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.