Comments on: Targeting the variable fee

By: Pam Woldow joins Edge International

Pam Woldow joins Edge International — Wed, 01 Sep 2010 16:08:44 +0000

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By: Duncan Jessiman

Duncan Jessiman — Sun, 15 Nov 2009 13:38:08 +0000

Until clients demand this type of billing it will not happen. A first step has to be proper budgeting for client matters. Just as in construction of buildings. There can be variances and change orders but the customer at least has an idea of what it might cost and has a say in changes. Right now clients are giving blank cheques. I know because I was a corporate attorney for 32 years and now run a publicly listed company with 7 operating companies. Anyone who has worked with engineers and has worked with Microsoft Project (it has been around for a number of years) knows it can be done. Lawyers have no incentive to learn and don’t, but they do learn to use a more complicated program such as Summation which helps them. I developed many prototype Project formats for numerous corporate transactions like financings, going public etc and could come very close to the actual number but it was never in my interest to use it with a client. But I do now know what a transaction should cost and now get an estimate from a lawyer I know knows what they are doing and can trust and if I don’t like the estimate I am able to challenge them. I talked to large in-house counsel 30 years ago about using this method and they were not interested so if they are not then who is? Offshoring may bring it around but I will wait and see. If offshoring works then what happened to manufacturing may happen to services and it may be too late for firms to change. Any change will have to be client driven. Watching with interest.

By: David Winch

David Winch — Tue, 10 Nov 2009 14:55:39 +0000

Jordan

I wish you well in your crusade. If I, a non-lawyer value-based-pricing expert, can be of any assistance, I’d love to help.

Conducting fixed-price, fixed-scope ‘projects’ has to be the way forward, by virtue of its inherent fairness when that fixed price is based on the client understanding the full and true value of having their problem removed, and when that value represents a huge return on their investment (your fee). To have clients saying “That’s a bargain! How soon can you start?” is a pleasurable thing when you are simultaneously thinking you’ve rarely secured such a profitable deal.

You mention “no firm can even contemplate fixed fees without a very clear understanding of … what it has cost them in the past to deliver their services”. I’m not sure this understanding has to be ‘very’ clear. Although an element of ‘cost accounting’ must take place, it only needs to be by approximate mental arithmetic. If you can simply establish that your fee vastly exceeds your costs, this is sufficient in the light of the client’s delight with their side of the bargain. If you can’t establish this then maybe you should look at ways of reducing your costs, or maybe you shouldn’t even take on the assignment.

David

By: Theresa

Theresa — Sun, 08 Nov 2009 02:56:36 +0000

Parts of our firm, mainly real estate, already use this type of billing. It seems that it can only work for the Legal Assistants that have an extremely profitable attorney, and an endless supply of energy. The workload is brutal.
In the current economic climate, there are few that can afford to go without employment for any length of time. Due to that knowledge, the attorney can (and will) demand that the production output be “stepped up”, while making another demand to complete the work twice as fast as a prudent professional would. It very well be the wave of the future of billing, but it may not be a heathly change for this career.

In looking at that department, there are many smokers, many drinkers and not many of them appear to be pleased to be in their position. However, if the real estate Legal Assistant is capable of this type of work, there are more than enough Firms that will offer employment.

By: Barry Willms

Barry Willms — Fri, 06 Nov 2009 16:00:32 +0000

This all requires a paradigm shift both by the client and by the lawfirm. It will come but it might be slow. Lawfirms that refuse to make the shift will be a memory. Client will need to drive this.