When $975/hr is Value Pricing

March 8, 2010 | Filed Under Alt Billing, Value 

Sometimes billing by the hour beats the alternative.

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.

This Bill Knows Value

Orrick Fits Levi’s with Made-to-Measure Billing

November 23, 2009 | Filed Under Alt Billing, Law Firm Trends 

The ABA Journal reported this morning that Levi Strauss is handing all legal work worldwide (save IP) to Orrick, Herrington & Sutcliffe. For a flat fee. Where Orrick doesn’t have a presence, it will refer the work to other firms, which can be the hardest part of a deal like this to make work in practice.

This arrangement sounds similar to that struck by Tyco and Eversheds a few years ago for international work, which I covered here. Last week, Corporate Counsel magazine described how Tyco’s domestic US product liability work is handled by Shook, Hardy and Bacon.

This shows how a global firm really can differentiate itself with a global client. For all the talk about value pricing, it comes down to a firm taking risk and a client taking a stand.

There’s no information thusfar about how many firms Levi’s is supplanting by converging on Orrick.

(Hat tip to Ron Friedmann via Twitter).