Skip to content

Legal Fees are Like Hazardous Waste

2011 June 23
by John Wallbillich

This is Rule 1 in Zen and the Art of Legal Pricing. To suggest that legal fees are like hazardous waste is not to call any lawyers toxic, by the way.

Some years ago I worked in the environmental area, both for an energy company and with a company that specialized in waste handling and recycling. Some of the waste involved was hazardous under federal law, and it had to be treated properly. Some of it would go to landfills designed and authorized for hazardous waste disposal.

You can imagine that it was a very profitable business to be in when there weren’t many facilities that could handle such waste. Prices were high, and tended to move higher as more companies would rather spend some money now than be part of a Superfund site or an enforcement action later.

So in typical capitalistic fashion, some of the leaders in the industry looked at the growth trends in waste generation and rising disposal prices and rushed to get more hazardous waste facilities online.

It was a fantastically profitable business. For a while.

Then some sharp engineers got the bright idea to minimize the hazardous components in products, or to recycle wastes for benign disposal or re-use.

And those new hazardous waste landfills that looked like such a great idea just a few years earlier were either seeing declining fees or were closing down altogether.

I think you see where I am going with this.

As we move out of the Great Recession, some think that demand for legal services will rebound in linear fashion with the global economy. It may to some extent, for a while. But we all know that many consumers of legal services are looking at ways to minimize the need for legal services, or are finding ways to spend less.

Law firms aren’t just competing against other firms on price. There are also the in-house lawyers, the LPO vendors, and technology solutions. Indeed, some clients are re-designing processes to avoid the need for certain legal services altogether.

So you need to look really closely at the demand for legal services and how that affects price. If you don’t, someone else will.

Tomorrow, Zen and the Art of Legal Pricing features Rule 2: The premium pricing fallacy.

Leave a Reply

Note: You may use basic HTML in your comments. Your email address will not be published.

Subscribe to this comment feed via RSS