May 2011

Sometimes, it is best just to move on and and not turn an unfortunate event into a catastrophe.  Case in point: young, inexperienced lawyer, a recent graduate of Touro Law School (to be honest, I’ve never even heard of it) takes a murder case to trial.  Case doesn’t go well (there’s a shock) and judge grants a mistrial.  Oops, a Washington Post reporter is in the room and writes a story about what happened.  The internet allows everybody and their brother to see it.  Not surprisingly, some people blog about it.  That’s unfortunate.

How can one turn this into a catastrophe?  How can a lawyer make himself radioactive, as likely to be welcomed by a future client as the bubonic plague?  Sue the internet (you really have to read this), and let another round of stories be written, and worse yet, a bright light to be shined upon what certainly appears to be gross incompetence (that’s just my opinion).  Read the complaint and judge for yourself.

If there is a moral on the client service front, it is this: don’t pretend to be more than you are.  Karma has a funny way of leveling that field.

It was only back in 2009 when Cravath Managing Partner Evan Chesler stunned the legal world with his Forbes article, Kill the Billable Hour. Chesler spoke about the importance to him of getting an exact price from the contractor remodeling his kitchen, and made the leap that clients had the same interest in knowing the cost of services. Here is one the takeaways:

The client will no longer be surprised by a whopper bill….

In context, it was clear that surprising the client with an unexpectedly large bill (from the client’s perspective) was not a good thing. Chesler’s epiphany resulted in him being named an ABA Legal Rebel.

Apparently the rest of the firm did not share Chesler’s epiphany. Or maybe Cravath has moved on to the past. Check out this story.

Rees Morrison, who blogs at Law Department Management, just wrote a really interesting post, Sorry, it’s perfectly fine if a firm sets a fee based on estimated hours of work.  The genesis of the post is a comment by an Associate General Counsel at Altria that

“A firm is disguising hourly billing as value billing if it merely estimates the number of hours it would spend on a case and derives a flat fee from that.”

Rees disagrees. 

Estimated hours represent a solid basis for a flat fee. Moreover, a flat fee, however derived, differs enormously from hourly fees. The firm and the client have arrived at a mutually acceptable fee, and therefore value to the client, for services and the firm has an incentive to deliver on budget.

Rees is wrong on this one.  In my view, basing a fixed fee on estimated hourly billing is the "wolf in sheep’s clothing syndrome."  The only time it is acceptable is if the client’s only objective is budget certainty.  But even in that circumstance, consider this: if a matter is proceeding using hourly billing, it is the client, not the firm, who stands to benefit if the matter resolves earlier than expected.  If a fee is fixed using an estimate of the hourly cost of handling the matter, the client loses that potential upside. The fixed fee based on estimated hourly billing locks in all of the firm’s expected profit and does nothing to align the parties’ economic interests. 

So how does Rees justify his conclusion?  Read his post, but when you are doing so, ask yourself what the client gets out of the arrangement he justifies.  And if you think of something real, let me know.

 

Nice story from the Chicago Lawyer on law firms developing apps for smartphones, iPads and similar products (and we especially like the way the story features Valorem!).  Here’s the key takeaway:

"More cell phones are being sold than computers," [uber Marketing ConsultantLarry] Bodine said. "Everywhere I go people are texting or going online and looking at their smartphones. Once you have one of these smartphones, what makes it fun to use are all the apps. What that means is that everyone has to adjust their marketing from a 20-inch screen monitor to a 2-inch screen."

The world is changing quickly, including the world of our clients.  Stay abreast or your clients will be looking at you (if at all) through their rear view mirror.

 

While the focus is on practice in Germany, this American Lawyer article is a very interesting read in terms of how many lawyers inside BigLaw must be thinking these days.  Key statement:

"Our departure was not a decision against Dewey, it was a decision against big law firms in general," says Konrad Rohde, who left Dewey & Le­Boeuf last summer with Frankfurt office head Hanno Berger and three other partners to establish Berger, Steck & Kollegen, a novel tax boutique. (emphasis added)

Perhaps the moral of the story is that for many, the grass actually is greener on the other side.

 

Value: qualitative or quantitative?  Or both?  What does it mean to you?

Here’s some food for thought.

"Value is a feeling.  It is not a calculation."  Simon Sinek

"Price is what you pay.  Value is what you get."  Warren Buffett

"There is a difference between getting what you pay for and what you hope for."  Malcolm Forbes

In-house lawyers:  how do you determine whether you have received exceptional value?

Outside lawyers: how do you determine whether you have delivered exceptional value?

We received a most unusual email about our App that I just had to share.  Here is the body:

I saw your cool app and thought I’d send you this note.

That pretty much sums it up. I was browsing for a Chicago cubs app and came across the app. As a first year law student I figured I’d check it out and I have to be honest, the firm looks awesome. Id let you hire me, but I’m already employed for the summer. Just kidding. But seriously.

Also, I really enjoyed reading about your goal to avoid litigation with business solutions. The example of buying the company that brought suit made me spit out my coffee and I wasn’t even drinking any.

Best

Mike

The Internet is a wonderful thing–looking for a Cubs App (begging the question, why on earth?) and finding the Valorem App (check out Valorem Law in the iTunes store) instead.  Wow.