Nickel and Dimed
January 21, 2005 | Filed Under General
Matthew Homann makes a great point in the[non]billable hour about law firm client cost recovery. He mentions a presentation at the upcoming LegalTech that will cover many items to charge back to clients:
Effective cost recovery systems must manage these billable charges - everything from Internet research to printer, fax, phone and copier activity - from the minute they’re incurred all the way through billing and reimbursement.
Mr. Homann understands what clients are really buying, and charges accordingly.
When I open a statement, I look at what legal services were rendered and the charge. I then make an assessment of how much I value the services, and glance at “disbursements” to see if they seem proportional. If services or disbursement charges appear excessive, I call and ask for an explanation.
As a general counsel, I understand that law firms are businesses. I also understand they are entitled to prompt payment for appropriate services rendered. And I generally agree that I should pay for some costs associated with doing business.
But when many law firms are charging $300 per hour (or more!) for services rendered, the invoicing for some disbursements (like above-market long distance charges, for example) reinforces a long-held concern: law firms, under the current hourly billing model, have no incentive to control costs save a strong sense of professional responsibility.
While this concern can be aggravated by many things, is a fax charge really worth it?
Law firms that understand their costs dollar-for-dollar reduce my company’s bottom line and clearly act consistent with that understanding will get my work in the future. Firms that don’t are just living off goodwill earned years ago and are basically spending their associates’ inheritance.
Ron Friedmann notes that General Electric is expanding its use of auctions to purchase legal services. I would bet the RFP governing the auction terms includes some flat rate or other control on disbursements.
When I noted earlier that I call and ask for an explanation of charges, that isn’t always true.
I may just make a mental note, and not refer additional work to the firm.
Weblogs and Legal Innovation
January 18, 2005 | Filed Under New Services
Ron Friedmann points out in Strategic Legal Technology that large law firms are slowly dipping an institutional toe into the icy waters of legal weblogs. I agree with Mr. Friedmann that more large law firms will roll out weblogs in 2005.
This leads to a question: what took so long?
Many of the intrepid legal webloggers in my “blogroll” (aka “Links” on the right) have been writing and publishing for many years now. Yet the large firms are just getting going.
In thinking about a reason, a working hypothesis emerged: large law firms can be less innovative (not all). This isn’t necessarily because their lawyers are less innovative. I think it may be due in part to the inertia that a large law firm can exert on a lawyer with a new idea. Particularly one who is trying to move the firm (in a small way) into the 21st century.
One can imagine the challenge in getting a green light from the necessary firm committees. Or the reality that one naysayer can derail progress and put things on hold.
Whatever the real reasons, I believe that the not-too-distant future for law firms will be characterized by major innovation challenges. These challenges will likely make the hurdle posed by starting a legal weblog look in retrospect like the dilemma of what color to choose for the firm’s stationery.
Or maybe I am over-complicating the issue. Perhaps the real reason can be summed up in two words.
Non-billable hours.
The Clients are Revolting
January 17, 2005 | Filed Under New Services, General
The Wall Street Journal today takes over where Cisco: Change or Die left off.
Reporter David Bank describes the power shift roiling the software industry in an article called “The Revolt of the Corporate Consumer” (sub req’d; WSJ Online format prevents linking). A summary is presented here by Steve Hebert.
Mr. Bank notes that open-source and web-based software are posing an increasing threat to software companies, shifting power in favor of corporate customers, who are increasingly wielding negotiating clout. Mr. Bank then makes an excellent point, in part by quoting a venture capitalist:
For software companies finally being forced to improve security, simplify maintenance, reduce costs and deliver measurable business results, … the shift “will be really punishing.” But customers are already reaping rewards.
Now permit me to free-associate for a moment. Instead of software companies, think “law firms”. Instead of consumers, think “corporate clients”. Now for the re-set:
For law firms finally being forced to improve matter staffing, streamline the usability of their work product, reduce costs and deliver measurable business results, … the shift “will be really punishing.” But corporate clients are already reaping rewards.
At first glance, there appears nothing for lawyers to learn from an analogy linking software to corporate legal services.
Maybe it’s my morning coffee, but I think there is everything to learn.
Mr. Bank concludes with a quote from the CEO of Siebel Systems, Mike Lawrie:
“It’s not just about making the best software,” he says. “It’s also about helping companies get to that business outcome, get the value from the investment they’ve made.”
I went back and re-read the article linked above by Laura Owen of Cisco. While the title grabbed my attention, this observation was even more striking:
Clients are already demanding change from their law firms. Unless you want to join the other fossils, it’s time to change your ways.
Exactly.
Now I’m going back to the original WSJ article excerpt and inserting “corporate legal departments” for “software companies.” No one is immune from the demands of the bottom line.
A Feeding Frenzy
January 16, 2005 | Filed Under General
A bit of inside baseball in the blogging community was played this weekend.
Martin Schwimmer of the Trademark Blog has requested that Bloglines, a popular weblog RSS feed aggregator, remove his weblog from the service. Bloglines has complied.
Mr. Schwimmer explains his reasons here and here. This set off a series of burn-and-churn posts amongst bloggers such that I will not try to link to them. If curious, try this.
One reason given by Mr. Schwimmer caught my eye:
I create content in part to promote my law firm, which I cannot do effectively if my contact info is removed. I do not participate in targeted advertising programs because the majority of advertisers that target the keyword ‘trademark’ are competitors.
This result, in Mr. Schwimmer’s view, would be tantamount to “creating the free content for advertisements that Bloglines will sell to other trademark law firms.”
As a Bloglines subscriber, I am disappointed in this decision, since it means for all practical purposes that I won’t see The Tradmark Blog anymore. Once you use an aggregator, you can’t imagine checking sites individually ever again. His blog was one of the first that I became aware of. I will miss it.
The contact reason doesn’t wash with me, since any Bloglines subscriber soon learns that when you click on the blog title in the preview pane, you get the home page. A potential client who can’t figure that out would probably be a slow pay anyway.
But I really think that Mr. Schwimmer is over-estimating the competitive threat of Internet ads. If I saw an ad next to his entry in Bloglines, I would do what I always do to an Internet ad: ignore it. In fact, it would probably reinforce in my mind that The Trademark Blog is the standard, and the ad-mongering attorneys are mere pretenders.
Mr. Schwimmer seems right on the law, and this issue will certainly get more focus as RSS feed aggregators become more widely used.
But because of a currently theoretical concern about competitive ads, Mr. Schwimmer is opening up Bloglines to the competition.
I think that is called the law of unintended consequences.
UPDATE: Scoble is following the post-fest here and here.
The Hot 100
January 12, 2005 | Filed Under General
So what is the first thing that pops into your mind when you saw the title of this entry?
Wait, I bet I know–English Lawyers!
A slick photo gallery documents the awards party: hot or not? A hidden microphone picked up the mood of the moment.
We hope a forward-thinking American legal publication will bring this idea stateside; it’s a great way to select outside counsel.
Thanks to Skallawwag for the pointer.
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