What do all of those things have in common? They were all featured topics in the April 2010 edition of Law Practice Today.
Sharon Nelson and I posted our 30th Digtal Edge: Lawyers and Technology podcast "ABA TECHSHOW – It's a Wrap." There have been other post-TECHSHOW articles and blog posts. But Sharon and I shared what we found interesting there and our show notes provide links to various products and presentations we found noteworthy.
Effective Diversity Strategies In Law Practice Management was the theme of this issue, with eight articles focused on that subject.
Natalie Kelly and I were honored that our materials for our Alternative Billing program at ABA TECHSHOW 2010 were the first materials featured in Best of ABA TECHSHOW section for 2010.
Another article that should be of interest to everyone, but is probably more of interest to those heavily into technology is Will Free Fit into Your Technology Budget? An Open Source Software Primer for the Solo and Small Firm Lawyer By Dennis Kennedy and Gwynne Monahan.
Law Practice Today is a great free resource and I do not know why every lawyer doesn't take the time to subscribe.
On Monday, August 24th, the debate about alternatives to the billiable hour got even more high profile as articles appeared about the topic in both the Wall Street Journal and Corporate Counsel. I received Corporate Counsel in the morning mail and soon thereafter my inbox received notices of the WSJ feature from a discussion group. (Note that unless you are a WSJ subscriber, the link above only gets you a small part of the front page article, but you can watch the video and read the comments to the article.)
This reminded me, first, that there is still a lot of discussion to be had and work to do in this area, and, second, that the 2008 book Winning Alternatives to the Billable Hour, Third Edition: Strategies that Work by Mark Robertson and me is now for sale on Amazon, at a cheaper price than at the ABA bookstore.
Bruce MacEwen on his Adam Smith, Esq. blog has a great analysis of this discussion in his post The Billable Hour Debate Is Not About the Billable Hour, I would encourage you to read his thoughts. I'm in the camp of those who believe law firm billing is now a matter of corporate focus and it is unlikely that large law firm billing practices will return to "normal" after the economy rights itself.
Ron Baker is a true expert on the billing methods and profitability of professional services firms. He's written numerous books on alternative billing and is a speaker in high demand. Every single lawyer in private practice should read his recent essay on Recession-proofing Your Firm. Stories of law firm layoffs are in the legal press every day now. But coping with a recession is more than cutting costs or cutting staff. Read Ron's suggestions for positive proactive change. You don't have to attend a conference or pay Ron a consulting fee for these ideas. Just click on the link and read.
A blog post from the Greatest American Lawyer blog made me chuckle and it might make you think. The webinar topic was law firm profitability and GAL wanted to talk about alternatives to hourly billing. What he didn't anticipate was his unease in discussing hourly billing at all. Read his interesting post.
One of the interesting things about discussing hourly billing is how defensive some people can be regarding their status quo. One lawyer asked him how could it be ethical to have system that returned more than the lawyer's hourly rate. Think about that. That same lawyer likely wouldn't question a lawyer who had so much business that he decided to raise his hourly rate by 25%. But a system disclosed to and agreed with the client that returned 125% for an hour over what the client who opted to pay the lawyer on an hourly basis paid, well, there has got to be some ethical problem there, right? Obviously, I don't think so.
This summer, the American Bar Association published Winning Alternatives to the Billable Hour 3rd Edition by Mark Robertson and Jim Calloway. I don't know if it was modesty or oversight that kept me from mentioning it here on my blog before. I actually did think of mentioning it when I covered several other law practice management books this summer. In doing the third edition of the book we did several case studies, interviewing lawyers who had actually put alternative billing into practice. In hindsight, I am not sure how we left out GAL, but I am glad he provided us with this abbreviated case study on his blog.
Allocatur is a site that I encourage all of my readers to visit. Liz Harris is a "cost lawyer" based in Melbourne, Australia. I'll let you visit her site's About page to learn what a cost lawyer in Australia does. She has a very interesting point of view. (Of course, maybe that's just because I agreed with all of her recent posts.) Her blog covers "news, thoughts and suggestions on lawyer /client relationships, legal costs, value billing, the 6 minute unit and meeting client expectations." Given our current global financial situation, most lawyers can use another source discussing lawyer billing and value to the client. If you've never visited this site before, you will find lots of her archives to review. Visit Allocatur by Liz Harris. American readers will get an international point of view. I think all of you will be glad you did.
I first became aware of the Shepard Law Group as a result of legal media coverage they received when they banished the billable hour from their firm. Jay Shepard came up with a very cute idea for the name of a blog related to employment law issues: Gruntled Employees. (After all you don't want DISgruntled employees, do you?)
Since most law firms are also employers, it is good to keep up with this substantive legal area and Jay's posts are always easy to read and well-thought out. But Jay's posts are not limited to employer-employee matters. Here's a great recent post (with links) on alternatives to hourly billing. But the post I really want you to read is one entitled "Your employees are the sizzle." He notes his experience in a restaurant and relates it to customer services generally. As a lot of Oklahoma lawyers are aware, I like to use restaurant analogies when I talk about client service. In fact I just recorded a webcast on improving client services for the OBA. You should be able to purchase by going to this Webpage in a few days.
The cover story of the August, 2007 ABA Journal is The Billable Hour Must Die by famed lawyer-novelist Scott Turow. No one who has read any of Mr. Turow's books would be surprised that it is a well written and persuasive piece. He repeats a phrase I find very significant: "dollars times hours." Turow writes:
This may sound like it applies to large firm lawyers, but the math applies equally to lawyers in every size of practice who bill only by the hour. This issue may represent one of the greatest future challenges to our profession. But, of course, I've thought that for a few years now. Mark Robertson and I published Winning Alternatives to the Billable Hour: Strategies That Work, Second Edition through the American Bar Association in 2002. (And Mark is now waiting on me to finish my assignments for the next edition very soon.)
If I were to quibble with Mr. Turow's piece, it would be that he, like so many, mixes together what I view as two distinct aspects of the billable hour crisis.
The first is the dollar times hours aspect. Is a mechanical formula really the best and most fair method to determine a legal fee? Is it the best for the law firm? It is the best for the client? The case against hourly billing is pretty easy to make; it can reward inefficiency and the total cost is unknown to the client until a matter is concluded. While I would not state the ethical challenges as strongly as Turow, there is the inescapable fact that, for the most part, the one who makes the decision as to whether those eight depositions are needed is the same person who makes more money from those eight depositions.
But the ethical challenges would not disappear by changing to all flat fee arrangements. If an hourly payment arrangement presents an ethical challenge to do too much, then surely a flat fee for an entire matter presents the opposite challenge to do too little. Public perceptions notwithstanding, all but a very few lawyers take their ethical responsibilities very, very seriously in all circumstances.
The second aspect of "the problem" can be said to be even more critical than the first, however. For it involves people's lives rather than just dollars. The Billable Hour discussion is also a code phrase for the fact that too many lawyers are working themselves to death, both physically and spiritually. This lawyer may be the new associate at a major law firm struggling to ethically bill 2200 hours a year or the small town well-established solo who finds himself having to step up his work schedule when he should be enjoying the rewards of a fine career. Maybe this is caused by greater family needs, such as a child going off to college, or maybe it is caused by more time devoted to business that cannot be billed such as marketing or untangling the mysteries of e-discovery.
As Turow says in the essay, " Worst of all, however, is that when somebody is working 2,200 hours a year, he or she has less chance to pursue the professional experiences that nourish a lawyer’s soul."
I completely agree that a large part of the problem with the largest law firms is the fact that they publish earnings per partner and deem themselves winners and losers on that basis. But considering what these large firm lawyers are making, is that extra several thousand dollars worth adding the 10:00 p.m. to midnight shift an average of three days a week? Perhaps the more enlightened view someday will be factoring in average billable hours per partner and the law firm whose lawyers are all easily recognized by their children gets scored as the best.
We are living in a time of great change. We see the successful businesses. We know that they embrace the efficiencies of technology, they adapt to changing consumer needs and demands, they provide good customer service and they continue to improve and evolve. The question Turow brings us face-to-face with is how lawyers can plan for their future success in an environment where productivity improvements amount to an income reduction and a personal success story is getting a full night's sleep or just one time seeing all of the child's little league games that week.
If it were easy, all the smart lawyers would have already done it. But there are smart lawyers and smart clients who are using alternative billing methods. How do you start? Let me suggest modest steps. You recall the old saw "How do you eat an elephant? Answer: One Bite at a time." So litigators, are there some routine tasks that should be billed on a task completed basis rather than an hourly basis? What about filing documents with government clerks? Hourly or fixed? Consider this and revise your policies accordingly.
Read Scott Turow's essay. Think about improving your future and serving your clients better at the same time.
ABA members recently received the following link in their MyABA e-mail. But for the rest of you, (or for those who didn't pay attention the first time) this should be of interest. At ABA Midyear meeting in Miami a few weeks ago, the Young Lawyers Division and the Law Practice Management Section co-sponsored a program on retainers, fees and billing. The presentation materials are available online. Viewing PowerPoint slides without seeing the oral presentation often loses a lot in translation, and some of these are pretty sparse. Nevertheless, here is a great opportunity for a 15 to 20 minute refresher course on retainers and billing. Most readers should take advantage of this opportunity. Read the summary here and then download the PDF file with the materials. Priya Harjani's nine points about billing at the end are definitely worth your effort.
© 2004-2007, Jim Calloway. All Rights Reserved.
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