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In Search of Perfect Client Service

Why lawyers don't seem to get it

Great insights on patchwork mentors

Posted in People, Places and Blawgs

The latest insight from my partner, Nicole Auerbach, in her monthly feature, Insights From The Corner Office (even though she voluntarily gave up her corner office for more windows and a better view):

It is commonly held that people with mentors progress faster and are more satisfied with their careers than those without mentors.  It will probably come as no surprise to learn that women are less likely to be mentored in the work place than men. Perhaps this is because people are inherently drawn to those who remind them of themselves, and men still hold the majority of positions that would lend themselves to being a “mentor.” Couple that with the often-unspoken issues that can arise when a more-senior man spends one-on-one time with a younger woman, and we can see why many women may never have what they would call a “true” mentor. Does that mean upward mobility is impossible? Not at all.

There is no reason why there can’t be a conglomeration of people who end up serving as mentors. In fact, if we acknowledge that one person rarely exhibits all of the traits that we most want to emulate, the idea of a patchwork mentor becomes that much more appealing. Looking back, that’s exactly what I had.

Read the rest of Nicole’s post at The Legal Balance.  You can also catch her wit and wisdom in her periodic tweets, @ValoremNic.

 

PS–She’s right!

Nicole Auerbach and lessons from a middle office with a view

Posted in Uncategorized

My partner Nicole Auerbach, proud owner of a middle office, recounts the lessons learned when she voluntarily gave up her corner office, and also those from some other risks she’s taken along the way.  This is her story, as first posted in The Legal Balance.

A Middle Office with a View

BY NICOLE NEHAMA AUERBACH

I am honored to have been asked to write this monthly column, “Insights from the Corner Office” for the relaunch of The Legal Balance, but full disclosure is in order: I don’t have a corner office. Idid have a corner office, but a middle office opened up that had two great windows, including one with a view of Buckingham Fountain.

So I moved.

There was a risk that people might perceive me as less powerful without my corner office, but truthfully, I couldn’t be happier.

My office move dovetails well with The Legal Balance’s theme for this month—risk taking. As I’ve gotten older (I just celebrated another birthday; they seem to speed up as we age) I’ve realized that so many things we learned growing up—“Don’t talk about yourself or your accomplishments; that’s unbecoming,” or “Good things will happen to those who wait”—were probably good advice … during the era of Jane Austen. But in today’s world, while good things sometimes do happen to those who wait, they happen a lot quicker for those who aren’t standing around hoping the stars and the moon will align. And truthfully, while it would be nice if our accomplishments were automatically emblazoned on big lapel buttons so we wouldn’t have to brag, it’s clear that’s not happening, either. Instead, getting ahead requires some action and, also, a willingness to take risks.

The biggest risk I have taken in my career is, without question, the one that has delivered the most reward. In 2008, I decided (after a lot of hand wringing and soul searching) to leave my comfortable partnership position at the large firm where I had practiced for nearly 15 years to start a new firm with new partners and a new model, handling litigation using alternative-fee arrangements. There is no question that the anxiety associated with this move was huge, but so was the amount of excitement and the energy we had in launching Valorem.  While I know that hindsight is 20/20, if you had asked me just a few weeks into the endeavor—at a time when I didn’t know if we’d be around in five months, let alone five years—I would have said that the risk was well worth taking because it gave me affirmative control over my destiny. That’s a hard lesson to learn, because a lot of risks don’t pan out in the end. But I think that lawyers, and often women because of the way we were raised, tend to miss great opportunities because they are risk-averse and simply afraid to fail.

Having control over your own destiny is often the key to being happier and more satisfied with your career. But if you’re doing something because you chose to do it, that is exponentially more rewarding than doing something simply because it’s part of some master plan that you think society has made for you.

And don’t forget: Risk comes in a lot of different sizes, so if you are ultra-conservative, start with a small one—a risk that will make absolutely no difference if it doesn’t go well. Then try to build up to larger ones that may ultimately shape your destiny. Who knows—someday, you may end up in the middle office with the good view.

Or, if you prefer, the corner office.

Nicole Nehama Auerbach’s office isn’t in the corner, but it’s still nice. Nicole is a founding member ofValorem Law Group, a litigation firm solving its clients’ issues using alternative-fee arrangements. She also co-founded the Coalition of Women’s Initiatives in Law.

Hugely successful GC on the role of Value Fees in highly successful law departments

Posted in Uncategorized

Ken Grady

With his permission, I want to share with you a note I received from Ken Grady, the former General Counsel of Wolverine World Wide, Inc. and architect of the astonishingly successful Wolverine law department and its accomplishments in recent years.  The topic I was discussing with Ken and others was whether Value Based Fees alone were enough to help law departments become high achievement groups. The discussion was part of our preparation for the most recent session of the Association of Corporate Counsel’s superbly designed Legal Services Management program.  Ken’s perspective as a General Counsel who went through the change process is so valuable.  I hope you find his insights as valuable as I do.

I think we are seeing in many ways that VBB alone is not going to carry the day.  If the law firm provides services the exact same way under a VBB arrangement as it does under a billable hour arrangement, nothing has changed – as Pat says, there is no risk sharing.  GC’s complain that law firms aren’t presenting them with really viable VBB options, so they default to billable hour – discounted fees.  Law firms complain that when they present VBBs, clients won’t do them and default to billable hour – discounted fees.  This is true even at the firms that are leading the way in doing VBB and implementing PM and other changes.

Distributed change – redoing the corporate legal world where no one firm or company has the power to force through change – is more difficult than changing a single company (obviously).  In the absence of a killer app or service that drives the change, it will be slow, uneven and lack clear direction.  This isn’t new, it is the same thing that has happened in other industries at other times.  It is new in the legal industry, and it is remarkable in the legal industry because it is so visible for an industry that considers one or two major changes every 100 years to be fast enough.

All of the tools and techniques we teach will help in the short term, but the tipping point – the real moment for change – will happen when someone shows that using model “X” results in meaningful change at such a level that there is no going back.  [Excuse the self-promotion] In the last five years, while our company has grown revenue by 60%, the Legal Department has reduced legal spending from that 5-year old starting point by 12%.  We are spending 12% less than we did five years ago to support a company with several new product lines, expanded geography, etc., etc. that is 60% larger and significantly more complex.  We did it by combining the tools and techniques we teach.  But, the real tipping point would have been if we had cut our legal spending by 50%.

With a few notable exceptions, major law firms are not going to try to reinvent their profit model (assuming they have the wisdom to know how) to help clients cut costs by 50% while allowing the law firm to continue generating revenues and profits as it has done in the past.  Since clients aren’t pushing, most competitors aren’t doing it, and there is tremendous risk in trying to do it – why bother?  The disrupters will be (as they mostly are) start ups who have nothing vested to lose and who can try new models while adaptively changing fairly quickly.

On the client side, those disrupters so far simply don’t have the geographic, subject area and expertise scope to do what we need in a broad enough way to meet the 50% reduction challenge.  They tend to be grouped around litigation (U.S.), small localized transactions, and volume/repetitive work.  While there is some market for that work, larger companies need the broader universe and scale to really drive down spending (versus moderating its growth and achieving efficiencies in spending).

A Thousand Dollars Per Hour: Wrong Focus

Posted in Commentary, Hourly Rates and Alternatives

The Wall Street Journal recently reported on the increasing number of BigLaw partners charging more than $1000 per hour. My thoughts on hourly billing are well know, but the criticism of these rates as excessive misses the point entirely.  An hour of work from a lawyer billing at this level may well provide far greater than $1000 of value.  The point isn’t simply the number of dollars per hour.  It is about the use of time as a surrogate for value.  A minute of time to avoid a lawsuit is worth millions whereas millions spent defending a lawsuit only to settle at a high number may contribute nothing of value.  And a smart client should be willing to pay much more than a minute’s worth of time for the great advice, but at the same time find it unnecessary to pay for time that yields not value to the outcome.

Focus on what’s important.

BigLaw tries to sell the Brooklyn bridge

Posted in Commentary

Just ran across an article in Today’s General Counsel on choosing between litigation and arbitration.  There are many factors that go into a decision to pursue one or the other, but this paragraph caught my eye:

Moreover, the inability to obtain full discovery can be considered a cost, not a benefit of arbitration.  While it may be true that eliminating or severely restricting discovery can shorten the time it takes to final resolution of a dispute, doing so actually negates one of the primary purposes of alternate dispute resolution; facilitating expedient settlements.  Robust discovery provides each party with the opportunity to learn the true strengths and weaknesses of the other side’s case, which in turn permits both sides to take better and more reasoned settlement positions.  Because settlement is often the most efficient way to reduce costs, the lack of discovery  can actually hamper the dispute resolution process by adding unnecessary time and expense.

Excuse me?  Quite apart from the absence of any data to support the conclusions, the reason is dubious at best.  Let’s parse the paragraph.  The statements that appear in red are my commentary.

Moreover, the inability to obtain full discovery can be considered a cost, not a benefit of arbitration.  [So one benefit of arbitration most parties desire --less discovery--is a cost.  Hmm, other than privacy, why would anyone actually want to arbitrate anything?]  While it may be true that eliminating or severely restricting discovery can shorten the time it takes to final resolution of a dispute, doing so actually negates one of the primary purposes of alternate dispute resolution; facilitating expedient settlements.[The premise of this statement is that the parties must have full and complete discovery to assess their risk.  No trial lawyer believes this and I have not found a single client in 30 years who actually prefers to wait until discovery is complete before evaluating settlement. So if there is less discovery in arbitration, do parties just not settle?  No data suggests that is the case.]  Robust discovery provides each party with the opportunity to learn the true strengths and weaknesses of the other side’s case, which in turn permits both sides to take better and more reasoned settlement positions. [The assumption that a lawyer cannot assess the strengths and weaknesses of a case without "robust" (read, "really, really expensive") discovery" is simply untrue, as is the implication that business objectives do not greatly influence many if not most settlements.]   Because settlement is often the most efficient way to reduce costs, the lack of discovery  can actually hamper the dispute resolution process by adding unnecessary time and expense. [This statement is just absurd.  Clients know from decades of experience that settlements after discovery almost always raise their overall costs.  Legal fees are obviously higher and many times the settlement position worsens as both bad information becomes known and the other side's investment in the case escalates.  This is precisely why virtually every sophisticated litigant places a premium on early case assessment--trying to identify opportunities to assess and settle the case before the expense escalates.]

I don’t know the authors of the article, but the positions they espouse in the article seem to benefit only the law firm’s pocketbook.

Go West, young man. Okay, so we did!

Posted in Commentary, General, People, Places and Blawgs

Dave Bohrer signing paperwork to join Valorem

At the chime of the midnight bell on April 1st, Valorem now has on office in Silicon Valley.  We are so pleased to announce that David Bohrer has merged his Confluence Law Partners practice into Valorem.  Dave’s addition gives us a powerful patent litigation presence on the West Coast as well as a disciple of the gospel of value-based fee arrangements.  Many readers of this blog will recognize Dave from his FlatFeeIPblog or his tweets (@DBohrer).  Dave is an accomplished patent trial lawyer, and will be working with Marty Lefevour and Manotti Jenkins, patent litigators in our Chicago office, giving us a robust patent trial presence.

Here is our press release. Valorem-Confluence press release 3 -2013

Simple questions a client can ask to expose dirty little secrets

Posted in Client Service, Commentary, Hourly Rates and Alternatives

Everyone claims to offer fee structures that are alternatives to the billable hour.  Frequently, these “alternatives” are nothing more than estimated hours x hourly rates, plus “a little cushion.” So clients should ask:

1.  How did you determine your alternative fee?  What metrics did you examine?  What factors did you consider?  What experience did you draw on?  Can I see your worksheet?

If the lawyer mentions hours, that have provided only a surrogate hourly rate number.  But its locked in.  Early settlement?  Client loses.  Case goes the distance?  Law firm covered.  That is not risk sharing under any definition.

Everyone knows that those who are serious about alternative fees have learned to handle things differently?  Legal Project Management.  Lean Six Sigma.  Project Management.  Process Mapping.  Those words mean something to those truly committed to alternatives because these are among the things that drive the cost of production down (and hence increase profit margins).

2.  How do you handle cases differently under the alternative fee you quoted than you would if you were billing by the hour?

If the answer is “we don’t,” they you need to ask “how are you doing things differently now than you were three years ago?  Be specific.”  The questions should elicit some specific response—changed staffing, great risk-taking, more partner involvement at the front end–something to show the manner of handling has changed significantly.

If the answer is that there is a difference in how the cases are handled, ask if the changes are designed to improve the firm’s efficiency and reduce the cost of handling the matter.  The answer must be yes or the firm is too stupid to let them work for you .  Once they answer yes, ask why they are doing those things when it benefits them (lower cost equal higher profit margin) but not when it would benefit you (cost plus billing)?  There is no acceptable answer.

Everyone knows there is a huge amount of fat built into litigation, particularly in the process pieces of litigation.  So clients should ask:

3.  What is your disaggregation strategy, and why?

If there is no disaggregation strategy, the firm hasn’t eliminated the fat.  It’s just that simple.  The best answer, in my view, will be that document review (not just first level review, but all review right up until partners lay hands on the documents) should be outsourced.  There are professional reviewers who do more, at a higher quality and provide more useful work product, than any law firm could consider, for a fraction of the cost.  The cost difference is quantifiable.  And the difference is money in your (the client’s) pocket.

Ask the questions.  Don’t accept the standard lawyer pablum as an answer.

The Premise of Pricing

Posted in Commentary, Hourly Rates and Alternatives

I am frequently asked how I go about pricing the handling of a lawsuit.  I am always tempted to answer with the old line, “I could tell you but then I’d have to kill you.” My real answer goes something like this:  “Before talking about how, you need to know why.  Why is it that your client wants a fixed fee (or some other alternative to the billable hour) and why do want to offer it?”  The latter question frequently draws the “I want the business” answer, which in my view is utterly unsatisfactory.  It reflects a lack of recognition that AFA pricing is as much about how you do the work, how you approach problems and how you relate to your clients as it is about the dollars you receive.

Here is what I believe.  The money the clients spend on piece of litigation belongs to the client, not me.  I have never had a client with unlimited resources, so I assume there are other ways the client could spend the money it is considering spending on the lawsuit or dispute.  It could buy a machine, it could acquire a business.  You get the picture.  Those other investments all have projected returns.  Why shouldn’t the defense of the lawsuit?  The corollary to this is that the client has a right to chose how and how not to spend its money.  If I incur fees the client has not approved, I am taking this right away from the client.  Who the hell am I (or any lawyer for that matter) to do so?  Most AFAs (and budgets “with teeth”) are designed to address these two premises.  Once you have the why, the how, while not easy, is not as hard as it otherwise is.

Another example of “just not getting it”

Posted in Client Service, Commentary

The prior post contains a link to a story discussing one of Disney’s key philosophies–”It’s not my fault, but it is my problem.”  When a park patron shares a problem with a Disney employee, it doesn’t matter that the employee had nothing to do with the problem or that it’s “outside their jurisdiction.” The employee is trained to “own” the problem until it is solved.  In stark contrast, I saw a story in today’s Chicago Tribune about American Airlines once again missing an opportunity to convert a problem into amazing customer service, similar to my own recent experience with the airline.  “Service” programs that are designed to kick the can down the road (“you’ll have to deal with it at the airport”) are a waste–they do nothing but tick off the customer.  How much easier would it be for an airline to fix the problem rather than suffer attack on Twitter or a major story about what jackasses they are in a major (well, the Tribune used to be) Sunday newspaper?

Customer service is not something you claim to do.  It is something that is part of your (whether a person or a company) DNA.  It is clearly not part of American Airlines’ DNA.