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“Battered Client Syndrome” – A Way Out Of The Billable Hour Abuse Cycle

June 12, 2013

Clients, have you looked in the mirror lately?  It’s not a pretty sight. Fifty years of constant billable hour abuse have understandably left you unable to stand up for yourself.  I know you’ve tried your best.  Given the circumstances, asking for meager discounts does seem like progress. They make you feel better for awhile, but has anything really changed?  If you’re honest with yourself, you know the answer to that. Tired “solutions” like generic fixed fees, capped fees and blended fees are really nothing more than the billable hour in drag.

But here you are, looking for help, which is a huge, positive step in the right direction.  I applaud you for your courage.  It’s not easy being bullied.  Before we can move forward, however, we must first identify the key dynamic behind the cycle of abuse.

The Root of the Problem:

Time x Rate = Cost

It really looks too innocuous to be the cause to all of your problems, right?  It’s also so confusing.  As a client, haven’t you always craved predicability and certainty?  Nothing could be more simple than to have your lawyers bill you for the amount of time it takes to complete any given task.  But, you’re missing the 800 pound gorilla sitting right on the beginning of the equation.  The “time” factor, as practiced by your lawyers for the last 50 years, has had no real limits placed on it.  They’ve been given a license to do wrong.

How did this happen?  Because you meekly turn away when they look you straight in the eye and give you the same old tired excuse that has caused you so much needless pain and suffering throughout the years:

Legal matters are simply too unpredictable to accurately plan and budget.

There is no arguing that this is what your attorneys need you to believe.  If you buy into this one assumption – they get a free ride – the bank vault door is left wide open.  As I discussed in Part II, if they are freed from any rational budgeting constraints, and can instead bill with brazen impunity to meet or exceed their minimum billable hour quotas.

The whole house of cards rests on this assumption.  If they’re right, it looks like you’ll just have to grin and bear more of the same.  But, what if they’re wrong?  What if you’ve been bamboozled all these years? Then, my friends, you’ve got a chance to kick this bad habit.  And it’s about time you get some good news. The bastards are wrong.  One hundred percent, unequivocally, categorically, full-of-malarkey, incorrect.

Now I realize that this will be a shock to your system.  Even though you’ve known in your gut that your lawyers weren’t perfect, you trusted them.  In the past, even when you might have suspected that they didn’t have your best interest’s at heart – and you even reached out for help – none could be found.

I can’t change the past, but I can lead you out of the darkness, into a place where fairness and common sense reign.  Listed below are real, concrete steps that you can take today that will allow you to leave the billable hour behind altogether, or at a minimum, defang the surly beast.

Option 1 – New Litigation Matter:

You’ve just been sued.  Your old firm can’t give you a budget and only provides a non-binding estimate or range that is invariably low.  In the past you had no choice but to take it on the chin.

New solution:  Pick up the phone and call Valorem Law.  They will break your matter down into comprehensible stages and give you a fixed price for each necessary and/or foreseeable phase.  They will further discuss other value pricing strategies like holdbacks and success bonuses, each designed to incentivize the firm while aligning the interests of the firm and client.  Win-Win.  Don’t like Pat, because he went to the University of Michigan, then try Conduit Law, or Cognition LLP, or Miller Titerle. Just do it.  All will easily crush your tired, good ol’ boy firm.  In fact, they regularly beat your AmLaw 100 firms.  Oh, and did I mention that some of them guarantee their work?  If you aren’t completely satisfied, you can choose to not pay some, or all, of their fees.  I think you’ll like being treated so well once you get a taste of it.

Option 2 –  The “Bet the Company” Case:

So, you know you’ve been mistreated, but you’re not quite ready to throw your abuser to the curb.  These cases, however, are the most dangerous to your bottom-line, especially when no budget is in place. Welcome to 7 and 8 figure legal fees and unsolicited discussions of potential bankruptcy.  The costs of discovery alone in these cases can make the devastation left behind after a clash between Godzilla and King Kong look like child’s play.  Godzilla is no match for a team of first-year BigLaw associates grinding out endless 10 hour days at up to $800 per hour on document review.  Hello, welcome to $2 million a month legal bills.  Those bills will leave a mark on even the biggest clients.

A typical discovery battle

A typical discovery battle

Solution 1:  Bring in Novus Law to handle the document production and related discovery.  Your current firm will throw a tantrum like an irritable 2-year old, but so be it.  It’s your case and your money.  You’d be better off using Novus in conjunction with Valorem, but you’re still moving in the right direction.  Why Novus?  Because they will give you a fixed price per document that will be at least half the price of what your stodgy old firm can do it for.  And they will do a far better job of it, too.  Need proof?  Here is what Bruce MacEwen of Adam Smith, Esq., and a key consultant to Big Law, had to say on this issue:

The founder and head of one of these firms, which is in the business of applying Six Sigma processes to document review, and which has demonstrated consistently and convincingly that their quality is immensely superior to that produced by BigLaw associates working on the same document sets, remarked fairly casually to me not long ago that “for every dollar of revenue we gain, BigLaw loses three.”

‘Nuf said.

Solution 2:  Legal Project Management (LPM).  Bring in Elevate Services or ERM Legal Solutions to professionally scope and budget your case, and equally importantly, to monitor and ensure that the scope and budget are being met.  For a relatively small upfront fee, they will easily deliver a massive ROI.  And don’t tell me you don’t have the budget for this.  You’re about to hand over a blank check to your abuser, yet you can’t afford to pay a fair fee to the nice guy who will treat you like you’ve never been treated before?

Option 3 – Assess the Situation Before Acting:

Okay, you know you need and want change, but the problem seems so big and confusing that you don’t know where to start.  Money is tight.  You need more information to better understand the scope of your problem with the billable hour.  Baby steps are better than no steps.  I’d recommend looking into a data analytics and benchmarking company like Sky Analytics or TyMetrix.  I’ve seen Sky Analytic’s legal spend data and it shines a very bright light on the dirty little secrets of all those “venerable” AmLaw 100 firms.  Armed with this objective and conclusive evidence of abuse, you will now be motivated to leave the billable hour behind for good.

Just Take Some Type of Action:

Any or all of the options listed above will lead you to a much better place than where you currently are. It’s just hard to see when you are in the cycle of abuse.  Most of them can be implemented today for less than you would pay one of your BigLaw partners for one single day of their time.  Yet I keep hearing of resistance.  The only thing that can explain that resistance is the perverse psychology of the battered client syndrome.  It’s all you know.  You are unable to blame your abuser and irrationally see their methods as omniscient.  This series has been an attempt to show you that there are currently far better alternatives that exist in the real world.  The key to breaking the cycle is to take that first real step.  Help is out there.  You can do it.

*Disclaimer Alert:  The only “compensation” I receive from these 21st century firms and companies is straight answers to my questions that demonstrate that they “get it.”

Part II – The Billable Hour is Dead to Me (And Why it Should Be Dead to You, Too)

Part Ia – The Billable Hour is Dead to Me

Part I – The Billable Hour is Dead

5 Comments leave one →
  1. June 14, 2013 1:34 pm

    Having worked in a billable environment – I found this article to be very very interesting (and enlightening for sure) Thanks for posting that!

    [Originally posted on LinkedIn group “Litigation Case Management”]

  2. June 20, 2013 6:57 am

    I enjoyed this article, although I think it doesn’t give enough credit to the law firms who really are working in sync with their clients to strike the right balance of efficiency and effectiveness in getting the deals done.

    We are finding at Sutherland that our efforts to improve communication with our clients at the outset, work harder at proactively scoping legal matters and setting up practices to manage, track and communicate about the budget is getting us closer to our goal of optimum client satisfaction. Law firms can do it, and they want to (most of us!).

    [Originally posted in LinkedIn group “Project Management for Legal Departments & Law Firms]

  3. June 20, 2013 7:03 am

    Mike’s content is right on point. In fairness, however, the accusatory tone may be missing the fact that most law firms stick with the billable hour out of habit, and lack of skill and discipline in efficient matter management rather than some evil intent to pad their income or “abuse” clients, even though that can be the outcome.
    True, their habit creates the disincentive that Mike writes about…one attorney actually said to me: “…but if I become more efficient, won’t my billable time drop?” Such is the inertia that Mike and I and informed clients perceive as lawyers’ willingness to have clients pay for the lawyer’s inefficiency.
    Another longer term step to address some of this problem would be for the ABA to get more serious about including more practice management topics like legal project management in approved CLE credits for individual firm efforts to teach better matter management skills…possibly under the “Diligence” rule of ROPCs.

    [Originally posted in LinkedIn group “Legal Project Management”]

  4. June 21, 2013 2:26 pm

    Agreed, Gary. I believe that the billable hour’s days are numbered, but, for many, it will be a long, slow, painful death. The quote that really resonates with me from your article, Mike, is “Legal matters are simply too unpredictable to accurately plan and budget.” Funny thing is – transactional attorneys tell me it’s easier for litigators to plan and litigators tell me it’s easier for transactional folks to plan! The truth is, regardless of the practice, there are certain aspects of any type of matter that can be standardized. There will always be some level of variation, but if lawyers map the process – whether a litigated matter or a transactional process – they’ll see much more of it can be standardized, planned and budgeted for than they might have imagined.

    The concepts of Lean and Six Sigma that you mention in the article are more applicable to law firms than most lawyers are willing to admit or accept. Lean Six Sigma allows law firms to begin the transition from the billable hour to value pricing. Legal project management is a big part of that picture, but other Lean Six Sigma methodologies like eliminating waste, understanding what your clients value and delivering that value are important, as well.

    [Originally posted in LinkedIn group “Legal Project Management”]

  5. June 22, 2013 7:53 am

    Mike, As usual, your observations are eloquent and persuasive. (And thanks for the “shout out”.) As we speak with more and more legal departments and law firms around the world, one thing becomes increasingly clear: the billable hour holds enormous power over lawyers and client because “we can’t know what we don’t know.” It sounds so simple, but the power of the Dunning Krueger effect makes the most intelligent among us blind to the value of change.

    However, those that have experienced the changes LPM can provide are becoming educators to those of us who haven’t. Recently, in NYC about 100 in house lawyers heard from their peers at company’s like Pfizer, Deere, DuPont, JP Morgan, the Royal Bank of Canada and other leading companies that the “old way” isn’t the only way. These are all companies that have brought fixed fee pricing into their relationships with outside counsel, some exclusively. They all acknowledge that price certainty in the delivery of legal services is essential in the new normal of global commerce and LPM is the primary means of providing it. As outside lawyers are forced to understand the old ways are unacceptable, they will also come to understand the benefits to the law firm far outweigh the burdens of moving into LPM methodologies.

    Just yesterday I had the pleasure of implementing an LPM installation with a financial litigation specialist who kept observing the values of moving out of the open ended billable hour world into the LPM environment where price certainty and firm profitability go hand in hand. Two months ago he didn’t understand that LPM could have any applicability to his practice. Within an hour of demonstrating the power of LPM, he said, “I need that.” Today, he can’t wait to roll out LPM techniques to his team and he is excited about how LPM will give him and his team more time in each day to do more work for sophisticated clients that see his market value as differentiated from “the pack” who have yet to “know what they don’t know.” Personally, as a lawyer who has practiced for over 35 years, the gratification I receive from “ah-ha” moments like that are worth far more than the revenue they generate.

    As Nora and Gary have noted, habits are our enemy when critical times of change are looming and the billable hour will hang around in many forms for longer than it has served any valuable purpose for lawyers and clients alike. However, thanks to leading thinkers and doers like you, the fleet of legal services providers (not just the battleship) is turning on its axis and new oceans of opportunity abound.

    Keep up the drum beat, Mike. The sounds of change are being heard.

    [Originally posted in LinkedIn group “Legal Project Management”]

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