work. Not in how efficient I was, but how effective I was.
What does this have to do with baseball? Longtime readers know that I'm a big Red Sox fan. And they wouldn't be surprised to know that I'm very excited about the 2011 season. The Sox made a huge trade for Adrian Gonzalez, sending prospects to the San Diego Padres for the star first baseman with a swing built for Fenway. They also snagged the top free agent on the market, Carl Crawford. And they also rebuilt their bullpen, a major weakness last season. Because of all this spending, the Sox will sport one of the highest payrolls in baseball, and will be one of only a few teams subject to the league's payroll tax.
If I cared about efficiency, I'd be pretty upset about this profligate spending. But all I care about it is winning, and I know that the team has put itself in a strong position to do just that.
Last season, the most efficient team in baseball — in terms of payroll dollars per win — was the San Diego Padres. They led the league in efficiency, paying a mere $419,000 per win. (Compare that to the Yankees, who shelled out $2.17 million for each W.) The Padres finished in second place in the NL West, outside of the playoffs. Think their fans are happy with the team's efficiency title? Think again.
People who worship at the altar of efficiency, who prostrate themselves before the idols of project management and Six Sigma Yellow Belts, who speak volumes on efficiency and nothing on effectiveness — they're focusing on the wrong things. They're looking at the work, not the result. They're paying attention to the lawyers, not the clients.
Unlike baseball fans, they're not focused on the wins.
I have two daughters, ten and seven. Like most girls their age, they're becoming more interested in pop music. So I find myself listening to a lot more pop than I have in recent years. It gives me another way of connecting with my daughters, and some of the music's just fine. It also gives me a smidge of credibility with people half my age.
(Case in point: Yesterday at our local diner, I asked my eldest if the song playing was the new Far East Movement single. Our twenty-year-old waitress just about fell over, then told my daughter that she was lucky to have a "not-lame dad." The very accolade.)
Today we were in the car and had "American Top 40" on. My daughters were asking questions about how record charts work. (Such as, "Dad, what's a record?") I was trying to explain how it is that some songs go to number one, and some stay on the charts for half a year, while others flame out in a couple of weeks.
Meanwhile, Ryan Seacrest was interviewing Ke$ha (am I really typing this sentence?), and asking her what she attributed her success to. Kind of a silly question, and one that most singers would have trouble with. But she actually answered it quite well. She said that she's trying to make an emotional connection with people. She wasn't trying to be deep; the emotion she was trying to connect with was of the partying and having-fun variety. Makes sense. And that's why she's had five straight top-ten hits.
This got me thinking. It's not just about chart-toppers. I'd take it a step further: Every single song that someone chooses to play or buy or download or steal has made an emotional connection with at least that one listener. Whether the emotion is fun, melancholy, angry, sentimental, schmaltz, crazy, bittersweet, lonely, gregarious, or emo. Without the emotional connection, no one would bother. That's what music is all about. That's why people share their favorite songs and music videos on Facebook.
But it's also what lawyers are all about. ("Wait, what?" you ask. Well, you knew this was coming, right?) At first glance, lawyers have about as much in common with Lady Gaga or Springsteen as they do with office ferns. (Well, actually …) No, really. Think about it. People talk to lawyers because they want to feel something: secure, safe, protected, comfortable, aware, smart. Yet nowhere in law schools or law-firm training or CLEs do they ever talk about making an emotional connection with your client.
Clients: How often have you felt like your lawyer was making an emotional connection with you?
And lawyers: How many times have you thought about the emotional connection you were trying to make with your clients?
When it does happen, it's like … music.
What do you think? Is lawyering so different from music? Should lawyers be paying attention to emotions, instead of just laws? And why does Ke$ha have a dollar sign in her name? Does she use a ¥ when she's in Japan? Sound off in the comments below.
In the meantime, here's a law-related music video for you. I believe the emotional response it strikes is "Gak!"
If I read another article about "alternative fee arrangements" or hear of another two-day seminar explaining all the various and complicated AFAs out there, I'm going to try to swallow my tongue. (Disclaimer: This is of course hyperbole. I'm not going to do that. And don't you try it either, just to see if you can do it. You can't. End of disclaimer.)
Lawyers beholden to the Prohibition Era model of billing and the consultants who court them are desperately trying to show how complex and scary AFAs are. The clients and other lawyers who read these articles and go to these seminars walk away shaking their heads and surrender to sticking with the old billable-hour model. Maybe with a discounted rate, please.
But I'm here to tell you that it is not at all complicated. In fact, if you have seven seconds, I can tell you about all the different types of law-firm fees. Ready?
There are two:
Time-based pricing
Solution-based pricing
That is all.
No, really. It's no more complicated than that. Time-based pricing is what nearly every law firm does, where the price of the legal services depends on the time spent doing the work and the rate of the "timekeeper."
(In truth, I'm being generous here, because it's not really "pricing" at all. Pricing is when you tell the client what something will cost them before they buy it; time-based law firms don't do that at all.)
Under the time-based-pricing model, invented in 1919, every activity is worth the same amount on a minute-by-minute (or really, six-minute-by-six-minute) basis, regardless of how important the task is. With few exceptions, every client is charged the same per hour, regardless of their differing needs. The only measurement of value is the amount of sand that has dropped in the hourglass.
Solution-based pricing is when a law firm sets a price based on the value of the solution to the client. It's that simple. I'm not saying it's easy, because it's not. It takes a lot of thought and preparation and understanding and empathy and experience to figure out how much this particular client values this particular solution at this particular moment. But that's OK because we're professional knowledge workers, not pieceworkers in a pin factory.
Clients — simple question: Do you want the price of your legal work to be based on the time lawyers spent, or on the value you place on the solution? It's one or the other.
(See, I just spared you that two-day seminar on AFAs. You're welcome.)
What do you think? Can you come up with any other methods? Bet you can't. But give it a shot in the comments. (I particularly look forward to time-based lawyers protesting about how hourly billing is a kind of solution-based pricing. Good luck with that.)
SUBSCRIBE BY RSS
