January 2015

Some people speaking with style.  Some put you to sleep.  Most law firm websites are the latter.  Law firms are so afraid of offending someone that they fail to capture the hearts of anyone. We’ve tried to be the former, to let our personality come through in our website.  We believe it is better for people to know who we are before they hire us.

Virgin Hotels makes no effort to appeal to everyone.  They appeal to those who appreciate style and wit, who like the way they thumb their nose at convention. Sir Richard Branson has created an empire by simply being true to his personality. He made no effort to be all things to all people.

I took this photo outside Virgin’s new hotel in Chicago, which opened just a couple of days ago.  Welcome to Chicago, Virgin.  Thanks for bringing your style to this great city.

Many firms have created a job for “pricing.” The reason for doing so is that firms don’t have much experience with non-hourly billing, but clients are demanding non-hourly fee arrangements.  Since the firms want to make the same or more money on such engagements, they deploy a resource to help make sure the price offered to clients on any matter is profitable.  With due respect to these firms, I think they have missed the boat.

Pricing is a tool–one of several–that should be deployed to deepen and strengthen the relationship between lawyer and client.  It is not, of itself, the end.  Designating someone to be in charge of pricing is like putting a coach in charge of the 3rd quarter, not the entire game.

I know the argument will be that the relationship partner is “the coach” and the director of pricing is a resource for the coach.  Perhaps that is why the goal of so many firms when creating a non-hourly fee is to equal or exceed what the firm would make if it billed hourly.  Some have called such fees “hourly billing in drag” or a “wolf in sheep’s clothing.”  Whatever the characterization, the bottom line is that such fee proposals do not deliver value to clients.

If a firm is interested in delivering value to clients, perhaps the title should match the responsibility.  A few firms seem to get the issue.  But far too few for clients to breathe easy.

My friend Dr. Silvia Hodges Silverstein leads the legal procurement organization, Buying Legal Council.  Silvia and her group are holding a conference in New York City on February 2, 2015, Pricing and Collaboration.  The program looks outstanding.  I wish I was able to attend.  I am sure there will be a twitter feed, and I look forward to “attending” remotely.

Why should you care?  Whether at the front of the table or not immediately visible, procurement specialists are influencing law department purchasing decisions and many if not most companies.  A chance to understand how is rare and should be taken advantage of when conferences like this occur.

In reading my morning mail, this post caught my eye: Don’t Lose Your Shirt When Raising Fees.  So I read the post, written by the CFO of a firm named Rivkin Radler.  It contains 5 suggestions on how to raise your rates and feel good about it.  To me, it reflected all that is wrong about the way lawyers view their clients.

Let’s start with this:

Don’t let fear keep you from raising rates! Chances are, if you are making excuses to avoid a rate hike, those excuses are a cover for speculations based on fear.

WRONG!  All the data and reporting available show clients are incredibly concerned about their legal spend, are moving more work inside where the cost structure is materially lower that what is paid to firms.  Fear of how clients respond to rate increases should keep you awake at night, especially if you can’t demonstrate that you have reduced your internal cost structure with the zeal of a private equity investor.

Then there is this gem:

Keep in mind that smaller increases — 3 to 5 percent per year — are generally better, and are met with less resistance when they are implemented consistently (i.e., the same time each year).

I just did a quick Google search–the cost of living increase for 2014 was just less than 3%.  But the author suggests 3-5% as if lawyers have a right to not only COL increases, but also “more.”  Lawyers need to understand that clients see this as implicit greed.

There are other statements made in the post which I think a fundamental lack of appreciation for the changed dynamic between law firms and clients, but these points suffice to show how much I disagree with the author.  There is no business I know of that has an unfettered right to increase its price annually.  Many are required to reduce their price to reflect the benefits of increased efficiency.  When lawyers defend a system that suggests they are entitled to a greater more of their client’s wallet just because 365 days have passed (not to mention the hidden fee increase built into associate advancement), I just have to express my disagreement. It laziness, greed and imperiousness.  Valorem takes a somewhat different approach.


Sometime last summer, my friend Peter Carayannis of Conduit Law reached out and asked if Conduit could use our Value Adjustment Line on Conduit’s invoice. We were thrilled to say yes, much as our friends at Summit Law Group in Seattle had said yes when we made the same inquiry to them when we launched Valorem seven years ago.  As Ralph Palumbo said to me, “everyone should be doing this.”

After seven years of including a Value Adjustment Line on every invoice we have ever sent, I still marvel that so few lawyers are willing to let their clients be the judge of the value of the services provided.  I wish that wasn’t so.  Clients deserve to be the judge of value.

So, in the interest of making it easier, this is an open invitation to lawyers to copy the Value Adjustment Line and let your clients be the judge of the value you provide to them.