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"We don't care what it costs, the client pays."

01/30/2012

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Our part-time general counsel law firm practices law in the Greater Seattle and Bellevue, Washington area.   People who know me,  know that I once co-owned a litigation support company. This company does litigation copying and scanning for law firms in the greater Seattle area. It’s a highly competitive business.

I had great people who ran and operated this company so it did not take much of my time or attention. Thanks to them once again!

Even before the economy crashed, the company began marketing the ” Select Firm Program.” The concept was simple; use our company for all of your outsourced litigation copying and scanning work, and you will get the lowest prices in town. The same high quality work product for less money.  The sales team presented this as a tool firms can use to demonstrate to their clients that they are working to deliver high value and help reduce litigation costs.

One problem, and it’s a big one.

Almost every law firm that our sales team pitched this cost savings proposal to respond that they did not care about price because their clients pay, not the firm.

“We don’t care what it costs. Our clients pay.”

Yes, you read that right.

Ironically, and even more shocking, a few law firms that rejected the cost saving proposal with the “we don’t care, our clients pay” response, later asked for lower prices when they could not pass the bill through to their clients.

This is just one example of how law firms look for cost savings and efficiencies to reduce overhead, but do not do the same to deliver greater value to their clients. The economic interests of the law firm, especially big law firms with large overhead, are not aligned with the economic interests of the law firm client.

This is offensive.  Law firms owe their clients a fiduciary duty, and surely this includes spending the clients' money wisely.  If  anyone offers our law firm a way to save our clients money, our ears are wide open. This is an integral part of our law firm culture. If it is not a part of your attorney’s law firm culture, get a new attorney.


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Be Wary of the Lawsuit Selling Lawyer

01/28/2012

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Some lawyers, especially lawyers who exclusively bill by the hour,  sell their clients on filing a lawsuit.  It's not hard to do.  The client is upset because they have been wronged in someway, and the attorney  can direct the client's frustration and anger into filing a lawsuit.  Not all attorneys do this, but many do.  After all, what could be better for the lawyer than a client who will pay the lawyer on an hourly basis to battle it out in court?  And remember this - when it comes to most commercial litigation and pay by the hour lawyers, the lawyers take no risk because they get paid win, lose or draw.     

Before filing suit, ask the hard questions and demand hard answers:  How can a lawsuit benefit us?   What will we accomplish with this lawsuit, what will the ROI likely be, and is there a better way to go?   In addition, in many cases the business should consider hiring an independent and experienced litigator to coach them through the litigation decision-making process.  Having an experienced lawyer who does not stand to gain from filing the lawsuit will often help you make a better decision.


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Legal Value - Are You Funding Your Lawyer's Second Home?

01/26/2012

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From time-to-time, I present a seminar called, How to Hire and Work With Attorneys the Smart Way (and not their way). It's  been a hit within the non-lawyer community, but I've taken a few shots on the chin from my lawyer friends and colleagues.

What follows is a bit of insight on how some lawyers bill their clients, and it derives  from a recent lunch meeting I had with the Managing Partner  of a small firm in the Greater Seattle area.   This senior attorney told me the secret for how he was able to afford to purchase a second home.

Did he use a financial planner?  He might have, but this was not the secret.

His secret:  Perform one extra hour of chargeable work for one client each day.   Assuming his hourly rate is $300 per hour, this results in $1,500 in  gross revenue each week, and $6,000 in gross revenue each month.

It's easy to see how you can fund a second home purchase under this revenue model.

This is how some lawyers think about the value of their legal services  and billing.    Too often lawyers give no thought to the question, "" Does this billable hour of work deliver value to my client  equal to my hourly rate?" This is especially true for attorneys who work for firms where performance is measured and rewarded by the number of hours billed.   In fact, in many law firms, the attorneys are only eligible for a bonus if they meet or exceed their billable hour quota.

So, how can clients use this inside information to their advantage?   When you are hiring a law firm, ask how the firm measures and rewards attorney productivity.   The "attorney productivity" phrase will likely sound like a foreign language to many attorneys you talk to because most law firms, especially most of BigLaw, only measure and reward billable hours.  But, if you want to try to make sure the "billable hours" your attorney charges you are not designed to fund his or her second home purchase, ask the question:  "How do you measure and reward attorney productivity at this firm?"


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It's Time to Talk to Your Hourly Law Firm About Alt Fees

01/17/2012

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I had lunch recently with a lawyer friend who works at a bill by the hour law firm.  When the issue of hourly billing came up, we both agreed that it is difficult for clients to feel that they receive a good value for the legal work.  Win or lose the case, and more often than not, clients dread the final bill because they have been frustrated with the legal bills all along.   Shocking, but unfortunately not surprisingly,  my colleague's law firm relies on a revenue model that they know does not deliver true value for their clients' legal spend.


When the issue of alternative fee  arrangements came up, my colleague agreed that what clients really want is to pay less for the same legal services.  Thus, if firms adopt alternative fee arrangements, they will make less money.  This is why many firms are reluctant to adopt alternative fee arrangements.   However, why would clients allow any vendor--especially a professional services vendor--to charge more than the value the vendor delivered?  It makes no sense, yet this is the norm far more often than it should be.

If  your bill by the hour attorney has not asked you if you believe their law firm provides a good return on your legal spend,  raise the issue with your attorney.   It's time to have a candid conversation on hourly fees and the return on your legal spend, and clients ought to push this issue with their law firms.   Your attorney's answer may surprise you, and you might find that it is time to look for an attorney that embraces alternative fee arrangements.


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