August 2007

I have spent more than a little time writing about high hourly rates and the hourly rate economic model.  I have spent very little time writing about timekeeping policies.  But I was fascinated to read the policies of several firms that were published at Above the Law, a blog that "provides news and gossip about the profession’s most colorful personalities and powerful institutions, as well as original commentary on breaking legal developments."  One post is about Fried Frank’s policy–here–and the other–here–is about Bingham.  Be sure and read the comments.

One of the most interesting comments is from Grasshopper (sorry, I’m having a flashback to Kung Fu, the old TV series): 

Daily time entry is a good thing. I defy anybody to maintain good accounting of what they did day to day and then record their time at the end of the week or month. Daily time entry is good business hygiene. You do right by the client and right by the firm.

Well, you certainly do right by the firm.  But Grasshopper makes a good point–people can’t remember what they did several days or weeks ago, or for how long.  They have to guess.  But the real irony is about yesterday–recording time in tenths of an hour (six minute segments) but doing so a day later.  Imagine the daily internal conversation: "Hmmmm, was it an hour and six minutes or twelve?  How much of that time was spent while I was looking at new YouTube videos?  Oh well, I’ll bill 1.2 hours."  At several hundred dollars an hour, pretty soon those rounding errors start to add up.  And lest people think that the errors rounding up are offset by the errors rounding down, my guess is that there are few errors on the downward side.  Be serious–given the pressure reflected in these memos, who really thinks people forget hours.  Obsession about recording hours is going to be reflected in rounding errors that give "the man" what he’s looking for.

Was just perusing a new blog I’ve started to follow, 800ceoread, and saw the post title "You Can’t Win A Fight With Your Client."  The post is about a book by the same title, authored by Tom Markert, who also penned the book, "You Can’t Win A Fight With Your Boss."  Both seem sensible if not self-evident.  I haven’t yet read the book (but have ordered and will provide a review next week), but here are some of the rules:

Rule 10: Be a Client Advocate
Rule 28: Speak the Truth
Rule 36: Find Ways to Make Their Lives Easier

Rule 46 was quoted in greater length: 

Roll Up Your Sleeves.

There is no work that is beneath anyone. If a project needs to get done for a client and there is no one at the right level to do it, then roll up your sleeves and tackle it yourself. Jumping in on a project or task that is not yours demonstrates leadership and commitment.

Your staff will see you doing it and will take in a valuable lesson. And of course the client will have a better experience with the company because the work got done. Everyone comes up a winner.

More to come next week.

Very powerful post by my good friend Gerry Riskin in his great blog, Amazing Firms, Amazing Practices.    The post, Doom and Gloom for the legal profession–it’s coming, contains Gerry’s prediction that “our legal profession is in for very rough times.”  Gerry is very much a “glass-half-full” person, so reaching this conclusion in spite of his optimistic nature, should cause every one to take a deep breath and spend time contemplating Gerry’s post and suggestions.

I am left with this question for my friend:  what are the things you see that give rise to your concern?  And are they tied to the next U.S. election or is that merely a benchmark for when you think the problems will be apparent?

UPDATE:  Gerry Riskin responds:

Patrick Lamb posted the following comment both here and on his own popular blog: In Search of Perfect Client Service in his post: Gerry Riskin’s Forecast: Stormy Times Ahead.

I think he deserves a response:

Patrick’s comment/question:    Gerry–very powerful post.  Not one that I disagree with at all, but can you share with us the signs you see that lead you to this conclusion?  And are the elections tied to result or simply a benchmark for the time by which you think the changes will be apparent?  Ciao.

My response:  The US election is a process that sees powerful interest groups exercising their discretion in a manner which will increase the probability of their preferred candidate(s) being elected.  As a result, a temporary and indeed unsustainable economic climate may be manifested.   I think things get very real about six months after US presidential elections.  With outcomes certain, interest groups lose their motivation in a hurry – at least for a while.   As for the indicators themselves, I am afraid to start because where do I finish?  However, here are some things to examine:

Currency fluctuations
Price of oil
Price of precious metals
Increase and decrease in “real” jobs
Geographic location of those jobs
Political stability of job locations
Foreign relations as they affect business
Balance of Trade between countries and regions
Housing markets (not just prices – but demand)
Auto market (demand)
Credit levels (or should I say “debt levels”)
Interest rates (they are not falling, in fact, get ready…)
The advent of the largely unregulated Hedge Fund industry
The establishment pensions that invest in Hedge Funds
The Domino effect – how one indicator impacts many others

And specific to the legal profession:

The disparity between views of General Counsel and Outside Law Firms
Associate starting salaries (and consequential impact on all salaries)
“De-equitization of partners” trend
“Law firms going public” (anticipated) trend
The obsession by partners on remuneration
The expectation of continued increasing revenues, PPP and PPL
The surrealism of the financial expectations of new lawyers
Comments from Citigroup’s law firm market specialists

Disclaimer:  Yes, I obtained a business degree before law and yes I studied economics and yes I subscribe to reliable publications like The Economist but I do not profess to be able to predict the stock market or future currency fluctuations.  In fact, I will admit that my post is based to a large extent on a hunch – intuition (I read Blink by Malcolm Gladwell so maybe this is OK).

Punchline:  If there were a fund that invested in the legal profession worldwide (at least in the western world) I am not a buyer – I might even summon the courage to put some money at risk by “selling short”.

In closing, perhaps not you, Patrick but there are many who will think I am completely wrong – I not only respect their right to hold that view, I hope that their view prevails.  I post this because if there I seven a significant possibility I am right, as stated in my original post:  “My message to Managing Partners is not to become pessimistic but simply to have a contingency plan in place.”

Many thanks, Gerry, for such a detailed and thoughtful response.

   A friend of mine passed along this quote from Scott Turow (apparently from a recent ABA Journal article);

     "One reason that dollars times hours continues to prevail is because its hard to devise a fair alternative.  Columbus setting out from Spain, destined, in some minds, to sail off the end of the Earth, probably had a better idea what he was headed for that either a lawyer or a client at the inception of a piece of litigation."

Turow, a former federal prosecutor and now a partner at Sonnenschein, is the well-known author of such classics as One L, The Burden of Proof and Reversible Errors.  He makes a good point–we spend a lot of time talking about the problem with the hourly rate system, but preciously little time talking about solutions other than abstractly.  Part of the problem is context.  It is hard to talk specifically about alternatives not tied in some fashion to the billable hour without a specific lawsuit to use as a point of reference.  I think the dialog would benefit greatly from a focus on specific case studies.

For example, in talking about "value billing" as it relates to a single lawsuit, how does one determine the value to the client?  I am guessing that most clients would begin by guessing the cost to litigate the issue using an hourly rate system and then look at how things stack up to that option.  But I invite people like Ron Baker and others more schooled in this than I am to provide case studies so that we can enhance the dialog on solutions.   Staying with the Columbus metaphor, perhaps we can then compare the solutions to how the crew must  have felt when they landed on one of the Bahama islands.