The Client Revolution

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.

Lawyers, music, and emotional connections

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!"

 

There are only 2 types of law-firm fees

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:

1. Time-based pricing
2. 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.)