The Value Sweet Spot

Jay Shepherd’s post on ‘associates as overhead’ got me thinking about associates and value. Jay closes his post with the comment, “They (clients) want to pay for value.” His main point is that law firms should bill by value and not by time keeper. This idea has merit, but as I have previously posted, clients are struggling to get from here (hourly) to there (value). In the meantime, I would be cautious about a blanket write-off of associates in the value column. My read on associates and value is that the dialogue tends to focus on first year associates who make $140-160k in salary. To support that rate of pay, they have commensurate billing rates. Commentaries on value-to-price (just given rates) for this type of work are generally not favorable. And these comments dominate the associate value dialogue. Turning this evaluation up-side-down – if I were in-house counsel, which lawyers would I want working on my matters? The quick response might be Partners, since they have the most experience. However, I would challenge that assumption. If it were me and my fees were in any way, shape or form connected to the billable hour (as most fees are these days), I would want senior associates doing as much of my work as possible. I would only want partners on high-level tasks, drawing more on their wealth of knowledge than their practice experience. Senior associates are in what I would call the Value Sweet Spot. They have a strong level of experience and mid-level billing rates. Of course, I would make adjustments to this approach for matters on the fringe - matters that are either very commodity level or highly technical. But those types of matters are more exceptions than the bulk of the legal work done at firms. The Moral of My Story: In-house counsel would be wise to drive work to the Value Sweet Spot. Senior associates fit nicely in this spot.

Bookmark and Share


Mikethelawstudent said...

I wonder if the level of pay lawyers recieve might decrease because of the present economy. I have been told by older lawyers that law practices are recession proof. But I seriously doubt that assertion. As the economy retract mid level associates might find themselves in a pretty good position compared to partners who charge too much.

Anyway I enjoyed reading your blog.



Jackie Hutter, Intellectual Property and Patent Business Strategist and "Recovering Patent Lawyer" said...


I had to laugh out loud at this post because I used to have this discussion all the time with my fellow partners when I was a prestigious IP firm in Atlanta. In order to do our work, we had to read patents, but even if you are a fast reader, it takes X time to read a patent. At some point it becomes impossible for you to read fast enough to get your rate for the cost that a client is willing to pay for a particular task. However, one needed to have a certain level of experience to do the work efficiently, which meant that 4 or more years were required to do the work without certain write offs. So, we had a "sweet spot" too. For a couple of years, as a senior associate-junior partner, my sweet spot was so "sweet" that my efficiency was over 100% (don't ask me to explain). In truth, more senior partners could not "get their rate" and would have to write off time.


© 2014, All Rights Reserved.