I just finished reading Mary Juetten’s post in Above the Law, Time Is The New Black. I was struck by this statement: “Also, all should reject the value billing theory that recording time is unnecessary.” Since there are few statements with which I would disagree more, I decided to parse the article and respond to… Continue Reading
Category Archives: Hourly Rates and Alternatives
Subscribe to Hourly Rates and Alternatives RSS FeedThe importance of learning what does NOT need to be done, and other things.
Posted in Commentary, Hourly Rates and AlternativesI just read an article in Law360 discussing Microsoft’s commitment to shift 90% of its work to alternative fee arrangements. Michael Rynowecer of BTI Consulting is quoted as saying the move is “one of the most aggressive” adoptions of AFAs he knew of. “Ninety percent is on the leading edge. It’s an enormous step; it’s… Continue Reading
A seminar on the cost of 6 minutes
Posted in Commentary, Hourly Rates and AlternativesReally? I just received an invitation to a seminar that stresses that the average attorney bills 6 minutes per day less than they did two years ago. Six minutes a day! According to this invitation, that costs firms more than “$12,000 in lost billings per lawyer per year. If you have 200 associates, that’s $2.4… Continue Reading
“Our clients don’t want AFAs.”
Posted in Commentary, Hourly Rates and AlternativesWhen I have the opportunity to speak, I ask participants and co-presenters about their experiences with alternative fees. Better than half the time, I am told “my clients don’t want alternative fees.” I always ask whether the firm has developed different work methods or whether the work methods are the same for both hourly and… Continue Reading
BigLaw: Another step in a relentless, vicious circle
Posted in Client Service, Commentary, Hourly Rates and AlternativesWhen lost in the desert or a thick forest terrains devoid of landmarks people tend to walk in circles. Blindfolded people show the same tendency; lacking external reference points, they curve around in loops as tight as 66 feet (20 meters) in diameter, all the while believing they are walking in straight lines. Livescience.com This… Continue Reading
Consulting? A natural way to share the many lessons we’ve learned over the years.
Posted in Client Service, Client Surveys and Audits, Commentary, Hourly Rates and Alternatives, Marketing, Branding and Sales, Prevention, Trends and InnovationsSomething interesting happened recently. Jeff Carr, Nicole Auerbach and I consulted with a client about how to improve the law department’s performance and save money. Shortly afterwards, Nicole and I consulted with a law firm about moving to alternative fee arrangements. The interesting thing was that we found ourselves enjoying being consultants. We found, in… Continue Reading
These hourly rates are breathtaking
Posted in Hourly Rates and AlternativesJust 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… Continue Reading
Valorem recognized as one of the best at delivering Alternative Fee Arrangements
Posted in Client Service, Hourly Rates and AlternativesLast week, BTI Consulting reported that alternative fee arrangements have “soared to an all time high,” noting that AFAs generated savings of nearly 14%, or an average of $2.7 million for law departments. These savings are significant, but as I have often said, much greater savings are possible if AFAs are deployed with other important… Continue Reading
AFAs are finally catching on, but so much more is possible
Posted in Client Service, Commentary, Hourly Rates and AlternativesMichael Rynowecer of BTI Consulting had a great, must-read post today on his Mad Clientist blog. In the post, which I strongly recommend, Michael makes these points: Spending on AFAs is way up—nearly 20% CAGR over 4 years Outside counsel spend under AFAs jumped to over 35% Almost 70% of companies The reported savings from… Continue Reading
“We just raise them every year.”
Posted in Commentary, Hourly Rates and AlternativesGreat article by Sara Randazzo in today’s Wall Street Journal, Legal Fees Cross New Mark: $1,500 an Hour. Set aside the wisdom of such rates when firms provide discounts on demand and realization rates average near 80%. What stands out for me is the utter hubris of this statement by John Altorelli, previously of Dewey… Continue Reading
The 4 stages of change.
Posted in Commentary, Hourly Rates and AlternativesRichard Susskind wonderfully described the 4 stages of change: 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.” There is truth in what Richard says, and… Continue Reading
Timekeeping company argues lawyers using AFAs still need to keep time
Posted in Commentary, Hourly Rates and AlternativesOne of the great things about non-hourly billing is that it frees you from the tyranny of timesheets. You stop thinking about billing and start thinking about results, about outputs, about deliverables. That approach is an anthema to the many vendors who specialize in products that help lawyers find more time to bill to their… Continue Reading
Firms that name a “Director of Pricing” miss the boat
Posted in Commentary, Hourly Rates and AlternativesMany 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… Continue Reading
Upcoming Conference on Legal Procurement
Posted in Commentary, Hourly Rates and Alternatives, People, Places and BlawgsMy 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… Continue Reading
Lawyers Can’t Help Themselves: Client Gouging is just a way of life
Posted in Client Service, Commentary, Hourly Rates and AlternativesIn 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… Continue Reading
It is the season for miracles!
Posted in Commentary, Hourly Rates and AlternativesIt is that season again, just as it is every year. Everywhere around us, miracles will be occurring. All we have to do is open our eyes to see. You probably think this has something to do with Christmas. Nope. I’m talking about the season where law firms raise their rates, and, with their associates,… Continue Reading
Focus on “shadow hours” misses the point of AFAs
Posted in Hourly Rates and AlternativesAric Press of American Lawyer penned a terrific article, What the Rise of Pricing Officers Says About Big Law’s Future. The article, reflecting the results of a recent survey, offers some great insights into the move to non-hourly billing at the largest law firms. One result was disappointing, though not surprising: Value is harder. We… Continue Reading
The Three P’s Shortchanges What’s Necessary to Bring Value To Clients
Posted in Commentary, Hourly Rates and AlternativesI ran across an interesting article in Attorney at Work, Trends in Legal Pricing and Project Management. The article reported on the recent P3 Conference offered by the Legal Marketing Association. The three P’s are pricing, project Management and process improvement. Having just written a book that covers these topics (and more), I was interested… Continue Reading
10 Value Questions Inside Counsel Should Be Asking Themselves
Posted in Commentary, Hourly Rates and Alternatives1. Has your management mandated (or gently suggested) that you reduce your spend on litigation? Would it be a good career move if you achieved a reduction in total spend? 2. Do your law firms spend more than the established budget? 3. In 2013, were you unpleasantly surprised by a bill you received from litigation… Continue Reading
Kaye Scholer’s clients need to check their bills
Posted in Client Service, Hourly Rates and AlternativesAnother law firm has motivated its associates to spend more time rather than less getting their work done. Kaye Scholer is paying upwards of $20,000 in additional bonuses to those who exceed 2,200 hours per year. The firm’s managing partner said this: At Kaye Scholer, we strongly believe in rewarding our lawyers who not only meet, but… Continue Reading
Valorem’s Nicole Auerbach Shows How Billable Hour Hurts Women
Posted in Commentary, Hourly Rates and AlternativesIt is rare I have nothing to add, but this six minute (now there’s some rich irony) clip explains precisely how and why women are penalized by hourly billing. Congratulations to my partner Nicole Auerbach on a presentation that has earned such widespread praise.
A Thousand Dollars Per Hour: Wrong Focus
Posted in Commentary, Hourly Rates and AlternativesThe Wall Street Journal recently reported on the increasing number of BigLaw partners charging more than $1000 per hour. My thoughts on hourly billing are well know, but the criticism of these rates as excessive misses the point entirely. An hour of work from a lawyer billing at this level may well provide far greater… Continue Reading
Simple questions a client can ask to expose dirty little secrets
Posted in Client Service, Commentary, Hourly Rates and AlternativesEveryone claims to offer fee structures that are alternatives to the billable hour. Frequently, these “alternatives” are nothing more than estimated hours x hourly rates, plus “a little cushion.” So clients should ask: 1. How did you determine your alternative fee? What metrics did you examine? What factors did you consider? What experience did you… Continue Reading
The Premise of Pricing
Posted in Commentary, Hourly Rates and AlternativesI am frequently asked how I go about pricing the handling of a lawsuit. I am always tempted to answer with the old line, “I could tell you but then I’d have to kill you.” My real answer goes something like this: “Before talking about how, you need to know why. Why is it that… Continue Reading