Blawg Review #106
Do Hours Equal Profits?

Wake Up! And Add Value

What did we learn from the fall of communism? One lesson that should have been obvious is that capitalism works because it provides the right incentives to workers. Ask yourself, "What are the incentives for the lawyers in my firm?"

With traditional hourly billing model, the incentives are merely to bill your hourly quota each day. The incentive to ensure that you meet your hourly quota permeates your thoughts and dictates your actions.

The value billing approach is different. Because you have defined and documented value to the client, and your singular mission is to obtain that value for the client, you wake up in the morning thinking about adding value. Instead of thinking about hours, your mind focuses on accomplishing the defined goals you have already laid out for your client.

It sounds like a subtle difference but it is not. It is dramatic. I am just winding up a multi-million dollar minority oppression case. Over a year ago, we set out with four major goals. Only one of those goals were financial. The other goals were strategic and provided the leverage we needed in order to obtain the financial goal. The goals were defined and documented from the beginning and monitored throughout the entire project. The discussions with the clients all centered around the four predefined goals. The to-do items in the extranet were all directed at the four goals.

Is it any wonder that we were able to achieve all four major difficult goals on behalf of the client? It shouldn’t be. The entire focus of the entire case was defined, documented, redocumented, discussed, assessed, reassessed, refined...

It is extremely hard to achieve the kind of focus described above in the traditional hourly billing setting. Good lawyers can do it pretty well on some occasions. But at some point, firm culture catches up with you. No one is impervious to the environment in which they live.

How can you create a firm culture which prioritizes providing value to the client from the time your workers wake up in the morning until they go to bed at night.


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