Yesterday’s Washington Post profiled (reg reqd) Robert Barnett of Williams & Connolly. Mr. Barnett has a virtual hammerlock on representing high-profile political and public figures who want to add “author” to their resume.

It’s a two step approach:

1. Find a niche that’s being over-charged:

Barnett’s rate of $975 an hour is a lot of money, but his transformational insight was to apply a lawyer’s fee structure to the work of an agent. Then it’s not necessarily so much money.

2. Realize that fee and hourly rate are not the same.

A traditional literary agent charges 15 percent of an advance. Barnett helped Bill Clinton sell “My Life” for a record $15 million. Clinton would have paid an agent $2.25 million; Barnett says he put in far fewer hours than the 2,308 he would have needed to work to bill $2.25 million.

His clients can do the math. “For someone like me, the savings are extraordinary,” author (James) Patterson says.

Mr. Barnett is certainly an exceptional lawyer with a unique practice.

But this part of his practice shows that billing by the hour can qualify an alternative fee arrangement.

So step back from the law for a moment and take a rare glimpse inside Google. You may be familiar with their work.

This is courtesy of an interview in the Silicon Republic with Google’s European sales chief, John Herlihy.

(First, there’s a mini-bombshell that Google sees the future in mobile, not on the desktop. That’s one reason for the development of lawriver. –Ed).

Mr. Herlihy describes what Google does to promote innovation and implementation at Internet speed:

It’s not good enough to apply normal management disciplines – we think that scarcity breeds clarity. If, for example, we have enough resources invested in something, we halve it and eliminate overheads.

When we build something we strive for ubiquity in usage and adoption. That helps us understand how customers react and then we build a revenue model.

We measure people every 90 days. We get 360-degree feedback on people every 180 days and that feedback is published to the whole company. People want reality. Ninety per cent of the rewards end up going to 10pc of the people.

Customers today have more choices and are more aware of our competitors’ offerings. Unless we can serve them 24/7, 365 days a year, competitors will eat our lunch. […] At the end of the day it’s the customer who owns the cash. That’s why we construct our organisation to deliver value. The underlying framework is to make it easier for people to do business, solve problems and move on.

That last sentence is not a bad mission for most companies, law firms included.

Clearly the Google model is not for the faint-hearted, or for partners wanting to slow down a bit after years of 2,000+ billable hours.

Scarcity, excellence, and value before revenue. Now that’s an alternative arrangement.

What is different is that this company has a product development process named after it. Two of the bedrock principles behind this system are “Respect for People” and “Teamwork.”

These are more than bromides, since process is nothing but words on paper; until somebody does something, nothing happens.

In law school you learn how to assemble the facts, marshal applicable law and advocate an outcome. But you likely didn’t learn how to be part of senior-level corporate decision-making so you have a chance at influencing people and shaping outcomes.

Part of the job description for an in-house counsel is to pull back from the demands of all sorts of processes on a good day and spend even 10 minutes considering how the bigger picture is trending for your client. This task is about 100 times harder when you are facing a major crisis or regulatory challenge.

And it is paradoxically even more difficult when you are the GC of a very successful company, because some of your colleagues may believe that all those great processes will themselves ensure good outcomes.

1. Large Corporate Client–Microsoft. News broke today that the software giant sealed an outsourcing deal wiith LPO firm CPA Global. Microsoft has been active in outsourcing legal work to India for some time. This follows on the actions of mining company Rio Tinto with CPA Global (the latter who this week hired Rio Tinto managing attorney Leah Cooper).

2. Major Law Firms–Take Your Pick. Just yesterday, the news started to break that a number of large law firms are reporting higher profits. Some show a growth in revenue, most cut headcount (including partners).

This pop in profits for many large law firms may not be indicative of long-term trends. Stock market fans might say we are seeing a secular uptick in what is a long-term bear market in legal work from major corporate clients.

Microsoft isn’t just converging work from 20 large law firms to two. As legal outsourcing work moves from process and discovery to product and transactions, it is gone forever. So as more of this happens in 2010, 2011 is looming as a real shakeout year, when increasing client cost control measures (in-source, out-source, and re-source) hits the mainstream.

(I follow only a handful of people on Twitter, Ron Friedmann and Jordan Furlong are in this group, and both have insightful things to say on this.)

By 2011, the Am Law 200 may more closely resemble America’s Top 40.

One thing for certain–it’s a hard issue to explain to the press. A case in point, as reported in Crain’s Detroit Business (reg may be required, sadly):

Rex Schlaybaugh, chairman and CEO of Detroit-based Dykema Gossett P.L.L.C., said his law firm pursued cost efficiencies to improve the bottom line during last year, and was still holding discussions with individual clients about rate increases for this year.

He expected the firm would not finalize rates for a few more weeks, but has generally raised rates an average of 3 percent-5 percent in recent years to keep up with costs.

I am impressed by the candor, and know that the annual rate increases (up until about 2007 or so) were something that managing partners counted on and corporate clients (sort of) expected.

But in the last few years, it’s harder to fathom for clients who are cutting costs themselves and seeing withering international competition for their own products and services.

It appears that some firms are initially using cost efficiencies to bolster profits and moving somewhat more gingerly about translating those actions into lower costs or clearer value for clients.

Mr. Schlaybaugh went on to say that alternative fees are about 15 percent of firm revenue, with volume-based discounts and fixed project-based fees the two most common options.

Of course, any firm with a history of rate increases is really just giving part of those back to clients, not really providing net savings. And GCs need to be able to show that sort of cost improvement to CFOs with a long memory and a short fuse.

Getting more guaranteed work (aka “volume”) in this market is hard for any firm. Saying we will raise your rates unless you do is the sign of a great firm whose talented lawyers are in consistent demand.

But you better be right, or it may come back on you when you least expect it.