Cheap armchair Armchair the armchair survivalist .
Cherry armoire Armoire baby armoires .
Best awning Awning rv awning repair .
Outdoor barstools Barstool commercial barstool .
High bed frame Bed Frame bed frame loft .
Oak bedroom set Bedroom Set cherry bedroom sets .
Mahogany bookcase Bookcase metal bookcases .
Majestic buffet Buffet no.1 buffet .
Outdoor canopy Canopy easy up canopy .
Inexpensive chaise lounge Chaise Lounge chaise lounge slipcovers .
Coffee veseat sets .
Sectional sofa couch in sectional couches sectional couch on sale .
Sectional sofa sleeper with a sectional sleeper sleeper

Why Value is not a Virus

March 15, 2010 | Filed Under Alt Billing, Value 

One thing about change in the legal industry: it is happening everywhere, popping up globally in much the same way at virtually the same time.

John Chisholm writes in the New Lawyer about the status of the billable hour in Australia, capturing the universal tipping point rather succinctly:

Sure, it probably annoyed some clients that whatever their legal spend was they couldn’t actually budget for it accurately, but this was a small price to pay for the benefits they were getting out of their firms. And there was no alternative anyway. Most law firms were offering the same rates, and it wasn’t as though any firm could give them a fixed price.

Since clients are becoming enlightened everywhere at once, it’s clear that value isn’t a virus. No amount of marketing or sales tactics will inoculate clients against it.

So what’s the new reality if clients are infected with new knowledge and increasing support (i.e., motivation) for change? It’s simple: there’s no going back. Fully 80-90% of corporate legal work will be priced to market. My real takeaway is this:

only top end work will be value priced.

What’s this “top end?” Think of things like deals, major disputes, key regulatory matters. Law firms will hope this is 10-20% of work. For many clients in normal years, it may be less than 10% (although more than 10% of the outside counsel budget since it will be priced at a value premium).

For the remaining 80-90%, it’s good work, but most of it will be seen by clients as what it is: a commodity. Law firms will struggle to differentiate and clients will know more precisely over time what a 10-site package of commercial leases in the Northeast costs. More pricing knowledge for clients equals easier shopping between firms and quicker switching if you need to. Bundling commodity work may get a slightly higher effective rate, but nowhere near that for top-end work.

Thus the fundamental strategic question for major law firms: can you do both (value work and commodity)? Should you? To do this, a firm would need two of everything: pricing structures, staffing models, talent pools, comp plans. It’s like merging Wal-Mart with Tiffany: I’d really like to see that ad copy.

Clients are coming off a 20-30 year bout of the billable hour flu. For a lot of corporate legal work, “value” is not a panacea, it may be something else.

(Update: Both Ron Friedmann and Steven Levy respond to this post; excellent stuff and I’ll continue with a round 2 later this week).

vino1.jpg

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).