Timelessly - Building Professional Firms Without Timesheets

Quantum leap: How you will practice law in 2019

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!

The other 11 talks can be found here on YouTube.

The future of law in six minutes flat

Want to know what the future of law will be like — what it will be like to practice in 2019? Here are two easy ways to find out:

1. Go to sleep, set your alarm for eight years, and wake up in 2019. Then go to your law firm and look around. If you’re a lawyer, make sure you make arrangements to have your bar membership paid each year while you’re out. (OK, maybe that’s not so easy.)

2. Go to the Ignite Law website and give 5 stars (please) for my proposed talk, “Quantum Leap: How You Will Practice Law in 2019.” Just click on the fifth (rightmost) star (and click carefully; they’re tiny. See the helpful picture below). Voting ends tomorrow (March 22) at 5. There are 24 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 April 10. The Ignite Law program is Sunday night at 8:00 CDT. You can sign up for tickets here.

So what is Ignite Law? 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.

No matter which proposals get chosen, it promises to be an amazing event. Hope to see you there. And thanks for the vote!

Efficiency, effectiveness, and baseball

Pitchers and catchers report tomorrow.

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.

Two kinds of lawyers

There are only two kinds of lawyers in the world:

Lawyers who price, and lawyers who don't. Everything else is lip service, or window dressing, or sleight of hand.

Lawyers who price work very hard to try to figure out what their client's needs are and what the value is to the client of satisfying those needs. They then come up with a price that is less than or equal to that value, and they tell the client that price before performing the service. The client either accepts that price or does not, and if so, the lawyer does the work at that price. And the price for that service doesn't change. If the needs unforeseeably change, then a new price will be arrived at. But remember: we're talking prices, not estimates.

And that's it. It's that simple. (It may not be easy, but it's simple.)

If you don't do this, then you're the other kind of lawyer: the kind who doesn't price.

Obviously, lawyers who bill their time make up the bulk of this category. Telling a client what your rate is and then giving a vague estimate of the time you think you might spend is not pricing. Not by a long shot. Making adjustments to the bill at the end of the month to put the total amount more in line with the value delivered is not pricing. Tracking your time to try to determine any kind of concept of value is not pricing.

Capped hourly fees are not pricing. Blended rates are not pricing. (They're just a ripoff.) Hybrid fees are not pricing. AFAs ("alternative fee arrangements" — the in-vogue thing to call different alternative billing schemes) are not pricing.

Giving clients a choice between a price and hourly billing isn't pricing. It's a copout, and it tells the client that you don't believe in the value of your services. Tracking your time to see if your "losing money" on priced engagements is the same kind of copout.

Project management is not pricing. Six Sigma is not pricing. Neither is Lean Six Sigma. Or Portly Six Sigma. Or whatever. (And I don't care if you're a black belt, orange belt, or a braided-leather belt with a giant John Deere buckle. It ain't pricing.)

You can go to all the two-day seminars on AFAs you want, but mostly you'll be learning about Not Pricing. Your time would be better spent learning about your client and how they value the solutions to their problems and whether you can make a profit solving their problems for that amount.

That's pricing.

Fixing prices Down Under

The Client Revolution isn't just limited to the United States. Lawyers in Canada and the UK are also bridling at the Woodrow Wilson–era business model of timesheets and billable hours. In Australia, there's been a flurry of antitimesheet talk and activity. See Ron Baker's post "Timesheets on the defense Down Under" over at VeraSage Institute for a nice summary, highlighting colleague John Chisholm's great work in the area.

Australia's national legal newspaper, Lawyers Weekly, had a fine special report on the topic, "Once upon a billable hour," by the paper's editor, Angela Priestley.

I spoke with Angela last week. She was interviewing me in advance of my visit next month to Sydney, where I will be presenting at the Australian Law Practice Management Association's annual conference. Angela did a nice job framing the issues and summing up the message that I plan to bring to Oz next month. She paid particular attention to the problem of timesheets, and rightly so. She writes:

Shepherd believes that all areas of law can function without timesheets — even litigation, which he says takes up 75 per cent of his work — and he's adamant that if a firm moves to fixed-price billing it must also remove timesheets to ensure the removal of the billable hour is truly engrained, even if such a firm only uses timesheets for internal purposes.

"Many firms say, 'we'll try fixed prices, but we're going to keep timesheets.' That's a cop out, they are missing the point there," says Shepherd.

That point is that lawyers operate differently when not tied to billable hours. Shepherd believes that by removing timesheets, lawyers can truly concentrate on delivering the best outcome for clients and that in his firm, the moves has contributed to a direct increase in revenue.

"I really don't want my lawyers to be thinking about time," he says. "It's not just an invoicing method, it's a way of thinking about the work that we do. You don't practice the same way when you're not worried about hours. You do things differently, you make different choices."

It's an idea that's fast making its way around the world. Read the rest of Angela's piece here.

Thoughts? Have you heard of lawyers ditching timesheets in other parts of the world? Share in the comments below.

Cooling my heels: $600?

I spent part of Thursday morning at the Suffolk County Courthouse in Boston. Like all courthouses, it's a place where important work is done, but where a staggering amount of time is spent waiting. And that's what I did, for the most part: waited.

You see, I had to go to the courthouse to file an emergency motion to compel, something I rarely do. My task was mainly to get my papers in the hands of the courtroom clerk and get a hearing scheduled on the docket. I didn't want to send someone else — a messenger, a paralegal, even another lawyer — because there was a minute chance that the judge would offer to hear from me on the spot. In the end, she didn't, and the clerk scheduled my hearing for Monday. I accomplished what I needed to do, so it wasn't at all a waste of time.

But if I had been like 99.99% of other American litigators representing companies, I would have billed my client for that hour spent (mostly) waiting. And my client would be lucky that it hadn't been more time, since my office is less than a hundred yards from the courthouse. If I billed hourly, my client would have spent — based on my firm's size, my location, and my personal level of experience — at least $600. That's six hundred dollars for the two minutes it took to have a piece of paper filed in court, plus 58 minutes of leaning against a wall in the corridor.

Someone explain to me how my time — anyone's time — would have been worth $600 to stand around and do nothing for 58 minutes. And don't tell me about the opportunity cost — that my time cooling my heels for one client kept me from doing other work. No client cares about that.

Yes, I delivered value to my client by going to the courthouse, but not $600 worth. Fortunately, my client is paying a fixed price, and doesn't need to worry about how I spend my time.

What do you think? Should clients pay for waiting? How does that benefit them? Where is the value in that? Share your thoughts in the comments below.

The Revolution spreads to Solo Practice University

One of my big goals for 2010 was to adjust my role as a commentator on the state of the practice of law and become more of a change agent dedicated to helping fix it. Today I'm taking a first step in that direction by joining the faculty of the pioneering Solo Practice University. If you're not familiar with SPU you should head on over and check it out. Under the leadership of legal-education trailblazer Susan Cartier Liebel (who also blogs at the ABA Blawg 100 site Build A Solo Practice @ SPU), Solo Practice University picks up where law school left off. One of the most common complaints about legal education is its weakness in providing practical education about how to actually be a lawyer. SPU's got it covered.

What really convinced me to join the faculty was ... well ... the faculty itself. Check them out here. This is a phenomenal collection of big thinkers in the world of legal practice. Students (both active practitioners and current law-school students) have access to these big minds and can start learning how to improve their own practices right away.

I'm teaching a course called "Fixing Your Fees, Fixing Your Practice." In it, I'll be doling out practical advice on how to abandon the billable hour and replace it with open prices. If this change is going to happen, it's going to happen first with the solo and small-firm lawyers. And in my new role as an SPU faculty member, I'm going to help make that happen. So check out all the things you can be learning. Then enroll and start getting the real-world secrets about running your practice that you never got in law school.

Here's a short video (2:38) on the real reasons I've joined this great faculty:

Blawg Review #246

The best way to predict the future is to invent it.

— Alan Kay, computer scientist, 1971

The future is already here — it's just not evenly distributed.

— William Gibson, author, 2003

In gathering the best and the brightest from the blawgosphere for this first full week of the 2010s, I thought I'd look at them through the lens of a crystal ball. Many of us are wondering what this new decade will be like, especially in the world of the law. First, though, let's talk about what this decade will be called.

A decade with no name

Look, we just went through a decade that had no name, let alone a cool one. No Roaring Twenties, no Gay Nineties (the 1890s). Even the decades that lacked ready-made adjectives could easily summon up images and memories: the eighties (bad hair), the sixties (bad hair, but in a different way), the seventies (bad lapels), or the nineties (the 1990s; nothing but irony). And don't talk to me about calling it the "Aughts" — what are we, soccer fans now? No, we're stuck with calling them "the two thousands," which stinks because you can't tell if you're referring to the decade or the century. (Kind of like my problem with calling law blogs blawgs, because you can't tell the difference when you're saying blog or blawg aloud. But for today, "Blawg Review" it is.)

First prediction: this decade will be called the "twenty tens" (or the "tens," for short).

Not "teens," not "tweens," not "tennies," or anything silly like that. And for Pete's sake, quit with the "two thousand and ..." business. People, especially lawyers (who generally are people, though some would argue), tend to clutter their speech with extra words. Don't. This year is "twenty ten," not "two thousand and ten." Check out this website devoted to this cause: twentynot2000.com. Also see this discussion at Wikipedia, and this article at TechCrunch.

OK. Now that we've got that settled, what's the law going to look like in the tens?

Killable hours

Second prediction, and this one's a bit of a layup for me, and will come as a surprise to no one, given the source: The billable hour will die die die. If it survives in any form at all by the end of the tens, it will be at the kind of fringe firms that will cause you to sadly shake your head and maybe cross to the other side of the street.

But don't just take my word on it. Over the past year, the blawgosphere and oldstyle-media traffic on the topic has taken on the shape of a hockey-stick graph, without all those embarrassing Climategate emails and tree-ring proxies. For example, legal-marketing guru Larry Bodine's Law Marketing Blog covers Comcast's recent insistence that its lawyers stop billing them hourly; Ashby Jones at The Wall Street Journal Law Blog also has the story.

Even more novel, Matt Homann recommends that we let our clients set their own price. Matt, whose name is synonymous with innovation, writes at the [non]billable hour that if lawyers focus on value to their clients, rather than their costs (their time), their clients will reward them. Across the pond, Michael Scutt at Jobsworth asks "Is it all about price?" He answers his own question, writing that lawyers need to be salespeople and recognize and apply his "single sales principle": your client's compelling need plus your credible solution plus your perceived value equals a sale.

Speaking of value, Ed Kless of the visionary Verasage Institute deftly shows how price has nothing to do with cost. His post has a graph showing that HP black ink is far more expensive than bottled water, which is in turn far more expensive than crude oil.

Jason Mendelson's Musings discusses what the failed hourly billing system has wrought — namely, clients who demand ever-increasing discounts and clients who don't pay. These are just symptoms of the problem, of course. Another symptom is that the billable-hour system pays lawyers more if they do more work, rather than enough work. Ron Friedmann discusses "good enough" at Strategic Legal Technology. But let's not get too focused on counting and measuring and reporting hours and documents and other output. The Wall Street Journal this week wrote approvingly about firms' having electronic dashboards to monitor their hours. The article's behind a paywall, but we discussed it here — disapprovingly.

Lawyer wannabes

In Ron's post, he mentions a New York Times piece written by two states' chief justices (NH and CA) that calls for the "unbundling" of legal services — namely, more do-it-yourself work by would-be clients. Revolutionary legal-learning genius Susan Cartier Liebel covers this in more detail at her Build A Solo Practice @ SPU. It all comes down to what your clients need. Third prediction: this DIY lawyering will becoming a growing trend. Look at WebMD. Lawyers have to stop thinking of themselves as special, as members of a priestly caste.

As our clients dabble with being do-it-yourself lawyers, we need to become more entrepreneurial. Big-hearted and big-minded Tim Baran of uMCLE talks about this killer app of a personality trait. Over at Wired GC, John Wallbillich explains how law firms need to look at their business models right now, before it's too late.

Client says what?

You can tell from the title of this blog that it's supposed to be focused on clients. Similarly, Dan Hull's ecletic and passionate What About Clients? reminds us to always ask that question (except when it's called "What About Paris?"; I haven't figured that out). The current post (by Holden Oliver) admonishes lawyers to get over themselves and act like professionals ... focused on clients. Likewise, the always-inspiring Carolyn Elefant tells us at My Shingle to see our clients as our new partners, and she does it convincingly without irony or cliché.

Also sidestepping the dangers of an overused phrase, change agent and quixotic Toronto Blue Jays fan Jordan Furlong explains at Law 21 what it really means to be a "trusted advisor." Jordan makes the fourth prediction: that lawyers will be competing with other service providers for clients' dollars (even Canadian ones), and that our lawyerly sense of service and trustworthiness will be competitive advantages.

Over at Legal Ease Blog, Allison Shields warns lawyers to be specific, meaningful, and realistic in setting goals for the new year. Heather Milligan at Legal Watercooler advocates a daily resolution for marketing over a yearly one. And the musically clever Jared Correia over at Mass. LOMAP instructs lawyers to resolve to maintain client contact. It sounds so simple, and yet we all end up letting it slip.

Benched

This past year has been brutal on associates at firms big and small, with nearly 5,000 reported layoffs. Law Shucks has done an incredible job of basically becoming the National Bureau of Economic Research (in a good way) when it comes to law firms, who are usually stingy with their information. Fifth prediction: Law Shucks will become the new NALP (also in a good way). And here's what the incomparable Elie Mystal at Above the Law has to say about the old NALP:

I don’t know. Increasingly, I’m of the belief that the old system just needs to be blown up and a new one should be built from scratch. How can a firm make a realistic hiring decision nearly two years in advance based on one year of law school? How can a law student make an informed choice when firms straight-up lie to them?

Elie is a wise, funny man. And speaking of funny men and making realistic hiring decisions years in advance, how's NBC's 2004 decision to hire Conan O'Brien to host "The Tonight Show" in five years look now? Does the word "d'oh" mean anything to you? Here's some advice, for TV networks and law firms alike: hire people when you need them, not when you think you might need them in a few years.

All these layoffs have had many unforeseen consquences, such as diminishing participation in lawyers' sports leagues. The Am Law Daily reports that some basketball and softball leagues are down as much as 30 percent since last year. Sixth prediction: Participation in laid-off lawyers' leagues will continue to rise.

Don't weep too much for laid-off associates. As Larry Ribstein at Ideoblog writes, lawyers are paid too much. They're also paid too little.

Don't say "pursuant to"

If we're looking into reinventing the legal business, we should spend some time rethinking how we write. Lawyers use words like carpenters use hammers and nails. Except that they tend to use too many nails, and the nails are often fancy, overpriced, weak, feckless, and pompous (OK, maybe I went too far with the nail metaphor at "pompous"). Mister Thorne at Set in Style explains how lawyers are authors, and like all authors, need editors. If you care about writing, you should be reading Mister Thorne. (I swear he's the only person I call "Mister.") Over at Feminist Law Professors, Ann Bartow offers some hysterical media examples of why every writer needs a good editor. ("I never thought to look in the sandwich.") Meanwhile, The Namby-Pamby, Attorney at Law, shows that even potty-mouthed plain English is better and more readable than legalese. It's an important lesson, motherf@*&!%.

Social (media) security

It used to be that lawyers just had to write briefs, memos, and letters. Then in the nineties (the ironic ones, not the gay ones), lawyers started writing emails. Now, social media has opened up a whole new world of words for lawyers. And pictures and videos too. But lawyers are conservative, wedded to tradition and bound by precedent. Turns out that lawyers have been a little slow in embracing Web 2.0. Award-winning blogger Robert Ambrogi notes at Legal Blog Watch that only 29 of the Am Law 100 firms have vaguely active Twitter accounts, and only nine of them tweet regularly. Seventh prediction: Law firms will be dragged kicking and screaming into Twitterville. Not being on Twitter in the tens will be like not being in Martindale-Hubbell in the nineties (ironic ones). And still being in Martindale in the tens will be like being booked as a guest on "The Jay Leno Show" ... at ten o'clock. (Actually, the new Martindale is really LinkedIn, where you absolutely have to be, with a complete profile and headshot. Do it now. I'll wait. Mine's here.)

Molly DiBianca at Delaware Employment Law Blog lists her three principles for being a good social-media citizen: community, conversation, and transparency. Similarly, pioneering Twitter interviewer Lance Godard of 22 Tweets says that social media is all about connecting, contributing, and community. Check out his slideshow on social media here.

The brilliant Michelle Golden at Golden Practices wants to make sure that we're not turning people off with negative postings and status updates. Stephen Seckler at Counsel to Counsel advises that social media has to be a part of a firm's marketing plan. He's right. But Twittering lawyer extraordinaire Adrian Dayton at Marketing Strategy and the Law warns that Twitter is not a game to see who can get the most followers; they have no cash value. If they did, Adrian would be one of the wealthiest lawyers on Twitter.

The blawgerati

Lawyers have been somewhat more social-media savvy when it comes to blawgs, as you can see from all these excellent links. Besides Blawg Review, there are many other sources for aggregated links. The Brits are trying their own new version of Blawg Review with UK Lawyers Blog of Blogs, with the first edition hosted by Michael Scuff (see above). The ABA has a good collection (by Joshua Poje) with the Practice Management Advisors blog roundup. Blogging in-house lawyer Colin Samuels has what he calls "A Round Tuit" at Infamy or Praise. A terrific link collector, Colin is also a "sherpa" for Blawg Review. Walter Olson at Overlawyered, the original law blogger (since 1999, which makes him the Homer — as in Odyssey, not Simpson — of law blogging), always has a great roundup of legal news that will often make you spit-take your coffee.

Lawyers can provide a great clearinghouse for information. Conveniently named Ernie the Attorney (what would his parents have called him if he had been destined to be a plumber?) has a terrific post telling us his favorite sources for information.

Of course, not all law blogs are created equal. Social-media-for-lawyers guru Kevin O'Keefe, who writes Real Lawyers Have Blogs, takes issue with the so-called blogs that West Publishing–owned FindLaw puts out. As Kevin shows, these are not real blogs posts, but rather search-engine-optimized ads for its lawyer-directory service posing as actual content. In an indirectly related story, knowledge-management expert Greg Lambert of 3 Geeks and a Law Blog reports on how West has laid off a third of its law-library-relations team. Eighth prediction: The traditional providers of legal information — now freely available on the Web — are headed the way of the billable hour: West, Lexis, Martindale-Hubbell, and others. Their time has passed. They could save themselves if they could get ahead of this wave, but like newspapers and video stores, they're showing no sign of doing so. Already, Google is starting to make free online legal research available. Rick Georges over at Futurelawyer argues that law-book publishers are in the same kind of danger from e-books. Bruce MacEwen, who writes the always-excellent Adam Smith, Esq., boldly predicts which industries will survive the digitalization of the tens before making his Cassandran warning for our little industry.

There's an app for that (of course)

Soon it won't be enough for lawyers and law firms to have a website, a blog, a Twitter presence, a LinkedIn listing, and maybe a Facebook fan page. You're also going to have your own iPhone app. Jeff Richardson at iPhone J.D. shows how a couple of firms are already doing it. At last week's Consumer Electronics Show, according to tech blog Cult of Mac, a panel said that businesses must have a mobile app or "they don't exist." As for the iPhone itself, Enrico Schaefer at The Greatest American Lawyer has just gotten his own, and is declaring the BlackBerry platform dead for lawyers.

Gerry Riskin at Amazing Firms, Amazing Practices wonders whether we'll soon be delivering our marketing materials on a slatelike device. The video, which is a prototype demonstration of a fake but awesome slate, is worth a look ... at least until two weeks from now, when Steve Jobs (as rumored) introduces the Apple slate. Ninth prediction: He will, and it will completely change the way we interact with media.

R-E-S-P-E- ... aw, you can spell it yourself

One final thought, and then a final prediction. There is a theme in many of these posts, and while it's not always explicit, it's found in the best advice of these wonderful blawgers. It's this: treat people with respect. Respect for a client that goes with giving them an agreed-upon price — not a rate — before the work is done. Respect for different types of clients and what their needs are. Respect for associates to whom you promised jobs. Respect for readers of your written words, who have limited time and attention to devote to what you have to say. Respect for members of the social-media community that we're increasingly becoming a part of. And respect for people who are adapting to the forces of change in the new decade.

My last link is to our sister blog, Gruntled Employees, which discusses an interview with an airline executive who understood about respect: "If you treat me with respect, I'll do more for you." Seems like a fair trade.

And our last prediction, giving us ten for the tens: The Red Sox will win the 2010 World Series. They might have gotten a little weaker offensively, but it's a cardinal law of baseball that pitching and defense win championships.

Enjoy all these posts. Shepherd out.

• • •

Blawg Review has information about next week's host, and instructions how to get your blawg posts reviewed in upcoming issues.

The final Client Revolution post

That's it. I'm shutting it down. The party's over. After a year and three days, the Revolution is complete. Turns out, it was easier than I thought.

How do I know? Well, I read it in The Wall Street Journal. Tuesday's paper reported that large-firm lawyers had figured out how to deliver value to their clients. The secret? You'll never guess.

Web 2.0.

I know. Ironic, isn't it. Lawyers, who have been so reluctant to put down their buggy whips and typewriters and powdered wigs, have now connected to the Interwebs to help their clients get more value for their legal spend. (Brief aside: when did spend become a noun? Answer: it didn't.)

Nathan Koppel, who's one of the Journal's excellent legal-beat writers and whose work I've mentioned here before, penned the article. The title and subtitle say it all: "Using web tools to control legal bills: Big law firms turn to technology to provide clients with real-time expenses, automate tasks." (The link appears to get you to the article despite the usual WSJ subscription firewall.) (Update: Naah, it appears that Rupert has strengthened the pay wall. You apparently need a subscription.) The premise is that law firms are "turning to technology" to help their clients see how freakin' expensive they are. In real time. On the Interwebs. Two-dot-oh, baby! Woo!

Woo, indeed. Koppel describes how one huge firm has made their costs transparent:

Foley & Lardner LLP, a firm with 1,000 lawyers and offices throughout the U.S., has developed a Web-based system designed to provide its attorneys and clients with a real-time and comprehensive picture of legal costs.

From their desktops, lawyers at the firm enter and continuously track the amount of attorney time and costs that have been incurred on a particular matter. Foley clients have direct access to the data through a secure Web site, which also provides access to court filings and correspondence.

Now don't get me wrong. Foley's a fine firm with some world-class lawyers. And I respect that they, like some other firms, are trying. I don't mean to pick on them, but they're the star of the article. And I'm sorry to say that they're missing the point. Cue the boldface message:

Clients don't care one whit about attorney time and costs. They care about the value the services have to them.

Koppel goes on to describe how this system lets the lawyers or the clients "crunch data" to see if the firm is using the right mix of associates and partners. Two points here: computers may be, as they say here in Boston, wickit smaht, but they can't possibly tell anyone what the proper mix of associates and partners on a given matter at a given time is. And second: again, clients don't give a rolling donut about that, as long as the job gets done on time, done well, and for a price that's less than or equal to the value the client places on it.

The system also "pings" lawyers with automatic email alerts when a case reaches certain budget levels. Whoa. Paging George Jetson: your flying car is double-parked. Guys, I've been getting "automatic email alerts" from bookstores and coffeehouses for years. This isn't exactly groundbreaking.

Here's the money quote, showing how law firms just don't get it:

Recently the firm could see a certain lawyer was spending more time than had been projected to complete one aspect of a business transaction. Foley alerted the client, a global manufacturer, and asked the company whether it had anyone in-house who could do the work.

Instead, an agreement was reached to have a law student then clerking at Foley handle the task at a "very favorable billing rate," Mr. Kalyvas says.

ZOMFG! All right, where do I start? First: a lawyer was spending too much time. Uh, dudes. Lawyers at big firms don't qualify for bonuses unless they bill a certain number of hours, usually in the 1,800–2,000 range for a year. So you're giving lawyers a financial incentive to bill more hours, then having the Interwebs ping them when they're billing too many. Hmmmm.

Next: asking the client, "Uh, you guys got anyone who can do this?" Imagine if you went to a hospital and the doctor's Web 2.0 system pinged her saying it was costing too much and so she asked you, "Uh, can you just take care of this at home?" Uncool, guys, uncool.

Finally: "We'll hand it off to Billy the 2L. And we'll give you a good rate. He doesn't know anything, but he's feisty!" Uh, no.

This fancy system, like similar systems at other firms, doesn't do jack for the problem of making sure that clients get value. Having a computer tell you that a case is getting expensive doesn't give the client the power to do anything about it, other than moving their work elsewhere, doing it themselves, or putting their trust in Billy the 2L. Do you think for a minute that if a firm asked the client about these alternatives before they signed on that the client would say that that was fine? Not a chance.

Clients want to know the price beforehand — not when it's too late. Koppel writes:

Now when Foley attorneys turn on their computers, messages occasionally pop up on their screens reminding them that clients do not want to be surprised about their legal costs.

"That has helped focus our attorneys," [partner James] Kalyvas says, "and has created the willingness to change."

Sorry, guys. This isn't change. This is bells and whistles. This is a coat of paint on a busted old horse buggy. Change is open prices, where the client can decide if the cost matches the value before agreeing to the assignment. Pinging emails and Billy the 2L are not solutions to the problem of high legal costs or surprised clients.

• • •

All right, never mind. Despite what the Journal says, the Client Revolution isn't over after all. See you next time.

Why lawyers can't win the Cy Young Award

There is an active major-league pitcher with a career win-loss record of 59-68, and he is a mortal lock for the Hall of Fame. Now, if you're a real baseball fan, you immediately realized that I must be talking about a relief pitcher, and probably a closer. And you'd be right. Trevor Hoffman, the closer for the Milwaukee Brewers, has 591 saves to go with that seemingly unimpressive W-L record, more than anyone in major-league history.

You see, wins are a useless statistic for a relief pitcher. Whether a relief pitcher wins or loses the game often depends on what other players (on either team) do. In fact, it's possible for a relief pitcher to win a game without throwing a single pitch. (This has happened 15 times since 1957, according to the hardball geniuses at Baseball-Reference.com. The scenario involves throwing out a baserunner to end an inning, having your team take the lead immediately after, and then getting relieved by someone else.)

The win-loss record for starters is a more-useful statistic, but it is still seriously flawed. For example, on October 2, Adam Wainwright was denied a chance to be the Majors' only 20-game winner in 2009 when the St. Louis bullpen imploded. He pitched six strong innings, striking out eight and allowing just one run. Then the first two batters reached in the seventh. The playoffs were around the corner and Wainwright had already thrown 90 pitches. So manager Tony La Russa (a lawyer, by the way) replaced him with Kyle McClellan, who promptly allowed Wainwright's two runners to score and let in four more of his own. As a result, Wainwright finished with 19 wins, which probably cost him the National League Cy Young Award. It wasn't his fault that he didn't get that twentieth win, still considered a magic number.

What is unusual is that both Cy Young winners announced last week had even fewer wins than Wainwright. Kansas City's Zack Greinke won with just 16 wins, and Wainwright's teammate Tim Lincecum won with 15 wins, the lowest win total ever (for a starter in a nonstrike year). In Sunday's New York Times, Tyler Kepner discusses this novelty in a piece called "A New Generation of Statistics Redefines Baseball." (Actually, the article appears online with a different title: "Not Your Grandfather’s Stats: Baseball Redefined.") Kepner makes the point that the sportswriters who vote for the awards are becoming savvier about which statistics are better indicators of a player's performance. Win totals have long dominated the Cy Young voting, and Kepner and ESPN.com's Rob Neyer point out that Wainwright would have beaten Lincecum if the Cardinals bullpen had held on to get him his twentieth.

Kepner compares the 1990 seasons of Roger Clemens and Bob Welch. Clemens pitched substantially better according to the more-meaningful statistics: many more strikeouts, fewer walks, far fewer home runs, fewer baserunners per inning pitched, much lower OPS against (that's opponents' on-base percentage plus slugging percentage, for you nonseamheads). But Welch won 27 games, six more than Clemens, and thus won the American League Cy Young Award.

The point here is that if you're going to measure performance, measure the things that matter most. (Brace yourself for the segue to law firms.)

So how do law firms measure associates? By the number of hours they bill, of course. Oh, sure, they have evaluations, and 360-degree reviews (whatever that means), and other methods of assessing performance. But the one number that matters — the win totals for associates, if you will — is hours billed for the year. (If this were baseball, we'd call it "HB." Of course the Times would call it "H.B." with the periods, just like they write "E.R.A." and "R.B.I." That bugs me.) This metric is so important that many BigLaw firms have a threshold: if you don't bill 1,850 hours, no bonus for you.

[It's worth noting that unlike baseball teams, law firms usually don't pay their associates based on performance. At least at the larger firms, they pay their associates (in lockstep) based on years of service. Under that system, Alex Rodriguez (who debuted in 1994 — call him a 16th-year associate) should get less than Cliff Floyd (who debuted a year earlier). Of course, the Yankees paid A-Rod $33 million for 2009, while the Padres paid Floyd a mere $750,000.]

And what's the most important measurement for the firms themselves? Profits per partner. This is how they keep score, with the numbers voluntarily reported and shared with The American Lawyer. (Why law firms, which are all privately held, would share their profit numbers is beyond me.)

But how do these "win totals" — HB and PPP — measure real performance? In other words, the performance that the clients care about. I submit to you that like relief wins, they don't.

It's difficult to measure performance when you're talking about professional services. Lawyers aren't playing baseball. But it's not impossible. Value-pricing guru Ron Baker has an entire book devoted to key predictive indicators, or KPIs: Measure What Matters to Customers: Using Key Predictive Indicators. In it, Ron talks about the sort of KPIs that law firms could use, such as turnaround time (which is basically the opposite of billable hours, if you think about it), innovation sales (selling new services), customer loyalty (retention rates), share of customer wallet, and others. You could learn a lot about how to run your law firm better — buy it here.

Lawyers: stop worrying about relief wins, and start measuring what actually matters to your customers.

[Update: Ed Kless, who comments below, has a great sidebar in Ron's book that discusses the topic of using the right stats in baseball. A must read.]

Boston Business Journal reports on killing billable hours

The Boston Business Journal ran a nice profile on our firm, Shepherd, and how we got rid of the billable hour three years ago. Lisa van der Pool, the BBJ's top-notch legal-beat reporter, did the interview and wrote the story. The piece is called "Rebel with a clause: Lawyer is fixed on reforming the billable hour."

Lisa describes how we changed our business model:

For the first eight years of running ... Shepherd Law Group, Shepherd billed clients by the hour. But soon after starting the firm he began to research everything about the billable hour, including how long it had been in use and whether a fixed-pricing model could even work.

...

His next step was to analyze eight years worth of bills from his firm, to figure out what was driving costs. Did his clients feel like they got their money’s worth and did his firm feel like they got paid fairly? He had read that you can’t do litigation on a fixed-fee basis, and 80 percent of his firm’s work is litigation.

“Now, after doing it for three years, I’m here to tell you, you can do litigation on fixed fees. It all comes down to, what is the service ... worth to the client?”

If there's a money quote in the article, it's probably this one, talking about how lawyers see themselves as being something more than other businesspeople:

“We’re so resistant as a group to thinking of ourselves as a business. But we are a business. We’re not a priesthood. It’s not a guild.”

Read the entire piece here. (Note: the article continues onto a second page. The next-page link is tucked in after some sponsored links.)

Glengarry Glen Ross, LLP?

My brother Bill Shepherd is a world-class salesperson. Literally. He has sold many millions of dollars of services and products all over the world. (Fans of our sister blog, Gruntled Employees, will remember Bill from "Of sticker shock and empathy," which describes his near-death experience — my wedding).

Bill and I often talk about business — at least when we're not talking about the Red Sox. He often has terrific ideas on how I can further grow my law firm's business. Many of them are about running the firm more like a business than like a law firm — which is something I've consistently tried to do over the past eleven years.

One of his suggestions was to do what most businesses do to stimulate sales: hire salespeople. That's an idea that makes a lot of sense. But there's a major problem. Salespeople are generally paid on a commission basis. Rule 5.4 ("Professional Independence of a Lawyer") of the Model Rules of Professional Conduct (which govern the conduct of lawyers in almost every state) mandates that

A lawyer or law firm shall not share legal fees with a nonlawyer ….

(There are four exceptions, which aren't relevant to our discussion; they have to do with dead lawyers and things — call Haley Joel Osment). Bottom line: you can't pay commissions to nonlawyer salespeople. So that idea's a bust.

Or is it?

If you can't pay commissions to nonlawyer salespeople, what about paying commissions to lawyer salespeople? Saleslawyers, if you will. (You would never call them that, of course. They would be business-development attorneys, or something.)

As our friends over at the incredibly well-written, popular, and snarky blawg Above the Law have chronicled, it has been a tough year for associates at large law firms. (See their joint project with Law Shucks: the Layoff Tracker.) There have been more than 5,000 associates laid off by major US law firms since the beginning of last year.

What percentage of the 5,000 laid-off associates would have the aptitude and desire to be commissioned saleslawyers? They would still be lawyers, of course. But their focus would be on selling their firms' services to prospective clients. They would get valuable experience interacting with clients and learning about their firms' practices, but they wouldn't have to worry about billable-hour requirements and office memoranda. And if they were good at their jobs, they could make a bunch of money.

What do you think? Too Willie Loman? Too Alec Baldwin in Glengarry Glen Ross — "Always Be Closing"? (Warning: Alec Baldwin had a NSFW vocabulary even back then.) Too unlawyerly?

I particularly want to hear from associates, especially laid-off ones. Could you see yourself working as a business-development attorney? Put your thoughts in the comments below, or reach out to me with an @reply or DM on twitter at @jayshep.

• • •

By the way, just how popular is Above the Law? Well, last Thursday, ATL ran a seven-word blurb in its daily "Non sequiturs" post that included a link to this blog. Those seven words plus a link caused Client Revolution traffic over the next two days to increase by 2,300 percent. Yowza. Thanks, guys!

How Ed McMahon taught me to be a lawyer

Ed McMahon died yesterday at 86. The thousands of articles about his death and his life will refer to him as a “second banana” or “sidekick,” will cite his catchphrase “Heeeeeeere’s Johnny!” and will touch upon the financial troubles that plagued the latter part of his life.

What they won’t do is talk about Ed McMahon as an author, who wrote a book that every law student and lawyer should read.

Turns out McMahon wrote a few books. The biographies (one inevitably entitled Here’s Johnny), of course, and a book called Ed McMahon’s Barside Companion (perhaps also inevitably). But the book I read was a slim volume (122 pages in paperback) published in 1986 called The Art of Public Speaking. It’s a gem, and it helped make me the lawyer I am today.

To many of us who watched McMahon on “The Tonight Show,” it seemed he had a pretty easy gig. Basically, his job was to introduce Johhny Carson (the classic “Here’s Johnny,” stretched out to three or four seconds), then sit on the couch as the foil for Carson’s bits, throwing in an occasional "You are correct, sir.” He was warm, avuncular (which by the way means unclelike, and nothing else), and familiar. (Many also don’t realize that he was a decorated Marine fighter pilot in World War II and Korea, retiring with the rank of colonel.) He probably got paid a decent amount to warm that couch.

But what many don’t realize was that he was a highly successful and sought-after public speaker. His natural ability led him to write this book, which is sadly out of print. You can find copies through Amazon, though.

In his book, McMahon reveals secrets of public speaking that every lawyer should learn. For example, he discusses the differences between written English and spoken English. He admonishes against writing out your speeches word for word, because — as he puts it — you should “write with your mouth.” Otherwise, you’re left translating your written speech into spoken English on the stage (or in the courtroom), and that’s very difficult to do.

He emphasizes brevity.

In fact, every chapter begins and ends with a suggestion of something to leave out of your speech (examples: self-deprecation about your speaking abilities, statistics, apologies, and long words).

He has other excellent tips for any speaker: Use pairs, repeated phrases, and the power of three. Use the active voice, vigorous words, and specific words. Leave out unnecessary words and phrases, tired terms (clichés), and redundancies. Stop decisively.

He also wrote the best advice I’ve ever read or heard on dealing with prespeech nerves. In fact, Chapter One is called “How to Turn Stage Fright into a Positive Force.” Believe it or not, McMahon got stage fright before every performance on "The Tonight Show." He writes:

If you exploit stage fright in a methodical way, you’ll give a better speech. First understand that stage fright isn’t something you’ll ever get rid of completely. I haven’t. Before every public appearance I feel the tension build; I have a sense of growing concentration; I feel myself rising to the occasion.… Forget about obliterating stage fright — your goal should be to help it give you greater awareness, higher concentration and a finer performance.

As a lawyer, I do a lot of public speaking. I give lectures and seminars, I run employee trainings, I appear in court. And after 15 years of doing this, I still feel nerves beforehand. And because of Ed McMahon’s little book, which I first read 23 years ago, I know that this is a good thing. Because it means that the adrenaline is flowing, and that I’m going to be up for the performance. Nowadays, the only time I get worried is if I don’t feel any nerves beforehand.

So for those of you law students and lawyers who aren’t comfortable with public speaking: “Heeeeeeeere’s Ed.”

Note While the book is out of print, you can find it through Amazon here.

Lexis, coffee filters, and associates: law firms' overhead

My law firm pays the same amount for LexisNexis online research every month. For a fixed price, we get unlimited access to the caselaw and statutes that we use in our practice. Now don’t get me started on the absurdity of paying money for free, public-domain, governmental content; that’s a topic for a different post. Instead, let’s talk about how we handle this expense.

Unlike many firms, we don’t pass this cost along to our clients. For one thing, it’s impractical to do so. Who wants to bother with dividing up the total monthly nut for all our Lexis research and then apportioning it by client? What if we reuse research originally done for one client in another client’s case? Who pays?

Who cares?

Online research is overhead. It’s the cost of doing business as a modern law firm. We don’t apportion our rent, insurance, taxes, coffee, or legal pads (actually, who even uses legal-sized legal pads anymore — it’s an eight-and-a-half-by-eleven world, kids). Yes, it’s possible that in a month where we do a ton of research for one massive case and an unusually small amount of research for all our other cases, it could seem fair and appropriate to have the research-heavy client bear the expense of the legal research. But why would we? Again: I’m not going to have that client pay its “fair share” of rent for that month. So why is online research different?

It’s not as if my online-research expenses go up as a result of this heavier usage. As I mentioned, I negotiated a fixed fee with LexisNexis. (And your firm should, too, unless you’re too ill informed to understand the value of your monthly legal research. In which case, get better informed.) If I do a ton more research in June than in May, my expense isn’t going to go up. So why should I bother to “pass along” (or worse, pass along and mark up) these costs to the client. Overhead is overhead.

My costs are my costs. They don’t change much month to month. I pay our rent, payroll, insurance, taxes, fees, supply costs, and so forth every month, and it comes out about the same each time. This is the cost of doing business, and as long as we can bring in enough revenue to cover it, then we’ll remain in business.

Which brings me to associates and their time.

Why do law firms feel the need to “pass along” the cost of the associates? How are associates any different from LexisNexis or coffee filters or photocopy toner? Most law firms pay their associates an annual salary, divided up into monthly, semimonthly, or biweekly pay periods. As with LexisNexis, insurance, and coffee filters, the firm knows what its monthly payroll nut is going to be. Whether they work harder or less hard, for one client or fifteen clients, the associates’ pay isn’t going to change from month to month. The law firm’s cost isn’t going to change either. So why feel the need to apportion this cost to clients?

Associates are overhead. Just like coffee filters.

(Partners are too, but that gets more complicated. Let’s stick with associates for now. And coffee filters.)

Law firms don’t apportion and pass along their rent, insurance, taxes, coffee-filter expenses, or fancy-artwork costs to clients. Why not? Because it’s all overhead, and clients wouldn’t tolerate it. Send a client a bill for some portion of your month’s rent and see what kind of reaction you get. You’ll have clients marching in with rulers and floor plans to make sure they’re not getting ripped off. (That’s not actually true; the clients would simply fire you.)

So why do they tolerate it with associates’ time? Habit. And a sense that they have no other choice.

Now folks at other law firms will whine that they need to know how profitable an associate’s work is, and how profitable a particular matter or client is. Without tracking and billing for time, they can’t possibly tell.

Nonsense. Take an accounting class. Profit is revenue minus expenses. The question is whether the firm is profitable, not whether an associate or a client is profitable. The relevant question for a client is whether you’re delivering enough value to the client to justify the best price they would pay. The relevant question for an associate is whether he or she does good work for your clients.

The whining continues: But if we don’t track associates’ time, how do we know if they’re working?

After your accounting class, take a management class. You know by managing your associates.

Bottom line: Overhead is overhead. Clients don’t want to pay for overhead.

They want to pay for value.

"A melancholy pall of diminished billable hours"

Great piece by Alan Feuer in Sunday's New York Times chronicling carnage at a major US law firm: "A Study in Why Major Law Firms Are Shrinking." It talks about how White & Case has had to lay off hundreds; close offices in Dresden, Milan, and Bangkok; and cut the budget for its "depressive" holiday party to a mere quarter million dollars (oh, the humanity!).

Big law firms run on a peculiar business model, where profits per partner seem more important than plain-old profits. According to the article, White & Cases's profit rose 7.7 percent last year to $1.6 billion. But the all-important law-firm metric — profits per partner — declined six percent to $1.6 million. So they fired nearly 600 people, including 279 lawyers. Makes perfect sense, right?

As in many pieces on the current troubles in BigLaw, the tendency is to place the blame on the economy and the failures of Wall Street. But as readers of The Client Revolution know well, I believe that the problem is more fundamental than that, and has more to do with a system that focuses on billing hours rather than delivering value to clients.

There are some great lines in Alan's article. My favorites:

• [T]he corridors of White & Case are quiet, the happy buzz of business having gradually been replaced by a melancholy pall of diminished billable hours.
• The gentleman’s profession of the law is becoming a vestige of the past, removed enough from reality to be remembered, like phone booths or fedoras.
• "You used to feel the intensity in the office,” said a longtime partner at a big New York litigation firm. “When people walked to the bathroom, they would actually scurry. Now it’s more of a stroll. For the first time in their lives, people feel sort of useless. All of a sudden, you can go to lunch for two and a half hours and really not be missed. It’s a blow to the ego. You’re talking about people who have never really failed.”

And the money quote:

• But the natural order of this world has been set on end by the economic crisis and the possible disappearance of fixtures like the pyramid system (under which associates are thrown en masse at certain cases, fattening the fees), and the billable hour itself (increasingly replaced by flat rates or retainers in a client’s market).

What do you think? Is it the economy, or is it the business model?

Read the whole article here.

Top ten Twitterers for innovative lawyers

There's no denying that Twitter has gone from a mere internet fad with a quirky name to a legitimate innovation in today's business world. There are more than six million users, and more than a few of them are lawyers. And within this group of twittering lawyers, there are a bunch of lawyers and friends of lawyers (yes, such an animal exists) who are committed to innovation. If you have a free Twitter account and have any interest in innovative lawyering, you could do worse than to follow them (that is, read their tweets). To help get you started, I've come up with a top ten list.

Here they are with their Twitter handles (plus real names if they're different) and Twitter bios. The order is arbitrary, but you really can't do a top ten without numbers. Just click on their links to follow them. They will help you innovate.

1. @kevinokeefe Lawyer, dad to 5, husband to saint, Cubs-Packer fan. CEO of LexBlog, provider of professional blogs to law firms & operator of LexTweet & LexMonitor.


2. @matthomann Legal Thinker. Innovational Speaker. Creative Facilitator. Dad.


3. @lancegodard International legal business development and marketing consultant. I help law firms grow and prosper.


4. @nikiblack Legal technology consultant (www.lawtechtalk.com) & crim. def. attorney trying to drag the legal profession into the 21st Century while enjoying good food & wine.


5. @riskin (Gerry Riskin) Lawyer/Consultant, http://www.gerryriskin.com/cat-about-gerry.html


6. @carolynelefant Practicing lawyer, marine renewables expert, avid blogger, Solo by Choice author, CEO (MyShingle.com), mom.


7. @alexisneely Mom, Family Financial and Legal Expert on TV, Changing the Way Lawyers Think And You Think About Lawyers, Wrote a Book For Parents Who Care What Happens. 


8. @karasmamedia (Kara Smith) Principal & Founder Karasma Media the first Harlem based boutique specializing in social media public relations campaigns for the legal marketing industry. 


9. @bobambrogi Lawyer, writer, consultant.


10. @glambert (Greg Lambert) Law Librarian, Blogger, geeklawblog, Competitive Intelligence, Social Media, Knowledge Management (KM), Speaker.

And one up and comer: @ronaldbaker. Ron is the guru of value pricing, and the nemesis of timesheets and billable hours. He's new to Twitter. (His brand-new bio: "Quest: To bury the billable hour and timesheets. Founder of VeraSage Institute.") He's a CPA by trade, but he's forgotten more about legal innovation than any lawyer could hope to learn. Without a doubt, one of the five smartest people I've ever spoken with. 

So there's my list. I've doubtlessly left off many who should be included. Please offer up your own additions in the comments, or send me a tweet (@jayshep). I'll probably have to do another top ten list.

To learn more about Twitter and to get a free, twitterable corporate Twitter policy (that is, a Twitter policy that is exactly 140 characters long — the maximum size of a tweet), head on over to our sister site, Gruntled Employees.

[Updated 2 April 2009 to include Ron Baker's bio.]

Heroes of the Revolution: Dustin Cole

From time to time, we'll give a shout out to a Hero of the Client Revolution — someone who's doing more than their share to advance the cause of client service, whether in legal circles or in some other field. We kick off this feature with a tribute to Dustin Cole, founder and president of Attorneys Master Class, a Florida-based firm devoted to helping lawyers regain control of their practices. Dustin's laser-like focus is on teaching lawyers to "be of value" to their clients — a deceptively simple concept.

Four years ago, I was looking for ways to grow my practice and improve my marketing abilities. I went to Dustin Cole’s seminar at the Massachusetts Bar Association with more than a little skepticism. I mean, this guy's not a lawyer, and his background was in radio and television. What can he teach me?

Was I ever wrong. Instead of a know-it-all consultant looking to prey off lawyers' insecurities, I found a kindred spirit who shared many of the ideas I had about running a law firm like a real business. (Very few law firms do that.) After a one-hour phone-session trial, I decided that my firm would benefit from working with Attorneys MasterClass.

It turned out to be a smart investment. Talk about ROI: in the year after I started working with Dustin, our firm’s revenue increased 26% over the previous year. Over the past four years, our revenue has nearly tripled. More importantly, my coaching sessions with Dustin changed the way I think about marketing and management strategy. Never again will I feel like I am “selling.” Instead, I concentrate on trying to “be of value” to as many people as I can.

Our firm now focuses on what differentiates it from our competition. We’ve learned how to focus our message and align our goals with our clients’. We’ve discovered the nerve to radically change the way we do business, abandoning hourly billing in favor of upfront pricing. We’ve realized the importance of trying to be a “trusted advisor” to our business clients, instead of just another law firm. I’ve learned when to wear my entrepreneur hat, when to wear my manager hat, and when to wear my lawyer hat. I’ve gotten much better at delegating work to the appropriate person.

When my initial coaching plan ended, I immediately signed up for continued regular coaching. Because I’m my own boss, and have been since I was a fourth-year lawyer, I’ve never really had a mentor figure. Until now. Hiring Dustin Cole was the single-best marketing and practice-management decision I’ve made since starting my firm. Any law firm — big or small — will benefit from the advice and guidance that Dustin and Attorneys MasterClass can give.

Lawyers tend to resist taking advice from others. I certainly have. But Dustin Cole understands lawyers, and clients, and being a trusted advisor. As lawyers, we could all use more practice listening.

If you would like to discuss Attorneys MasterClass with me, please feel free to send me an email.

Five steps to killing the billable hour

[Originally posted at Gruntled Employees on 24 June 2008]

The American Bar Association's ABA Journal once again adds to the conversation about the battle against the billable hour. The always-excellent David Gialanella examines "The Skinny on Flat Fees" in the July issue of the magazine. David identifies five steps for law firms looking to drop hourly billing in favor of value pricing:

1. Do your homework.
2. Find a new measure for performance.
3. Stick to your guns.
4. Be a business geek.
5. Don't secretly keep track of time.

He also uncovers the secret of abandoning hourly billing: "The move from billables to flat fees is not just a practical change; it’s a different way of thinking." That's certainly true. It's not about the accounting — it's about delivering value to the client.

While he was researching the issue, Dave and I discussed whether value pricing would be just another also-ran to hourly billing:

The term alternative billing might seem innocent enough, but those two words make Jay Shepherd’s skin crawl. As CEO of Shepherd Law Group in Boston, the enterprising attorney thinks his firm’s flat-fee business model is not simply an alternative to the billable-hour standard: It eventually will become the commonplace way to run a law practice.

He's right: alternative billing is not my term of choice. A year-and-a-half ago in "No-alternative billing," talking about law firms' resistance to offering value pricing, I admitted:

I hate the term "alternative billing." It has that sneering, look-down-your-nose quality to it, like "alternative lifestyle."

And many law firms still think of it that way.

BTW, Dave had another nice piece in the February issue of the ABA Journal: "Taming the Billable Beast."