1/26/09
How to - Step One
Having been taken to task on my How To Alternative Bill post by Ron Baker, I have been making some progress on this effort so it's time for an update. Ron presses the Just Do It approach. When we just do it, we need to be able to do two things up front.
First - we need to build budgets in one sense or another to value bill. This is the case whether it's a flat-fee or pretty much any other type of value billing since we need to know our costs on some level. I've heard numerous partners tell me they know "in their gut" how much a matter or case will cost in fees. This is one approach. But it makes sense to have some benchmarks for how much a type of matter will cost. Of course, all matters are different, but some are actually quite a bit alike. Following Ron's lead of just picking a client and getting started, you should consider picking a type of matter you know well to handle for this client. Then you can construct a budget without a lot of effort. You can also check the fees from a few similar matters as a reality check on your estimate. So without too much over-analysis, you can have a good, reasonably informed budget to use. The risk factor is low, likely low enough to match the average risk a firm takes on a new matter. So our risk issue is well addressed.
Second - we need to monitor our performance over the life of the matter to see how we perform against the budget. Even if you choose not to share this effort with the client, you will be learning how to manage against the budget. This will tell you how honest your budget was and it will tell you when you need to make adjustments in how you manage the matter. If you plan to continue to value bill in to the future, this information feedback will be critical to your success. It will help you focus your efforts on higher value tasks and to manage your business with profitability in mind.
Both of these efforts can be kept relatively simple. Lawyers do have a tendency to over analyze and cripple their efforts by seeking perfection. Ron's advice makes sense in that context. And in my recent diggings, I have found that firms can perform both of these tasks. At first they may be very manually intensive, but over time necessity will drive development of automation. And this automation will be laser-focused. Too often large firms serve up great technology that never gets used. In this situation - technology will be highly focused on meeting pressing needs. Thus I see it getting used and being quite valuable.
The Bottom Line! Firms already have tools to handle value billing. These are likely not the best tools, but they can get the job done. And once you start value billing, you will be motivated to implement better tools and will know exactly what you want them to do.
MicroBlogging Within the Enterprise: The Missing Communications Tool
I have touted the benefits of using MicroBlogging tools like Twitter in the past as a good method of replacing listservs and as a way of creating a virtual water cooler to bounce ideas off of others. MicroBlogging - basically, a method of small electronic message communication - has many ways of streamlining communications in ways that e-mail cannot. I recently learned that one of Twitter's former competitors, Jaiku, is not being killed by Google, but rather, it is being set free as open source software.
The details are not complete, but I'm going ahead and assuming that when they say open source, they mean that I will be able to load the MicroBlogging software on my own network and create a MicroBlogging service within my own network. Enjoying all of the benefits of small messaging services, with the security of having it behind the firewall. Jason, over at No Option for Law Firm has a great overview of what it means to have this type of service available in a secure environment. (Note: there is an existing option for MicroBlogging within your organization by using Yammer. However, Yammer is an external application and may make some IT directors hesitant to try it without having control over the backend of the program.)
Many of us work in environments where we have individuals that are highly intelligent, creative, and inquisitive. Bouncing ideas off of these people would not only help you better handle the tasks that are set before you, it may also clue them into different ways of looking at problems, and help them handle task better. Unfortunately, the people within your organization that you could benefit the most from having these "water cooler" discussions with, may be in different offices, or even in different countries. E-mail just doesn't give you the ability to toss out an idea to a community, and see if someone picks it up and tosses a suggestion back. Imagine what would happen the first time you sent out one of those infamous "ALL EMPLOYEE" e-mails. The other possibility is to try to revive "instant messaging" within the enterprise, but I think that is something that gives every technology leader within an organization a twitching eye.
Having an MicroBlogging resource within the enterprise allows you to start building these relationships without overburdening the email system. It also allows you to throw things out there like links to a good article you just read, or to a competitors website with a comment of "can't we do something like this here?" Some of the messages will never be answered, but some will. And, answered by someone that you may not have ever had the chance to work with before. Breaking down barriers within the organization, and allowing the ability to really play off the wealth of knowledge that is contained within the organization.
Of course, there will be drawbacks to MicroBlogging - there's always someone that decides that it is the perfect place to talk about the concert they went to last night, or how there are cookies in the break room. But, to be honest, even these things are not all that bad. IBM has had these Web 2.0 resource internally for over a year now, and they are encouraging any type of communications, even personal activity discussion. The thought there is that people will better know other workers and feel that there is a true community within the organization.
We all hear that communications is essential to a well-run workforce. But, most organizations haven't really evolved past the e-mail phase of electronic communications. MicroBlogging within the enterprise can be the next step toward enabling employees to communicate without overloading either the email system, or each other. I look forward to testing out Jaiku when it is released as open source.
1/22/09
Stretching for KM - the Inauguration
Well I have been out-of-pocket this week since I traveled to D.C. to witness the Inauguration with my lovely wife. We had an incredible time. We had tickets in one of the front sections with seats and actually made it there in time to see the whole thing. We also made it to the reception being held in my firm's office - on the parade route. When the President got out of the Stagecoach to walk, it was right in front of us. Incredible!
One of my lessons from this experience is the value of knowledge. Since we had done our homework well, we had the right knowledge to make our way through the crowds. This meant when the train conductor announced he would not be stopping at the station we selected, we knew of an alternative route. We did so well, we defied The Post. That morning's edition stated it would be "impossible" to make both the Inauguration and the parade. Yet we did.
Yes - it's stretching the definition of KM, but I had to post about this!
[Edit: Special thanks to Ron and Stuart for hosting us!]
Here's a couple of shots taken with my phone.
Giving the Inaugural Address
The sun sets on the Capitol
The sun sets on the Capitol
1/21/09
Visualizing Information with ManyEyes
If you've followed my "product review" blog posts in the past, you know that I am a sucker for presenting information in new and entertaining ways. Well, I found a tool from IBM that really excites me about how information can be presented in ways that help the end-user quickly grasp large amounts of information in a better way.
IBM's "ManyEyes" project is a tool in development by their wonderful AlphaWorks team. I remember playing around with AlphaWorks projects early on in this decade, and haven't really been paying attention to them over the past few years (apparently a dumb mistake on my part.) Yesterday's inauguration promoted the ManyEyes project by allowing people to view the inaugural speech by President Obama as a word tree. ManyEyes allowed you to play around with the speech and see how phrases lead to statements, and helped see the theme of the speech in a new way.
That got me to playing around with other speeches, and I uploaded President Lincoln's 1861 inaugural speech and found that there were two words that stuck out in his speech - "Union" & "Constitution." It was really insightful to use a tool like this to quickly understand the theme of the speech, and to make me look at it in a new way.
Well, it also turns out that ManyEyes doesn't just allow you to present speeches or other pure text information in different ways, it also allows you to take datasets and present those in a visual presentation. I started by taking information that we compiled in our "Big Law Firms onLinkedIn" posting from a few months ago, and uploaded the spreadsheet data intoManyEyes. There were a few interesting visualizations that really gave me a different view of the data. It is really helpful when you can take "flat" information and actually make it pop out at you.
The last thing I've played with on ManyEyes (for this blog post anyway) is uploading geographical information. I looked at the data on home foreclosures in the United States over the past 4 months, and uploaded that into ManyEyes to create a visualization map. If I had enough time, the data could be even narrowed down to the specific county within each state.
So, kudos to IBM's AlphaWorks team for creating a product that allows us to visualize data in an easy to use fashion. I suggest that if you are also interested in presenting information in more interactive and visual ways, go to IBM's ManyEyes website and register to use the product. There is no cost for the AlphaWorks registration, but do remember that anything you post can be seen by any other registeredAlphaWorks member. So, no confidential information!!!
Enjoy, have fun, and share what you think!
1/15/09
Stretching our Twitter Feathers Tonight
One of the best sayings about the Internet is that it is a place "where no one knows you're a dog." However, tonight we are taking the leap and going to actually meet-up, or more appropriately, Tweet-Up with some of our local social media comrades.
The first, of what I hope will be many, Houston Legal Tweets "Tweet-Up" will happen tonight at The Coffee Groundz (@coffeegroundz) in Mid-Town Houston. I'm hoping that it will be just more than the 3 Geeks there (mostly because I reserved a space for at least 10.)
Although we are certainly not the first Tweet-up to ever happen, heck, it's not even the first Tweet-up The Coffee Groundz has hosted. But, it should be really interesting to meet face-to-face with some of the people I've been having interaction with over the past few months, and actually putting a real face to a Tweet.
If you are here in Houston tonight, we'll be at The Coffee Groundz, 2503 Bagby, Houston, TX 77006 starting at 5:30. I hope to see you there. Bring your favorite mobile twitter device, or even your wifi laptop, and your best Twitter story. We won't even require that you only tell the story in 140 character increments!!
Hope to see you there!!!P.S. - You can follow each of the 3 Geeks on Twitter:
@glambert - Greg
@lihsa - Lisa
@gnawledge - Toby
1/13/09
No Risk - All Reward?
He who knows when he can fight and when he cannot, will be victorious. Sun-TzuTo fully appreciate and understand the challenge of How To Alternative Bill, we should explore the various aspects of the challenge. This means we should explore all the reasons lawyers and firms have not embraced new ways of billing their services. In Jason's comment to my recent post, he made a telling comment: "The problem, as I see it for lawyers, is the fact they don't want to carry the risk that the project will cost more than what the lawyer has charged." This presents one of the more pressing challenges for firms as it is based in fear. Lawyers are by nature, more than risk adverse. Instead or measuring and weighing risk, they are trained to eliminate it. In the business world, this approach is problematic as No Risk = No Reward. Lawyers get panicked when they 'risk' not getting 10% of their billing rates. How can we expect them to risk 100%? The trick will be showing lawyers that 100% is not good enough. Risk is a two sided coin and they are only seeing the bad half of it. Put that down on the list of to do's for How To.
1/12/09
Alternative Billing - What Does It Mean For Non-Billable Staff?
Although Toby is the master of this discussion, I thought I'd chime in with some open-ended questions of my own. There has been a lot of talk about attorneys moving away from the billable hour method and look toward either flat rate or some type of maximum billable rate in order to coax more clients (or more of a specific client's work) to themselves and the firm they represent. But, my issue is this: What Does That Mean for Me (the non-billable guy)???
Here are some (very simplistic points) of the benefits that attorneys and clients get from a flat-rate, or similar alternative billing method.
Attorneys:
- Motivated to get client's case completed
- Potential ability to take on additional cases
- Profits are not determined upon the number of attorneys on the roster
- Ability to manage the client's matters rather than looking at the time spent
- Leverage different billing approaches to attract business that may have gone to competitors
Clients:
- Ability to determine exact costs of legal representation
- Simplify the billing process (less time reviewing those billing invoices)
- Use leverage of different billing approaches to determine what works better for their issues
So, if we look past all of the complexities and paradigm shifts that will need to take place in order to get to alternative billing, what does it mean for the support staff of a law firm?
Right now, the way a firm makes money is by charging more hours to a client. The more "billable" people you have on the matter -- the more hours you bill -- the longer you take to finish the matter -- the more you make. Since raising rates this year seems to be off limits, the only way to increase the bottom line would be to hire more billers. And, we seem to see that that isn't an option either.
There is one word that gets tossed around a lot when you talk about alternative billing -- Efficiency. We all seem to agree that the billable hour promotes inefficiency because the attorney will actually lose money by finishing up a matter too quickly. If alternative billing requires that matters be handled more efficiently, then that should push for tasks to be pushed down to the level that can handle them in the most time and cost efficient manner. It should also push for automated tasks when possible and the ability to find the most experienced people to manage the tasks.
Tasks that do not require a licensed attorney to do, should not be taking up an attorney's time. Why pay someone the equivalent of $80 an hour to do the task that someone paid $35 and hour can do? Tasks will be pushed down to the level that creates the highest rate of return. If that means a paralegal does the work instead of an associate, then the paralegal should do it.
Tasks that can be automated should be. This is something that the folks in Knowledge Management have been touting for years, but have not had total success in implementing due to the fact that if a task is automated rather than handled by a biller, then the firm cannot make money off that task. In an alternative billing world, there would be a push to automate these tasks, and train the attorneys and other staff on how to use the automation efficiently.
The end game of alternative billing is to enable the firm to handle more of the client's work in a shorter amount of time, and charging a rate that allows the firm to make as much or more than they were with the billable hour rate. The client wants the firm to handle more of the work in a shorter amount of time, and to have a standard rate charged on each matter that will allow the client to predict the money spent for legal work.
If the firm plans to take on more work, it absolutely has to make the handling of the work as efficient as it can. Finally creating efficient methods, standard procedures, and automating tasks when possible. This should encourage firms to finally implement some of the projects that KM has been discussing for the past few years. It is also a golden moment for well knowledgeable staff to step up and take on take on those tasks that they are qualified to do.
1/7/09
How To - Alternative Bill
Last year I had the opportunity to speak with Ron Baker. I’ve previously mentioned him in relation to alternative billing as he is a guru on the subject for the broader professional services arena. The conversation started with him going in to why large firms need to move away from the billable hour. I interjected and said I was sold on it, but wanted to learn more about How To provide professional services outside the billable hour. Ron’s basic advice was to talk to clients. This is good advice for selling services by value instead of by the hour, but doesn’t address the How To.
This week the Principle Partner (which I took to mean managing partner) for Cravath wrote an opinion piece for Forbes - it’s title: Kill the Billable Hour. Mr. Chelser states that it’s not just clients who hate the billable hour – law firms do too. Although a great marketing move, I question whether Cravath knows How To actually function without the billable hour.
It appears that firms and clients are ready; they just need to figure How To. From my recent post on the Paradigm of Profitability, Jackie Hutter’s comment included a great statement: "In truth, many lawyers are unable to function in a fixed price environment."
In my opinion, this is the challenge. Sitting down and talking with clients about value and price may be a new thing for lawyers, but it is not a particularly daunting task. In contrast, changing the entire way a firm functions will be a monumental challenge. Law firms’ entire structure is built on the billable hour. The way we intake business, the way we manage our knowledge, the way we hire and ‘train’ our people and most importantly the way we compensate our lawyers. The last point is especially important because "you get what you pay for."
So my role as the KM Guy is becoming the How To Guy. And where this all comes to a head for me is deciding where to start. I have good idea of the various processes and systems involved, but I am struggling with the question of where to best attack this problem. It may well involve multiple points of attack, but I think choosing wisely will be very telling for success.
Perhaps it’s a good time to re-read Sun-Tzu’s The Art of War.
Of course ideas, suggestions and thoughts about How To are welcome.
1/6/09
Marketers: Twitter Will Not Make Bad Lawyers Better
Larry Bodine recently blogged about Attorneys Flocking to Twitter listing the the following reasons:
I don't know, Larry... I'm going to play Devil's Advocate on this one. I'm a big Twitter fan myself (@glambert), but if an attorney can't take the time to update a bio, or write a blog or publish something on the legal topic that he or she is the expert in, then I don't see them using Twitter either.
Am I way off on my assumptions??
- Because lawyers don’t have time to update their own bios.
- They don’t have time to write articles.
- They don’t have time to update a blog.
I posted the following in the comment section, but I thought it was provocative enough to repost here.
I don't know, Larry... I'm going to play Devil's Advocate on this one. I'm a big Twitter fan myself (@glambert), but if an attorney can't take the time to update a bio, or write a blog or publish something on the legal topic that he or she is the expert in, then I don't see them using Twitter either.
Twitter is generally a resource of building relationships, that is true, but it is also generally a tool for linking to additional information. So, if the attorney has an old bio, and no blog or publications, what do they gain in 140 characters?
I'm coming at this with a "BigLaw" perspective (read: AmLaw 100 BIAS) - where we are looking for methods of marketing to legal departments of companies. And, from my experience, I'm not seeing a lot of GC's on Twitter.
So, how can I tell a Partner or Associate that they need to be using Twitter in order to build relationships with our aspirational audience, when that audience doesn't seem to exist?
My question is this: If we Tweet, will they come?
My answer is this: Maybe. But, it would take a leap of faith on the Partner or Associates part to take the chance of spending the time on Twitter (and believe me it is much more than posting a 140 character Tweet.)
Am I way off on my assumptions??
1/5/09
In Search of the "Holy Grail" - Competitive Intelligence, and KM's Role
Since the first day I walked into a large law firm, I have been amazed at the vast amount of information that is compiled within the four walls of each of these firms. Even more so, I'm am amazed at the normalization of the data that is compiled. Each office has a specific designation number; as does each employee; each vendor; each client; each matter; each saved document; so on and so on. This type of information can and should be the Holy Grail when it comes to building a knowledge tool and a competitive intelligence resource that will leverage existing information against the firm's future challenges. Remember, it sure helps to know where you are going, if you know where you've already been.However, it seems that all of this normalization gets siloed into its own little database and becomes so compartmentalized that it looks to be almost impossible for one database of information to link to another. Each piece of information usually begins as a unique process, such as a conflicts check, and it lives and dies within that space. Even when we buy expensive third-party projects, like CRM tools, we tend to have issues normalizing the data we import into that resource because we tend to not structure our existing data in a way that allows it to play well with the other data (let alone the new information we are compiling.)
Just off the top of my head, here's a list of information that firms compile and normalize:
- Employees (Employee ID)
- Offices (Office ID)
- Clients (Client ID)
- Matters (Matter ID)
- Matter Type (Matter Type ID)
- Practice Groups (Practice Group ID)
- Adverse Parties (Conflict ID)
- Vendors (Vendor ID)
- Filed Cases (Docket ID)
- Courts (Court ID)
- Documents (Doc ID)
Now, there are probably a few dozen more specific data points that we compile into the multiple systems we use in the every day life of running a law firm.
Let's think about the external information that is out there that could also be used as a reference point:
- Companies (DUNS ID; FEIN;)
- Attorneys (BAR Number)
- Individuals (SSN; Drivers License; e-mail)
Then there are more generic, but specific ID information out there:
- Telephone Numbers
- Zip Codes
- Cities
- States
- Country
- URL (abc-law.com)
The moral of this story is simple -- ask yourself this question before you bring on a new database:
How can I link this new information to my existing information?
If there is no "hook" between the new and the old, then are you really serving the needs of your firm by bringing in this new database? If you cannot tie an individuals information that is housed in your CRM to any of your existing databases, is the CRM really worth the huge investment (both time and money) you are putting into it??
As the old saying goes, "an ounce of prevention is worth a pound of cure", Knowledge Management, IT, and Competitive Intelligence professionals within the law firm need to create a strategy of making sure that each piece of data compiled can be connected to other pieces of data, regardless of which database that information resides. If it cannot, then why purchase it?
12/29/08
The Paradigm of Profitability
Thomas Kuhn's paradigm shift theory says that once a system (usually a scientific school of thought) has answered all the questions it can and then created a bunch of questions it cannot answer, a shift occurs and a new system emerges designed to answer these new questions. These shifts occur over time as schools of thought are born, grow and die.
The legal profession is of course not immune to this idea, but it does tend to hold on to morbid systems longer as its main paradigm is precedence. This paradigm of precedence looks back, and as such remains blind or at least blissfully ignorant to many things in the future (and some things in the present). For quite some time (at least since 1994) I have wondered when the paradigm of the billable hour would mature and die enabling a shift to a new approach. Client pressure would surely force law firms to open their eyes and make the shift. Clients might even demand a new pricing approach. Well, three recent events have caused a shift in my thinking on this topic.
1) Ron Baker's post on the billable hour debate makes the point that pricing model changes come from sellers, not buyers. This of course challenges my theory that clients will drive change to firms. Ron makes solid points on why customer driven price pressure does not change the pricing model, merely the price.
2) ... which is playing out in large firms right now. Clients are really ramping-up the pressure for rate freezes and discounts. Neither of these actions change the pricing model, they merely increase the financial stress on law firms. Firms are initially reacting within their known field of comfort, doing all they can to hold the line on expenses. These efforts will buy firms time. One might argue that the length of the current economic downturn will be pivotal. Firms may ride out the downturn like they have in the past. Things always go back to normal, to the way they were. Don't they?
3) Maybe not this time. Susan Beck's article notes that seven of the best leveraged law firms in the US have announced layoffs or even dissolved this year. What? Leverage is the bedrock of profitability for for firms. Beck comments on leverage:
It seemed like a sure-fire way to make money. But high turnover and rocketing salaries ate into profit margins. Now, the whole pyramid model is looking fragile.The combination of these three things brings me to a new position on the billable hour. Law firms shifting to non-billlable hour pricing will come from profitability pressure, brought in part by client rate pressures. Clients can bring certain pressures to bear on profitability, but they are not in a position to dictate law firms' business models. Which brings us to profitability. Law firms do not measure profitability. This statement may and should sound crazy. Firms measure billable hours, utilization, realization and hopefully leverage. But none of those measure profitability. Even Profits Per Equity Partner (PPEP) is not a profitability measure. That measure does not tell you the margins a firm has on revenue, only the average pay of an equity partner. My Theory: Financial pressures on firms will shift the focus away from leverage to profitability. This focus on profitability will shine a bright light on the limitations of the billable hour. And this in turn will open the door to law firms seriously exploring alternative billing methods.
Subscribe to:
Posts (Atom)
