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.

How Google Meets its Value Challenge

March 4, 2010 | Filed Under Value, Change

Many law firms are finding it hard to come up with a clear value proposition and delivery model for clients.

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.

ACC Value Index - A Few Good Firms

February 9, 2010 | Filed Under Legal Ratings, Value

The ACC announced last week that law firms would be given some access to performance feedback being gathered as part of the “index phase” of the Value Challenge initiative. The press release is here; Corporate Counsel has more today here.

Part of the CC article gives equal time to a former ACC national chairman, who:

… said law firms have expressed concern because the survey’s evaluators are anonymous, and outside counsel couldn’t see what they said.

In reality, certain firms saw Code Red last year when they first heard about the Value Index. These firms (not all large law firms, of course) appear to view shared client feedback as something to be challenged, as opposed to an evolving part of the puzzle that their clients are solving to better manage legal spending.

So, as mentioned earlier by ACC, law firms can see part of their feedback gathered by the Value Index.

Can you handle it? What are you going to do about it?

ACC Value Index - Still Going

January 11, 2010 | Filed Under Legal Ratings, Value

The Lawyer takes the pulse of where things stand in early 2010 with the Association of Corporate Counsel’s Value Index. Notably absent from this article are any law firms going on the record about concerns with the Value Index, or quotes from their consultants about same, as we saw last year.

A good summary of the initiative:

Lawyers use a five-point scale where one is poor and five is excellent to rate their outside counsel on the following criteria: understanding objectives/expectations; legal expertise; efficiency/process management; responsiveness/ communication; predictable cost/budgeting skills; and results delivered/execution.

Hardly sounds like something to be afraid of.

And a preview of what’s next from ACC president Fred Krebs:

“Some have expressed concern, mainly saying they don’t like the concept of being evaluated. But most want to see how they’re being evaluated and we’re in the process of providing that. We’ve already done it when we’ve been asked by a firm directly, but we’re looking to do that in an automated way. We hope this will go live later this month [January].”

This may help ACC get to a goal of 10,000 evaluations by its next annual meeting, in the Fall.

Some law firms could be re-thinking their opposition to the Value Index. Perhaps they realized that appearing hesitant about competition or transparency is not a positive signal to send in today’s legal marketplace.