June 2010

 

You start a new matter and the emails fly in. So you open a folder in Outlook for the ABC Matter. Eventually, you get around to creating some sub-folders. Six months later, an issue arises and you have this nagging thought in the back of your mind that you have seen something about that issue before. Where to start? Well, there is no specific Outlook subfolder under the ABC Matter on this issue. So you start searching and hope you find what you were looking for. Hit and miss litigation is never good. Outlook was not designed to be a litigation support feature or an organizational tool. Wikis are a far superior tool for organizing information, but they don’t necessarily have all the tools needed for true collaboration across the spectrum of a lawsuit.

Legal OnRamp

has designed SecureRamps as a tool to meet this need. But whether it is an LOR SecureRamp or some other tool, use the right tool for the job–and Outlook is not it.

 

 

Continue Reading Value Tip Of The Day: No. 2–Avoid Litigation By Outlook Syndrome

 

At the request of Paul Lippe, I have begun posting periodic "Value Tips of the Day" on Legal OnRamp.  These Value Tips of the Day (TOD) are directed to inside counsel, but sometimes to outside counsel too.  I thought they might of some interest to those who read my blog but aren’t LOR members, so I am re-posting these Value Tips here.  Here’s the first one:

1. Figure out what outcomes you want to encourage. You’ve heard the aphorism that "if you buy hours, you’ll get hours." So if you don’t want truckloads of hours, don’t buy them. Figure out what you want instead. Results? Efficiency? Low Cost? If you incentivize these outcomes, you will find yourself getting precisely these outcomes. You get what you pay for, so figure out what you want to pay for.

 

 

 

Continue Reading Value Tip Of The Day: No. 1

Law360 today reports in an article Law Firms Say Alternative Billing Won’t Dent Profits (sub req.).  Hmmm.  So let’s see.  We know the virtually no firm has restructured its business model.  We know that few firms have made a real commitment to project management.  We know that few firms have made even a pretend commitment to process management and outsourcing (or any of its variations).  So what inference can we draw from the conclusion that firms believe their profits will be the same?

It seems to me that the most significant conclusion is that clients should be very concerned about an any "alternative" (true believers use the term "Value Fee") fee quoted by their firms.  If the firm has not restructured its business model in a significant and therefore visible way and it expects to be reaping the same profits, the "alternatives" it will be quoting are nothing more than dressed up hourly rates–the "wolf in sheep’s clothing syndrome."  More evidence that most firms don’t really get it when it comes to change.

 

 

Continue Reading “Law Firms Say Alternative Billing Won’t Dent Profits.” More Evidence Firms Just Don’t Get It

If you’re not familiar with my Kodak saga, you might want to read about it first.

Kodak sent me an email.  Here is the pertinent part, along with my comments:

I am sorry to hear that your order confirmation email was delayed. Please be informed that all orders over $100 are automatically being reviewed by the system and once approved, a notification will be sent within 72 hours. [I WONDER IF THEY EVER THOUGHT ABOUT TELLING THEIR CUSTOMERS OF THIS BEFORE THEY ORDER] As I have double checked the order, it is already in process with a standard ground shipment. The order confirmation email has already been sent. Another email for the shipment confirmation will be sent once the items has left the warehouse.
We also received your request to cancel this order. However, the system no longer allowed us to cancel. [ALTHOUGH THEY ADMITTED THAT IF THE CEO SAID TO CANCEL AN ORDER, THEY COULD.] You may refuse delivery with the courier, and it will be returned to us. And if delivered, may return the items. A refund will be processed back to your account 3-5 business days after the warehouse verifies the receipt of the package. When your item has been received and checked in by our warehouse, an automatic e-mail will be sent to you as confirmation.
Please be reminded that the KODAK Store will not be liable for any shipping expenses that may incur in the process of returning your package. [SO AFTER WE SCREW YOU, YOU HAVE TO PAY TO RETURN MERCHANDISE YOU ASKED US NOT TO SEND YOU.]

 

Maybe because it’s me, I think this is worse than an objective person might find it.  But it is hard to imagine any seller having such rigid systems that customers can’t be accommodated.  I called Amazon just out of curiosity and asked how they handle situations like this–orders are canceled and shipments captured before they leave the building. I find it inconceivable that customers are not warned that orders have to be "reviewed and approved" when such approvals routinely happen automatically (think gas station confirming credit card).  Utterly pathetic.

Continue Reading More on Kodak–Worst Service in History

All I wanted to do was order a Kodak zi8 video camera.  How hard can that be, right?  I went to the Kodak website and ordered it.  At the end, I didn’t get an order confirmation.  I got a cryptic statement that my order was "under review."  No information on how long it would be "under review" or when I would learn if I had qualified for the purchase.  After a few hours of silence, I called Kodak, and I am writing this entry while listening to the horrible music they make customers listen to while we wait.

Here’s Kodak’s story: The review process is 72 hours. 72 HOURS!  That’s 3 days.  Just to find out whether I qualify to purchase a $150 product.  I can have the same product in hand from Amazon by tomorrow.  So I told them to cancel the order.  Kodak: "I’m sorry.  We can’t cancel the order.  When your receive it, just ship it back."  Isn’t that wonderful treatment of customers–make them ship back something they don’t want.

I begin these conversations with the premise that if the CEO of Kodak told them to cancel the order, they would find a way to do so.  In other words, its a matter of will, not technology.  So I asked to speak to the phone person’s supervisor.  She gave me the same party line, but did acknowledge that if the CEO said to cancel the order, they would figure out how to do so.  So I asked to speak to her supervisor, who "isn’t available."  I’m now on hold waiting for the supervisor’s supervisor’s supervisor.  We’re at 32 minutes and counting.

Congratulations  Kodak. You’re now in the No. 1 position in the Customer Service Hall of Shame.

 

Continue Reading Kodak: Worst Customer Service In History

In a headline I saw this morning, Law360 reports that blended rates "may be on their way out."  Finally.

One of two things is true about blended rates.  Either people do not understand how blended rates help prove the truth of P.T. Barnum’s most famous quote that "there is a sucker born every minute," or people choose to believe that lawyers always listen to angels on their shoulder.

Maybe its just that my experiences are atypical, but when former partners of mine got a blended rate assignment, the opportunity they saw was to staff up with inexperienced lawyers who would help drive the partner’s overall realization rate north of 100%.  Why was that important?  Because realization rates are a critical part of compensation.  So blended rates were great for the billing partner. And woe to those who messed up that realization rate. In fact, I still have a piece of my ass missing from having it chewed off by a partner who didn’t care that the complexity of the case required more senior lawyers to be involved.  He was concerned about one thing only, and neither the client nor the outcome of the case were it.

Of course, it is possible that the people I observed and the stories I have heard over the years are the exceptions, and more often than not these cases were staffed without financial impact playing a role.  My thought is that view could not be more naive, but hey, I’ve been wrong before.

There is a way to check this.  Analyze the composite average hourly rate of the team and then the weighted average hourly rate of the team.  Compare it to non-blended rate matters.  Compare the total realization on the blended rate matter to average realization rates on other matters.  The numbers won’t lie.

But for clients, think about this: if there is more work being done by inexperienced lawyers, how efficient do you think that work is.  And how effective?

Blended rates are a very bad idea from the client’s standpoint.  They should be on their way out, and if they are, that is a good thing.

One of the things that makes a great speaker great is his or her ability to communicate memorably.  A simple statement can either be quickly forgotten or can be communicated in a way that makes it stick in your memory.  Richard Susskind is just such a "sticky" speaker.  Here’s how he describes the stages of change, what he’s experienced in response to his predictions of how the legal profession will evolve.

Stage 1:  "What you’re saying is worthless nonsense."

Stage 2:  "What you’re saying is an interesting but perverted point of view."

Stage 3:  "What you’re saying is true but quite unimportant."

Stage 4:  "I have always said so."

Why is this important?  If you have to experience each of these stages, you’re behind in the race to survive.  Lawyers have always trailed their clients in the adoption and use of technology and adaptation to the business environment.  Clients are changing at ever faster speeds.  Lawyers? Not so much.  The gap is growing for many lawyers and firms. 

In today’s environment, can you afford to be more distant from your clients?  If you can’t, how are you changing–and how fast are you changing–so that you are essential to them?

I was talking about how Valorem works, saying that we do things where we add value and try to avoid things where we don’t.  I was pressed for an example, and here is one that jumped to mind.  We needed to analyze a mitigation issue under California law.  The normal practice is to have your associate jump in, find the leading cases, analyze them, write a memo, have the partner read the memo and then look at some or all of the cases to see if the associate got it right. 

Do we add value by finding the lead cases?  Not really. We’re good researchers, but so are others who are much cheaper.  We had them find the cases?  Do we need a memo? No, we need an answer.  Get the cases, analyze the cases in the context of the facts of the case.  Done.

When people talk about process management, they are talking about something different than project management.  Process management is deconstructing a case, a task, a problem into its constituent elements.  Critical.  Equally important is asking whether you or your firm add value to a given task. If not, find someone who can do it more cheaply.

Yesterday, I was honored to serve as a facilitator at DataCert’s Generals of the Revolution program in Houston.   This series of programs features Professor Richard Susskind, author of the brilliant book, The End of Lawyers?  I have worked with Richard on panels and have heard him speak many times.  He makes a compelling case for impending radical change in our profession, and he has a track record of accuracy in his predictions.  Remember back in 1996 when he predicted that email would become the standard manner by which lawyers and clients would communicate?  Most lawyers thought the idea absurd, some even wanted him banned from the profession.  How’s that working out for those lawyers?  I’m betting that event he most ardent critics then now use email regularly when communicating with their clients.

So here’s the deal.  Richard is not some wild-eyed wacko sitting in a ivory tower somewhere imaging the future while in some hallucinogenic trance.  He speaks with leading General Counsel from around the world, consults not only to law firms but also other consultancies that lead the legal profession in terms of adaption and change and gathers insights from those discussions as well.  So what’s on his mind now?  Here’s his premise:  General Counsel face the following problems.  First, pressure to reduce head count.  Second, pressure to reduce external spend, in some cases up to 50%.  And three, handle more and riskier work, including compliance issues that become more complex as the world becomes smaller for the business.  In the face of these challenges, there are only two responses:  greater efficiency (cutting costs) and collaboration (share the costs).

Based on this as well as the growing power of technology and the fact that the marginal cost of information tends toward zero, lawyers need to become specials at process management (not project management–more on that later), which is the ability to take a series of tasks and deconstruct them to their core constituents and decide what resources are most appropriately applied to  each.  The easiest illustration might be using one firm to do document discovery while another does the trial.

Richard likes to relate that after most of his speeches, lawyers will come up to him and comment about how everything he says seems so true, except for X practice area, which, shockingly, happens to be that person’s practice area.  Lawyers, being who and what we are, argue about the leaves instead of seeing the forest.

Maybe Richard is slightly wrong–he certainly does not have that track record, mind you–but don’t we all need to ask ourselves, "what if he’s right?"  If he’s right and we do nothing, we have only ourselves to blame for our eventual demise (our our firm’s).  If we realize he’s right only after it becomes apparent to everyone, it will be too late.  If he ask yourself "what if he’s right?" any sound leader will come up with a strategy for change. 

As for the future? One of my favorite Richard lines is something like this: "The future is here.  It just arrives at some places sooner than others."

 

 

I am thrilled to announce the publication of my book, Alternative Fee Arrangements: Value Fees and the Changing Legal Market.  While Shakespeare has nothing to worry about, I do think I have managed to add to the relevant knowledge on value fees.  At least I hope I have.  The table of contents and an Executive Summary are available here.   The book can be ordered here.   When ordering, use the discount code PL-AFA1 to obtain a hefty discount.

Please feel free to share this news with friends, clients and anyone else with an interest in the new legal world and how to price service offerings, whether as purchaser or service provider.

Continue Reading My Book Is Here! Lamb On Alternative Fees