Fred Bartlit Spices Up Legal On Ramp Discussions On Hourly Rates and Big Firms
Before founding Bartlit Beck in 1992, Fred Bartlit was "the man" at Kirkland & Ellis. As big and impressive as K&E is now, it was that and more when Fred was there. His departure to set up Bartlit Beck was big news. Few have seen big firms, big clients and small firms and big clients as up close and personally as has Fred Bartlit. So when he shares his insights on the thinking of big firms, the concerns clients have and on pricing for trial work, he's worth listening to--closely.
I've written before (here, for example) about Legal On Ramp. I wrote more about it when Fred Bartlit joined LOR. Since joining, Fred has been a frequent contributor in several outstanding discussions about the practice of law. You need to be a member of LOR or join to get the full discussions, but I wanted to share some of his input:
Two decades ago I had an epiphany.
It dawned on me that the litigation market was an anomaly. All other markets drive competing business models. Dell and HP, for example.
But the litigation market, rather than being the driver of many different business models, was driven by, was both the creation and captive of a single business model: the "billable hour"
It seemed at the time obvious that there were alternative models which would much better serve the interests of both clients and trial lawyer. So, 16 years ago my partners and I started a law firm devoted to a superior business model.
We thought at the time that the advantages for both lawyers and clients were so dramatic that new models, including ours, would soon overwhelm the billable hour model.
We were wrong. We forgot the basic rule of paradigm shifts: "those who have done best under the old, wrong, paradigms are the last to see the need to change"
So, 5-6 years ago I gave up preaching our new model.
Now, with economic crisis, there are powerful new forces for change. As Rahm Emmanuel said "a crisis is a bad thing to waste". Drucker's great book on innovation points out that much innovation over the years has been driven by major outside forces impacting a market and making the need for innovation much more striking and evident.
For these reasons, I have determined to use Legal On Ramp to restate the premises as we first saw them 20 years ago and have continued to drive our law firm.
Right away, you know you're getting a chance to hear some things that are based on meaningful experience and that Fred hasn't addressed publicly for a while. Elsewhere, he says:
3. Why do I say "no metrics" - because in almost any market of such huge size, competitors would have detailed metrics on the costs to them of every task under the son. Almost NO ONE knows what tasks should cost done right. I usually ask meetings of General Counsel and other inside lawyers "what should it cost to prepare for and take the deposition of an economic expert in a 100million antitrust case", I get answers ranging from "$30,000 to $500,000 in the same room"
So, to me, we have a dramatically atypical situation facing us: a huge market that is not competitive, that does not foster innovation in business processes, and has NO useful metrics for comparing efficiencies of different competitors or calculating roughly what various aspects of litigation SHOULD cost.
and then:
Dead bang right. 18 years ago it finally dawned on me that, for example, 3 highly experienced partners will always do a much higher quality job than 20 associates, 4 junior partners, chief trial lawyer, etc WHY? Because it makes no sense to have people preparing a case for trial who have never seen a trial. Such novices will always waste huge $$$ doing "projects" that will never see light of day at trial or change anything. Likewise, a 3 person team of great trial experience means that knowledge is concentrated, not fragmented. It does no good if someone in the back of the courtroom knows the answer; the person on her feet must know it.
So, my ideal law firm is 55 partners, maybe 2-3 associate novices in training/mentoring. And, many of our biggest cases (we do almost nothing under $100 million at risk) are handled by 3 lawyers, all of whom have lst chair jury experience, and NO associates.
These are just tastes, appetizers really, to a main course discussion that is extraordinarily provocative. Agree with Fred or not, if you read the discussion, your brain will be engaged. And that is always a good thing.
