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May 2005

The Ostrich-Like Behavior of Lawyers

Here is a great quote from Gerry Riskin On a post called Five Year Plan Every Day, at his Amazing Firms, Amazing Practices blog.

The firm is receptive to change and plans for it… unlike so many firms I know who have partners with sandy faces and necks from their ostrich-like behavior, petrified that something might change... appreciating their vulnerability but feeling ill-equipped to do anything about it.

Bringing a culture of change to the practice of law is critical in order for institutional improvements to come more quickly.  Blogs start the discussion, get the wheels turning and pull some heads from the sand.  This is just one reason why legal blogs are so important.

Marketing To Your Goals

Ellen Ostrow, Ph.D., Founder, Lawyers Life Coach ™Personal and Career Coaching for Women Lawyers, has a great web page where she talks about re-defining marketing. Here are some of her astute observations:

  • Marketing is developing a sense of yourself and your strengths and communicating this to others with the goal of helping them solve a problem. [My thought:  marketing should be driven by your defined goals.  My goals include developing relationships with the larger litigation firms in town and becoming a referral prospect when those firms have conflicts.  I am going to lunch with the local power-hitters all summer long].
  • Even more importantly - marketing is the best way to implement your career plan and control your life. Clarifying your vision of your "perfect" client and developing a solid sense of your strengths and the work you want to do empowers you to further your own success.[Being an independent practitioner allows you to think about who you want to provide legal services to.  I am working on defining my perfect client and then marketing to that goal.]
  • Designing your career, developing a network consistent with your goals, and acquiring a client book are the pathways to real career autonomy.  [Amen!  One bad client can ruin the whole experience of being a lawyer.  As Matt Holman at the Non-Billable Hour Blog says, don't be afraid to fire a client].
  • Without a plan, most lawyers won't market because they view it as difficult or unpleasant. But developing your own individual marketing plan enables you to make optimal use of the time you have and to avoid time wasters that don't fit with your priorities.  [I would submit that marketing is a mandatory for no other reasons than to make a lawyer think about how he/she wants their practice to look and feel down the road].
  • Leveraging is a way to get maximum usage out of the work you're already doing. It's a great time saver. [Don't re-create the wheel.  Leverage the relationships you already have.  I printed my complete client list and am going back through the list looking for ways to leverage the relationship I enjoyed most over the last year.  I'll do the same with my contact list next]

Finally Announcing My Law Firm

I now have two virtual law clerks and one paralegal working for me at about 100 extra hours per week.  This should handle my overflow capacity for the next two months or so.  I am now ready to announce my 3 month old firm to the world.  As noted previously, I was smart to be patient in sending these letters until the firm was fully operational and ready for traffic.

We sent out our first round of 150 announcement letters last week to lawyers and judges.  For each of the next two weeks, we'll send another 150 to the bench and bar. We tried to space out the mailings so that well wishers would not call all at once.

In three weeks or so, we'll send out letters to clients and prospective clients.  This will coordinate well with our Johnny Advertising campaign and general announcements to the media. I am also considering truckside advertising using a product called TruckSkin.

Will these letter generate any new business or referrals?  Only time will tell.

Every Law Firm Needs A Bike

One of the many benefits of my new practice is that I only dress in a suit when I go to court. My casual attire lends itself to a far more active lifestyle during the work week.

I bought a new 'law firm' bicycle today so I can travel around town and decrease my dependency on my car.  But the bike has many other benefits, including indirect marketing. I posted recently on the need to make sure you don't allow yourself to become isolated. I realize that I still need to find ways to be seen.   

You always have to always find new ways to let people and other lawyers know you are out there.  And being different sets you apart from the crowd.

Riding around town for lunch meetings, errands and general travel is a great way to make sure you remain visible and get your daily exercise as well.

The hourly billing model is like dirt under your fingernails

Reflections Of A Lawyer Set Free

I am finally feeling settled in my new firm at my new location.  Some things that come to mind about my journey thus far ...

  • The hourly billing model is like dirt under your fingernails.  It is hard to get the old dirt out even with a good scrubbing.   I am still trying to get my head on straight in my new life.  Too often, my brain unconsciously starts doing hourly calculations.  I keep reminding myself to avoid thinking time and instead think value
  • The Greatest Sin.  There is a latent stress which comes when I am not 'billing hours,' which of course would have been a cardinal sin at a firm strictly devoted to the hourly billing system.  Old habits die hard.  One of the evils of hourly billing model is the effect it has on an attorney's brain. The good news is that I can feel the hourly grip loosening each and every day.
  • I love technology!  One of the best parts of my new life is being able to evaluate and integrate technology on the fly, without having to worry about obtaining partner consensus or having to train a bunch of people. I wonder whether big firms will ever be able to compete when they are stuck in low gear when it comes to new technologies?
  • The money part works out.  You can spend a lot time worrying about bills and revenue. I have concluded that if you deliver quality legal services, the bills get paid and it all works out fine each month. 
  • Receivables won't be a problem if you deliver value.  I have not requested that my clients pay within any specific time frame and had planned on a diligent yet reasonable approach to receivables. To my surprise, my clients have been paying within 5 days of bill receipt.  These are the same clients that took 45 days to pay when I worked at my old firm.  I think they are actually excited to pay their bill and can only conclude that they are rooting for me to succeed.
  • Forget the way you did it before.  I constantly have to remind myself to scrutinize every policy, act and omission at my new firm.  You get so programmed to do things a certain way when you work for an hourly firm, you stop asking the question "why?"  Always challenge your own thinking and only do what makes sense under your own unique business model.
  • Make new friends with your local bar.  When you work for an hourly firm, you run in certain circles.  People develop attitudes and stereotypes about you because of where you work.  When you start your new firm, you need to extend yourself to the larger bar community and re-create yourself with them.  After all, they are the ones who are potentially your best referral source. And they may view you different now that you are on your own.

Alternatives to Hourly Billing for Small Firms

The alternatives to hourly billing are limited only by your imagination.

Here is an article from Sylvia Hsieh, Lawyers Weekly USA republished at the Missouri Bar Association web site.  It lists numerous ways to avoid the current iteration of the hourly billing model.

Be creative!  Every client and every matter is different.  Make sure your billing model makes sense for your client, and for you.

In one example, a law firm that represented developers decided to calculate its legal fees according to how much it would cost its clients per square foot of property.

The New Billable Hour

There are some cases and matters where the client requests to pay on an hourly basis.  There are also matters which don't lend themselves to a flat, contingent or other fee structure.  Litigation is sometimes unpredictable since you can not control whether the other hourly lawyer is going to file a stack of meaningless paper to which you have to respond or requires you to show up in court.

Task-Based Billing:

So what does a lawyer do when hourly billing is the billing method of choice?

First of all, the problem with the hourly billing model lies as much in HOW lawyers implement it, as the model itself.  The core problems with the present version of the hourly billing method and which make it clearly anti-client include:

  • The partner push to bill every second
  • The billing of time without any consideration of value or quality
  • Minimum hourly quotas for attorneys
  • Billing for administrative tasks
  • Billing for phone calls with clients which just encourages clients not to call

I have developed a list of tasks which I do not bill for such as most client phone calls, transmittal letters or emails, administrative tasks, monthly client update meetings, etc.  In short, I do not bill for anything that does not add real value to resolving or winning the client's matter.  This drives me away from 'make work' tasks, and towards tasks that really make a difference to the client.

Recently, I have added a new twist.  I have different rates for different activities. Attendance at trial is the maximum hourly rate since that is the activity that requires the most expertise.  Drafting important motions is billed a my normal rate.  Drafting standard discovery response is something a paralegal can do in most instances.  Preparing or responding to simple discovery is billed at a rate less than half of my standard rate.  This approach encourages lawyers to push tasks down to an appropriate person at an appropriate billing rate.

The focus in a task-based billing model is not on how valuable the lawyer's time supposedly is.  The focus shifts to how difficult the task is, and how well it is accomplished.

I include on every hourly bill all the tasks performed which were not charged and the fee rate of each tasks.  Client's are amazed by how fair task-based billing appears on the bill.  And of course, they can't believe they aren't being charged for activities that might have comprised 30% of the hourly bill at other law firms.

Task-based biling has been around for a while.  The Uniform Task-Based Management System (UTBMS) is a budgeting and billing system co-developed in 1995 by the American Bar Association (ABA), American Corporate Counsel Association.  The UTBMS was designed to provide clients and law firms with meaningful cost information on legal services. 

Here is an ABA chart from 1998 which lists the most common which clients make about lawyer bills. Many would be resolved by a task-based billing model.