June 2016

I feel like I am under assault.

From CNN:

Somebody else, who has never shown any regard for workers, has never fought on behalf of social justice issues … they don’t suddenly become a populist because they say something controversial in order to win votes,” Obama said. “That’s not a measure of populism. That’s nativism, or xenophobia, or worse. Or it’s just cynicism.

From Huffington Post:

Editor’s note: Donald Trump regularly incites political violence and is a serial liarrampant xenophobe, racist, misogynist and birther who has repeatedly pledged to ban all Muslims — 1.6 billion members of an entire religion — from entering the U.S.

From a recent nomination for an innovation award (I was a judge):

Clients continually expect a more powerful value proposition from law firms. They want more for less. It’s not just about AFAs and creative pricing. It’s about a true partnership, one which transcends the provision of legal services to include a widespread offering of innovative tools founded on communication and collaboration to address specific pain points.

There are lots of articles about jargon.  Apparently, people don’t read them.

There are lots of articles advising people to use short, simple words. People ignore them at their peril.  Calling someone a xenophobe or a misogynist doesn’t hurt the target if the audience does not know what those words mean. Talking about populism or nativism doesn’t help a candidate or voters if people don’t know what those terms mean.

As for me, when I am reviewing award nominations, a nomination that sounds like it was written by a first year marketing student on steroids is going to start out behind the eight ball, er, with two strikes on it.  Or maybe it will start out behind the other submissions.

 

Just read this:

MoFo, which submitted its first monthly fee statement earlier this week, is serving as special renewable energy counsel to the official committee of unsecured creditors. The firm is seeking $641,212 in compensation for work between April 29 and May 31.

MoFo’s attorneys billed more than 683 hours during that time period and charged a blended rate of $889 an hour.

Blended hourly rates of $889?  I couldn’t say that to a client with a straight face.

I was having lunch with a friend a few days ago and we started talking about the legal industry’s move to pay starting lawyers $180,000 a year. Plus benefits.  To me, salaries of this kind are the product of the criminally insane, but my friend said, “it’s only $10 an hour.”  I knew what he meant. If an associate works 2000 hours a year, a generally accepted target, the $20,000 increase is paid for by charging $10 more for each of those hours.  That is, charging a client $10 an hour more.

That doesn’t sound too bad at all.

But I asked my friend to think about that from the client’s perspective.  Let’s say the client pays a firm $2 million per year in associate time. At large firms, this is a modest to small client. If the average hourly rate for all associates is $400 (which is a low estimate), the client pays for 5,000 associate hours per year. This means that without more, the client is paying $50,000 more each year for no increase in value.

And then I asked my friend if he had ever heard of firms raising their hourly rates only $10 per hour, and he acknowledged that he had not.  Even during dark times, firms would raise rates 2-3%.  But normally, firms aim for at least 5%. To put that in perspective, a 5% increase on $400 per hour is $20 per hour. So the client is paying $100,000 per year for no increase in value.

When I asked my friend how he thought his clients would feel about that, he hung his head and said “that’s not how we think about it.”

The problem is thus defined.

Seth Godin had an insightful post in his blog today, Bigger for?. He writes about the pains of checking into a huge hotel, where no one knows your name, there is always a line at check-in and the gym is full at 5 in the morning. Bigger helps the owner make more profit (at least the owner thinks it will make more profit), but it does little for the customer.

Law firms that merge always say the merger is in the best interest of their clients.  “Bigger platform” is a phrase you frequently hear.  But I have never heard, or even heard of, a client saying that they thought the merger or acquisition was in their best interest.

For clients, bigger law firms mean more conflicts, less flexibility in fee structures or other steps that provide real value to the client. It means even greater cross-selling (“let me introduce to my new partner–pssst, what’s your name–er, George, who is the greatest lawyer in the world in—pssst, what’s your practice area–, er, Tanzanian wildlife restoration”).  Clients thrive when law firms design around the client, not from size. Size is an obstacle to being able to design around the client.