July 2008

I am a huge fan of Tom Peters.  Not a mindless disciple, mind you, but he is provocative in the best way.  He makes me think.

Tom’s recent rant about the healthcare system is worth reading, but in your mind, substitute the word "legal" for "healthcare."  Pretty ugly, isn’t it?

As with customer-care and people practices, we have the wherewithal within to make Giant Performance Leaps. So when will we do so with the Total Determination the issue demands?

Tom Peters/The U.S. Healthcare14

U.S. Life expectancy rank: #45.
WHO, overall American healthcare system performance: #37 (#1 in cost).

Access: Denied to 10s of millions un/underinsured.
Unnecessary annual health-system deaths: 200,000-400,000 or more.*
Performance/top med centers: Problematic re quality of care and follow-up.*
Over-treatment (meds, tests, procedures): Pandemic.*
Use of hard evidence in medical decision-making: Spotty at best.*
Collection of evidence based on reported treatment errors: Low.*
Use of S.O.P.s in treatment regimes: Spotty.*
Incentives for appropriate care: Low.*
Incentives for inappropriate care: High.*
Emphasis on prevention and wellness: Low.*
Emphasis on chronic-care: Low.*
State-of-the-art IS/IT: Rare.*

*Fixable without legislation or major societal change—e.g., can by and large be improved dramatically without some form of mandated universal access to care and in the absence of, say, a full-fledged War on Obesity. (Evidence in support of this proposition is the fact that in every category starred above there are Pockets of Excellence—hospitals and other health-service organizations, facing the same realities as their peers, that really "get it.")

I’d hate to see what he would have to say if he really focused on the law business!

I have frequently used a pair of boots to illustrate the notion of perspective.  Boots are one thing is you’re wearing a nice pair of broken in boots, quite another if you’re looking at the bottom of a boot as you’re being stepped on.  Same object, different perspectives.

This notion of perspective applies equally to trust.  As in trust between a lawyer and her or his client.  Recently, I heard some outside lawyers complain (surprisingly bitterly) that they resented their clients when they put work out to bid or interviewed a number of firms for work that their firm could have performed.  When asked to explain the reason for the resentment, it came down to bitterness over the fact that the client didn’t trust them to deliver the best value, which would have made the "competition" unnecessary.  When pressed to explain what the lawyer had done to earn the client’s trust, he responded by saying they had done nothing to lose it.

Perspective.  Is trust something you have to earn?  Or is trustworthiness something that should be assumed until evidence exists to the contrary?  From which direction do we look at this boot?

This exchange captured one of the essential differences that seems to keep inside and outside counsel from working on the same page.  One believes trust must be earned, the other believes it exists until it is lost.

Maybe because I am loathe to trust others until my trust is earned, I am not one to believe that trust should ever be presumed.   Having said that, however, there is a great line from the movie "Footloose," uttered by John Lithgow, that highlights the conundrum.  He asks a question to the effect of "how will our children ever prove themselves trustworthy unless we start to trust them?"  Still, when all is said and done, if you are retained for a matter, I believe you have all sorts of opportunities to demonstrate your trustworthiness is guarding the client’s interests in a way that furthers the client’s objectives.  So in the discussion with the lawyer I mentioned at the outset of this post, my own feeling is that if the client is bidding out work that you could do, you have failed to create a sense in the client that you provide extraordinary value–they still feel the need to look elsewhere.  Opportunity lost.

I hope raising this issue prompts some discussion.  I look forward to it. 

"I will be out of the office until Tuesday, August 19.  If your matter is urgent, please contact my assistant, Robin Hood, at 222-555-7777, or reach me on my cell phone at 222-555-9999.  Thank you."

You have a Blackberry–everybody does.  Use it.  This is the 21st Century.  We have technology that allows people to communicate from virtually any place on the planet.  You’re in a service business.  Act like it.

To really ice the cake, there are a staggering number of times when, within minutes of receiving the delightful auto-reply, I get a responsive email.  Gee, thanks for the chance to get two emails.  I really don’t get enough so you really made me feel special.

To be sure, there are places on the planet where you cannot communicate remotely.  If you go to one of those places, by all means, take advantage of the auto-reply feature.  And there are times–trials come to mind–when you will simply be unable to respond in a predictable or timely manner.  Again, feel free to use the auto-reply.  But the occasions when use of the feature is justified are very limited. 

Thank you for letting me vent.

Did you hear the one about the General Counsel who went shopping for hours? " I’ll have a dozen of the $380 hours and half a dozen of the $500 hours.  The $250 hours are looking particularly good this morning, so I’ll have twenty of those." 

Have you heard it? Neither have I, actually.  I confess, I just made it up.  Why did I do it?  To underscore a point that came to mind during a meeting I attended where I was able to listen to several in-house lawyers talk about their buying decisions.

Here’s my request of in-house lawyers.  Make a list of the most important things you would want from your lawyer if price was not a factor.  I’m not suggesting these are your list, but some potential candidates for your list might be,  results, speed of obtaining result, how much of your time the lawyer consumed, how responsive they were, anticipating your needs, and so forth.  You get the idea.

Now add price to the mix.  But it’s really the total price you’re worried about, isn’t it?  Now ask yourself this question:  How does the way I currently pay my lawyers create incentives to achieve the things I think are important?  (Be brutally honest with yourself–it’s the only way to the truth.) And if the answer is (as it will be many of you) that your method of compensating your lawyers does not create incentives for the things you believe are important, ask whether there is pricing system that would. 

Now the last question:  why are you using that system?

Suzanne Lowe of Expertise Marketplace reports here on the results of work by Patrick McKenna.  Here are three findings regarding law firms and their use of client teams:

  • 63% of all firms (of all sizes) reported having NO budget specifically allocated to support their client teams

  • Only 4% of firms (none over 500 attorneys) identified a budgetary item for satisfaction surveys, while only 6% spent any money on client research

  • For the vast majority of respondents, the main reason to form client teams was to increase their own firm’s revenues

Suzanne ends her post with tongue firmly planted in cheek:

McKenna and his co-author Michael Anderson exhibit laudable restraint in their closing comments: " . . . as our latest research here does not seem to give us comfort that enough firms have yet to understand how to make their client teams work effectively." 

Better get cracking with those next baby steps, I’d say. 

I had to chuckle at the "laudable restraint" comment.  But in my mind, it begs the question, what would happen if lawyers had to run real businesses?  Can you imagine any real business that sells goods or services not budgeting for their client teams?  Not measuring the ROI?  I can only imagine what the Jack Welches of the world think about our profession.

All that aside, though, the finding that really got me was the "we don’t give a damn about our clients, we just want to make more money" finding.  Success is a byproduct of great client service and genuine concern about the clients’ well-being, not the other way around. 

Randy Pausch died today.  I feel terribly saddened.  On the other hand, I can’t help but feel enriched by the enormous grace with which Randy led his life even as he knew death was on his doorstep.

If you haven’t yet watched it, you owe it to yourself to watch The Last Lecture.

I just came out of a meeting that included by inside and outside lawyers.  I was stunned by the lack of self-critical thinking on the part of the outside counsel.  Not that inside counsel were immune to the notion, but I was hearing a lot "we’re not the problem, it’s other firms" or "the problem is really with the clients."

Everyone is familiar with the concept of zero-based budgeting. For those who are not, this is how Wikipedia describes it:

Zero-Based Budgeting is a technique of planning and decision-making which reverses the working process of traditional budgeting. In traditional incremental budgeting, departmental managers justify only increases over the previous year budget and what has been already spent is automatically sanctioned. No reference is made to the previous level of expenditure. By contrast, in zero-based budgeting [1], every department function is reviewed comprehensively and all expenditures must be approved, rather than only increases. ZBB requires the budget request justified in complete detail by each division manager starting from the Zero-base. The Zero-base is indifferent to whether the total budget is increasing or decreasing.

It occurs to me that the same concept should guide our thinking on most any issue, certainly the major ones.  Instead of making all sorts of assumptions, we should start our thinking from scratch.  Maybe not everyday, every time, but at least once in a while.  Just think what might happen if we ever critically evaluated the premises that underlie our business models and practices.

For you GCs in the audience:  how is it possible for this to happen? How is it possible a firm can spend that much money and you don’t know the detail of what the firm is doing? On a matter of this importance, where the fee is going to be large, you would have a detailed discussion with outside counsel about what work would be done, who would be doing it and how much it would cost. And when bills suggested outside counsel wasn’t following the game plan, a discussion would ensue. I just don’t understand.

For the private practitioners out there, same story, different questions.  How is it possible you would let a client be surprised by your fees on a matter of this size and importance?  Given the scale of the document review, how could you have avoided a detailed conversation about alternative ways to approach the review, the cost of each and the quality issues involved?  I just don’t understand.

Seriously, I am not asking these questions rhetorically.  Obviously I’ve missed something in my 26 years of private practice, and since I’ve never been an inside lawyer, I am missing out on insights that experience may have provided.  I invite comments.

ADDENDUM:  Who says we lawyers are not in danger of becoming a caricature of ourselves?  From the irreverent blog, Above the Law, this take on one aspect of the suit:

Martin Rose, the Dallas lawyer representing McAfee in the fee dispute, alleges in his latest complaint that WilmerHale, which brought in East Coast lawyers to represent Goyal in a San Francisco trial, charged almost $200,000 in expenses for luxury hotel rooms, limousines and charges for room service and bar tabs. The software company described WilmerHale as "unrepentant in its greed."

C’mon, Mr. Rose, you’re a lawyer, you know better — drop the faux indignation. We’re talking Biglaw. This is how they roll.

(Seriously, for a case that went to trial, $200K in expenses does not seem unreasonable. Sometimes firms take over an entire luxury hotel in connection with a trial. Don’t expect them to stay at the Motel 6.)

In an article sure to drive Dan Hull crazy (go here for Dan’s thought on sensitively accommodating the needs of Gen-Y-ers),  The AmLaw Daily has published "Lawyers and Pros Say Flex Schedule’s Time Has Come."    Here’s the line that caught my attention:

Lawyers won’t have to be slaves to the billable hour for much longer, according to the panel of experts participating in "Flexing the Workplace," a roundtable discussion held in the New York offices of Davis Polk & Wardwell and sponsored by the National Association of Women Lawyers.

The rest of the article does not support the suggestion that the billable hour is going away.  It merely suggests that firms need to come up with career alternatives that allow employees greater flexibility than many more senior partners experienced in their youth.  But flexibility in work arrangements does not translate into the end of the billable hour.  Regrettably.

Are two heads better than one?  Four better than two?  I am sure there are exceptions, but frequently the answer is yes.

But let’s sharpen the question, shall we?  If your client has a tough problem that she wants your help to solve, will you come up with the best ideas by yourself or working with someone else?  If the latter, will your ideas be better if the person is a young associate or your most experienced partners?  When dealing with issues of strategy and tactics for pursuing complex business litigation, I think it is evident that the best ideas happen when the smartest and most experienced people brainstorm together.  An idea that survives review by that kind of group is likely to be stronger than one that is not debated or debated by younger lawyers.

If these things are true, why does such true collaboration happen so rarely?  Well, it is routine on the so-called plaintiffs side of the bar.  My partner Nicole Auerbach and I had lunch with a lawyer who is transitioning his practice from a plaintiff’s antitrust practice to a corporate litigation practice.  He regaled us with story after story of how the upper echelon of plaintiff’s lawyers collaborate on cases.  It happens because there is an enormous financial incentive for it–win and everyone makes money; lose and no one does.

But we still must confront the question, why does this kind of collaboration not happen on the "defense side" (in reality, the side representing corporate interests, whether defense or plaintiff).  Here are the reasons I’ve come up with.   First, clients don’t trust their firms to brainstorm efficiently and not use it as an excuse to over-bill.  Too many memories of three or four lawyers attending a deposition and not adding any value.  The plaintiff’s firms avoid this because they only get paid if they are successful.  Second, lack of desire to participate.  The smartest people have to worry about "their" clients and "their" matters and don’t have time for "your" clients.  The plaintiff’s firms avoid this problem because everybody has skin in the game for every client.  So, we’re left with clients not demanding it and "partners" acting like competitors (which given the way most compensations systems work is a fairly apt description).

For what its worth, we at Valorem insist on collaboration.  We’ve observed that it makes our work significantly better.  We have areas set aside for people to brainstorm.  And we do it frequently.  We avoid the problems because we don’t bill for it–we do it because we have skin in the game and want the best possible result.  And we don’t differentiate from a compensation standpoint–a rising tide raises all boats.  This is an important aspect of how we provide (we think) greater value for our clients.