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In Search of Perfect Client Service

Why lawyers don't seem to get it

Valorem recognized by in-house counsel as a Leading Collaboration Firm

Posted in General, People, Places and Blawgs

Valorem Law Group is honored to be one of the law firms “who leading legal decision makers say are the tops in collaboration.”  According to BTI Consulting, which reported the findings of its interviews with corporate law departments.

Clients say collaborative law firms show deep understanding of client needs across the team, are up to speed on all the issues whenever an attorney joins the team, and are all focused on the same overriding objective. The attorneys at the most collaborative firms work at it.

That last sentence is so important–we really do work at being collaborative.  We dedicate space to it.  We schedule it and we take pride in it.  We believe that collaboration yields better outcomes for our clients.  We put a lot of thought into collaboration, so it is so gratifying to be recognized as a leading firm in this area.

The importance of learning what does NOT need to be done, and other things.

Posted in Commentary, Hourly Rates and Alternatives

I just read an article in Law360 discussing Microsoft’s commitment to shift 90% of its work to alternative fee arrangements.  Michael Rynowecer of BTI Consulting is quoted as saying the move is “one of the most aggressive” adoptions of AFAs he knew of. “Ninety percent is on the leading edge. It’s an enormous step; it’s making a bold statement to all the law firms with whom they work, saying this isn’t an effort du jour.” If Microsoft is serious, and if it truly seeks the real value of alternative fee arrangement, the Microsoft law firms are in for a wild ride.

We’ve been a non-hourly fee firm for almost 10 years.  Our practice is complex commercial litigation and related areas of litigation. It was a wild ride for the first several years of our transformation.  When hourly billing is part of your DNA, you need to undergo surgery to alter your DNA. It is hard to overstate how hard it is for billable hour lawyers to make the transformation to being alternative fee lawyers.  There are so many areas where your view of the world needs to change.  Dramatically change.  If the firms want to get the maximum profit out of fixed fee engagements, they will need to change the way they handle matters, account for matters, determine value of lawyers and others, compensate partners and associates, and more. They need to learn how to litigate “skinny.” How to assess outcomes with less than perfect information.  To advise clients when less is more.  These things reduce the path to output. Clients, in turn, need to push firms to make these changes so they get more than billable hour fees using a different name.

It will be interesting to see if firms and clients go to school to learn the changes and create systems to be sure they are making these dramatic changes, or if they adopt a learn as they go approach.  The latter is a path to needless pain and waste. But the payoff can be great. For firms, high profit margins are a great thing.  For clients, the financial benefits and predictability are great, but the real payoff is in results.  As the Law 360 article noted,

“Most large companies are reporting that they’re getting better outcomes,” Rynowecer said. “They’re finding that one of the big benefits of AFAs is that it requires more discipline and planning than [billable hours], and it requires highlighting strategic goals earlier for clients.”

Better outcomes are a wonderful thing.  But the investment in them is a wild ride.  Here’s hoping clients and firms take advantage of the the lessons painfully learned by others who carved the trail.

Nicole Auerbach honored as one of Chicago’s most influential women lawyers

Posted in Commentary, People, Places and Blawgs, Uncategorized

Kudos to our very own Nicole Auerbach, who was recognized by Crain’s Chicago Business as one of Chicago’s Most Influential Women Lawyers.  Here is how Crain’s summarized Nicole:

After concluding that the billable hour model for pricing legal services needed to change, Nicole Nehama Auerbach helped form Valorem Law Group in 2008 to give clients an alternative. Valorem went from being one of the few firms created to provide alternative fee arrangements (AFAs) for commercial litigation, to being named one of the 22 Firms Best at Delivering AFAs by BTI Consulting in 2017 (along with such powerhouse firms as Kirkland & Ellis, Morgan Lewis and Seyfarth Shaw). Auerbach is a frequent speaker and writer on topics related to AFAs, innovation and the impact of the billable hour on women and minorities. In addition to her role as a thought leader on AFAs, Auerbach has had a notable year representing clients. In April, she obtained a $13.4 million verdict in federal court against the City of Chicago and six Chicago police officers for violating the civil rights of a client (Patrick v. City of Chicago, et al.). She is also the co-founder and current national board chair of the Coalition of Women’s Initiatives in Law.

And here’s what her Valorem colleagues thought of this honor:

 

 

 

 

 

 

 

 

 

 

 

 

We’re glad the rest of Chicago is learning what we’ve known for a while.

The importance of understanding context.

Posted in Commentary

Jeff Carr sent me a link to a post by Richard Smith of Sydney, Australia.  I don’t know Mr. Smith.  He is a “business development expert with over 20 years’ experience.” He works to develop and implement “successful business strategies for leading professional services firms; including working closely with stakeholders to maximise revenue potential from existing and targeted clients.” He recently wrote a commentary on an article by Firoz Dattu and Dan Currell of AdvanceLaw. I do know Firoz and Dan, both highly respected members of the legal service community.  I hope my acquaintance with them does not color this post, but perhaps its does. The Advance law post that leads to this article is here.

Richard Smith takes issue with this paragraph in the Advance Law article:

Third, flat fees. A natural question about flat fees or other alternatives to the billable hour is whether they are cheaper. You now know that we think this is a half-question (and not the interesting half). The whole question is: do alternative fees work better, all things considered?

Mr. Smith responds with this:

Let’s look at that third question again with highlights by me:

“A natural question about flat fees or other alternatives to the billable hour is whether they are cheaper.”

Actually, that’s a very, very long way from the natural question.

But then we get…:

“The whole question is: do alternative fees work better, all things considered?”

And while that question may seem a lot closer to the answer we seek, it is still – well – the wrong question.

Flat fees, or other alternatives to the billable hour, should not be about whether they are cheaper. In many cases they are more expensive.

Nor, per se, are they about whether they work better (and by that i am unfairly reading “easier”). In some cases they are far more complicated and getting them to work is a real art of communication (that is, if you have scoped the matter and given appropriate thought to LPM, etc).

But, crucially, what alternatives to the billable hour should be about is simple: ‘Do they offer better value?’; To the client? And to the lawyer?

And if they don’t, the simple truth is this: maybe you shouldn’t be using them.

It seems as if Mr. Smith ignores the fact that the AdvanceLaw team is writing about questions presented by data they have accumulated from their clients.  Of course it is interesting to know if flat fees have proven to be cheaper that hourly fees for similar work. Is Mr. Smith really suggesting we should not examine relevant data?  And then, even though the AdvanceLaw authors make it clear that there is a more important question that simply the comparison of fee totals, Mr. Smith quarrels further, leading to the conclusion that AFAs have to provide better value to clients and to the lawyer, or they shouldn’t be used.

Having been using AFAs for nearly 10 years, AFAs can provide great value to lawyers, but only if they change the way they do their work.  The old way is burdened with fat and excess, and it is why clients grew so frustrated with the billable hour.  Second, firms need to decide if customer service is a core value of the firm.  If it is, you find out what is of value to your clients and you figure out how to provide it.  It is an exceptionally rare matter in which, over the duration of a matter, an AFA cannot be used.  The challenge must be to carefully and precisely identify the client’s objectives. Once that is done, a fee to incentivize the accomplishment of those objectives is possible.

Forgive this rant–it is unfair to take a point made in one context and criticize it for not addressing points that are not in the context you want.

There is more to being innovative than simply deciding to be innovative.

Posted in Commentary, General

I was just having a conversation with a passing acquaintance, who runs a mid-size law firm.  He told me the firm had decided to be innovative, in the sense of saying “starting next Tuesday, we will be innovative.”  I hope I kept my smile inward.

Innovation is not something you simply flip a switch to turn on.  It is hard work, and there is no simple recipe for “doing” innovation.

I am a firm believer that every law firm should have an innovation lab, where the right people, in the right environment, with the right objectives, can undertake the work needed to become innovative.  A good starting point would be to debrief as many acknowledged innovators as possible so you can develop a working list of characteristics, tools, processes and kickstarters.  What are the things that make innovators innovative?

Research.  Learn. And then do the hard work.

If you are not using checklists, what are you waiting for?

Posted in Commentary

Before leaving for the Amazon, Nicole left an article for me from the Illinois Bar Journal, The Checklist Manifesto for Lawyers. It discusses Atul Gawande‘s incredible book, The Checklist ManifestoThe IBJ article is not special, but Gawande’s book is a must read.  Many years ago, I bought copies for everyone in Valorem and we became disciples.  When I wrote Still thinking: More things I think I think in 2014, I lauded checklists and Gawande’s book.  Nicole’s note to me was “They are only a few years behind!”  It surprised me that in this day and age, when efficiency is become so important and firms need to lower they cost of production on matters being handled on fixed fees, firms still have not enthusiastically embraced the power of checklists and that it was worthy of an article to mention them.

Actually, it doesn’t surprise me.  But it does baffle me how these firms continue to operate.

Valorem recognized as Leading Core Firm and Leading Recommended Firm for Manufacturing Industry

Posted in Commentary, General

I am honored to report that “Clients recognize Valorem Law Group for its unparalleled client relationships in the brand new BTI Industry Power Rankings 2017: The Law Firms with the Best Client Relationships in 18 Industries.”  Specifically, “clients rank Valorem Law Group a Leading Core Firm for the Manufacturing Industry, among the top 15% of all law firms,” and “clients also rank Valorem Law Group a Leading Recommended Firm for the Manufacturing industry, in the top 10% of all law firm.

BTI’s report is “based soley on direct, unprompted feedback from over 950 top legal decision makers” at major US and global businesses.

Needless to say, we are deeply appreciative of our clients’ continued support.

Space can make you more creative

Posted in Commentary, General

Not outer space.  No, the point is that the space you meet in, the space you operate in, or the space you interact with people in can make you more creative.  Everyone has been to a conference in a hotel ballroom, right.  Mind-numbing. Plain.  Boring.  The space sucks the very life out of you.  We at Valorem believe space matters.  That’s why we have always had a devoted collaboration space–whiteboards, chairs but no table, stuff to throw at each other.  An environment to make you think better.

Yesterday, Nicole and I spent the day with Matt Homann of Filament.  Matt is a victim of “idea surplus disorder.”  A couple of hours with Matt gives you a notebook full of things to think about, to dream about.  Matt, like us, recognizes that the right space makes the event, the meeting, the brainstorming session.  And he knew that such spaces are rare.  So he created one.  It is the best meeting space I have ever been in.  My words cannot do justice to the space.  Take a look.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The space is in St. Louis.  Believe me it IS worth the trip if ideas matter to you.

A real live mythical creature speaks about alternative fees

Posted in Commentary

Utah Business recently published Industry Outlook: Legal, which featured a question about alternative fees.  It appears that Utah is an hourly billing utopia, immune to much of the turmoil firms face in the rest of the country.  This quote, from Darren Reid of Holland & Hart, struck me:

As a litigator, I can tell you that the billable hour is alive and well. We hear about these mythical beasts, these boutique firms that are doing all of these amazing things. They advertise in all of the national magazines and things. I don’t know how they do it. They clearly have different cases than the ones I’m working on. But I can tell you that I’m not putting food on the table unless I’m billing hours. That’s what our clients generally expect. At the margins, maybe there’s some room for innovation. But usually that’s maybe in the patent world or some other kind of niche practice. But as bread and butter commercial litigators, the billable hours drives the engine.

I’ve never been called a mythical beast before, though I have to confess I have been called just a plain old ordinary beast on occassion.  I take exception to the assertion that “they advertise in all of the national magazines.”  Valorem has never run an ad, let alone in a national magazine.  I am not sure of whom Mr. Reid speaks.  I was struck by the “I don’t know how they do it” line.  How, in this day and age, could a partner in any law firm, let alone one as prominent as Holland & Hart, not have insight into what clients demand and how law firms are being forced to respond.  It makes me wonder if Holland & Hart has developed some special formula to keep its realization rates from falling year over year, as has been the case for most law large law firms.  But regardless, if a firm wants to improve, to remain competitive, how can its partners not know these things.

In case there are people from Utah that read this, I just want to make clear that there are a growing number of law firms that do complex litigation of every stripe and variety using alternative fees.  We’re real, not mythical.  We embrace change and innovation not just because clients want us to, but because we need to be better at what we do every day to maintain client relationships.

When it comes to change, there are two categories of people–those who shape it and those who fall behind.

The gap between claimed client service and the truth.

Posted in Client Service

Seth Godin just posted Four Ways to Improve Customer ServiceAs always, Seth’s insights are insightful and thought-provoking.  The four ways are:

  1. Delegate it to your customers. Let them give feedback, good and bad, early and often.
  2. Delegate it to your managers. Build in close monitoring, training and feedback. Have them walk the floor, co-creating with their teams.
  3. Use technology. Monitor digital footprints, sales per square foot, visible customer actions.
  4. Create a culture where peers inspire peers, in which each employee acts like a leader, pushing the culture forward. People like us do things like this. People like us, care.

I think if law firms were self-critical, most would evaluate themselves as failing in each of these categories.  And since many of these firms profess (well, at least say it on their website) to be “client-focused” or something akin, one can only wonder about the gap between what is professed and the truth.