Legal Business

    • 30 Nov 2011

    Pricing (Part 2 of 6): The cost-plus approach

    A few weeks ago, when I gave a speech at the retreat of a 1,000 lawyer firm, a senior partner asked: "In your experience, how do large firms determine costs?" I replied: "Mostly, they don't. Until recently, most firms were making so much money they didn't need to precisely calculate their costs." Many lawyers seem to think of their standard hourly rates as being equal to the firm's...
    • 30 Nov 2011

    Pricing (Part 1 of 6): What lawyers need to know and why

    Some law firms are going to large companies and offering to do all their legal work for one fixed price, but the firms don't know how it will work out in the long run. I suspect in some cases it will come out really ugly. This prediction was made in 2009, by a senior partner from an AmLaw 100 firm who took part in our LegalBizDev Survey of Alternative Fees . In the two years since, this prediction has...
    • 2 Nov 2011

    Has the Hourly Billing Model Become An AFA?

    In a telephone conference earlier today with a client talking about legal project management and alternative fee arrangements, I was struck by a statement by one of the partners on the call. Although he recognized clearly that AFAs, especially fixed fee matters, makes project management more urgent in today's legal world. He went on to say that that even if the firm was billing on an hourly basis, the client...
    • 28 Oct 2011

    Excuse me, I think your pricing is broken

    I was pleased to read the post on 3 geeks about value billing as this is definitely a topic that needs exploring further, not least because I'm astonished by the number of law firm partners who continually tell me that it's for clients to find a pricing model that works for the firm's services. The common refrain from private practice lawyers (especially those who know how I feel about hourly rate...
    • 28 Sep 2011

    The nine most common types of alternative fees

    When I interviewed chairmen, senior partners, and C-level executives from AmLaw 100 firms (in the LegalBizDev Survey of Alternative Fees ), nine types of AFAs were reported most frequently: Fee caps : In a fee cap, hourly rates are charged up to an agreed maximum amount for a particular matter. Beyond that, if additional work is required to complete the matter, the law firm pays for it. Of course, this is really...
    • 19 Sep 2011

    Year-end countdown: accounts receivable

    As we approach the end of September, firms with fiscal years ending in December should already be taking the first steps in their year-end fee collection campaign. Your firm's billing team will probably do most of the heavy work, but in well-managed law firms the billing partner for each file is the one who is responsible and accountable to his or her partners for collections. Firms with active partner involvement...
    • 14 Sep 2011

    How to manage budget risks – The example of enforcing a non-compete

    This guest post was written by Richard Rosenblatt , a partner in Morgan Lewis's Labor and Employment Practice. It is an edited version of an essay he wrote as a participant in our Certified Legal Project Manager TM program . When we represent clients seeking to enforce non-competes, there are many risk factors that can affect the success and cost of the matter. I used the Project Risk Analysis Template (from...
    • 29 Jun 2011

    How to define legal project management

    When I give speeches, I usually include a slide that defines legal project management. But until recently, I had not been satisfied with my own slide. Legal project management is an emerging area, and no one can be sure what it will look like in a few years. Which makes it hard to define the term in the meantime. In April 2009, when Paul Easton started the first blog in this area, his first substantive post...
    • 10 Jun 2011

    What Does “Cost” Mean?

    The always interesting 3 Geeks blog had a post the other morning about the procurement function in legal in general and reverse auctions in particular . The bigger question is this: Should clients buy legal services based on cost? 1 I don't want to argue the question itself here. (The whole industry is arguing it anyway.) But I do want to look at the meaning of a key term, "cost." Cost is...
    • 8 Jun 2011

    Legal project management: Fundamental shift or flavor of the month?

    Last month, the Canadian magazine Lexpert ran an article about legal project management that began by describing two partners at Stewart McKelvey who participated in our Certified Legal Project Manager TM program . The article went on to discuss other project management initiatives at such firms as McCarthy Tetrault , Ogilvy Renault (now part of the Norton Rose Group) and Osler and said that legal project management...
    • 1 Jun 2011

    Partners: Start Your (Marketing) Engines

    According to the "Firms in Transition Survey 2011" reported on Law360 on Tuesday "unproductive and underproductive partners" (read non-rainmakers) will be cut by 20% of the law firm responding to the Altman Weil (no follow) survey this year. The good news is that the percentage is less than the 33% of firms that cut partners last year. On a separate note, it is also surprising how many law...
    • 25 May 2011

    Building consensus in compensation: the Addleshaws case study

    Another well-intentioned and innovative reform to a law firm's partner compensation system has been aborted. The senior management team at one of the United Kingdom's better-managed law firms, Addleshaw Goddard , has been forced, by what appears to be unexpectedly strong opposition from some of their partners, not to go forward with a proposed transition from lockstep compensation to a scheme more strongly...
    • 11 May 2011

    Litigation Budgets Can Help Resolve Differences Between Inhouse And Outside Counsel

    By Eric E. Bensen & Rebecca K. Myers A detailed budget, one that accounts for the number and nature of anticipated motions, scope of discovery to be taken by each side, including depositions, length of trial, etc., provides an opportunity for In-house and Outside Counsel to discuss their expectations regarding the estimated costs of the litigation using detailed criteria. For instance, if the litigation budget...
    • 11 May 2011

    Budgets Are A Reality For Litigators

    By Eric E. Bensen & Rebecca K. Myers There is probably no other part of the litigation process where the cold hard reality of hindsight has less in common with the lofty expectations of planning than the much demanded, but universally dreaded litigation budget. Budgeting is a foundational brick in virtually every sound business process. While it always poses its difficulties - too low for the department head, too...
    • 4 May 2011

    Legal Project Management Can Help You Get the Fees You Deserve

    Many lawyers are reluctant to discuss money with clients upfront. I know when I practiced, it was a topic I would shy away from as much as possible. But, in this day and age, that is less of an option. Clients are more demanding regarding what they will be charged. Bob Denney has an article on Attorney at Work that talks about what you should do to assure that you get the fee you deserve. He states that most...
    • 4 May 2011

    Engagement letters vs. statements of work

    This post was written by LegalBizDev Principals Mike Egnatchik , Tom Kane , and Jim Hassett . At the beginning of a new matter, lawyers often specify its scope and fees in an engagement letter. The engagement letter is designed to clarify exactly what is included, and excluded, from a particular matter. Some states have specific requirements for what must be included in an engagement letter, and some firms...
    • 15 Jun 2010

    Alternate Fee Agreements Meet Process Improvement

    Following my post on Alternative Fee Agreements for law firms and their clients I had one of those days where I wished I had never heard of the phrase. I was sitting in the middle of a flat fee project. Had I priced by the billable hour, I would be rich and retired today. Instead, my hourly rate is clocking just above minimum wage and it's not finished yet. That's just how it goes sometimes, I guess. Of course...
    • 27 Apr 2010

    Is It “Alternative Fee Arrangements” or “Value-Based Billing?”

    Yes. There has been discussion over the past months as to whether the better term for non-hourly billing is "alternative fee arrangements" or "value-based billing." The answer is yes, and yes. The first "yes" is an increasing number of firms and clients - not a majority, not a tidal wave, but an increasing number - saying "yes" to non-hourly billing. Even more are seriously...
    • 31 Mar 2010

    LexisNexis Tips Series: Mastering the Basics of Alternative Fee Arrangements

    Rising client demand for alternative fee arrangements (AFAs) has forced an increasing number of law firms to move away from the hourly billing model. In many respects, firms are implementing AFAs in rather entrepreneurial fashion without benefit of proper planning and controls, says Norm Mullock of LexisNexis. Norm suggests more formalized initiatives with enhanced tools and processes borrowed from best practices in innovation...
    • 24 Mar 2010

    The Future Value of Today’s Inventory

    Most law firm managers understand intui­tively that the value of inventory (both WIP and A/R) degrades over time, but by how much and how quickly? The ability to un­derstand and answer these two questions is the first step in preparing a realistic, forward-looking valuation model - one that can iden­tify opportunities and drive action. To begin to assess the future value of cur­rent inventory, it is...
    • 23 Mar 2010

    Gaining Confidence in Alternative Billing

    The tide appears to have turned in favor of alternative billing solutions. Amid the continued economic tumult, firms are responding as never before to client demands for more creative pricing. As these arrangements play out, however, some firms are likely to find the deals they've struck are less profitable than anticipated. Inevitably, such unwelcome results will stem from the fact that in pricing such matters, firms...
    • 22 Mar 2010

    Gaining Firm Acceptance of a Profitability Model

    As law firms grow in size, and expand geographically and across practice areas, the use of firm-wide profitability tools has become a business necessity. But understanding the urgency to adopt or update a profitability model doesn't guarantee its successful implementation. The road to success begins with the ability to anticipate the pitfalls that may impede the process. In addition, firm managers should consider...
    • 3 Mar 2010

    Does Bringing this Suit Make Sense?

    The second in a series of articles about how to reduce litigation costs while getting better results. The following is adapted from Chapter I.C of Bensen & Myers on Litigation Management . Once the pertinent facts and applicable law are analyzed and a detailed budget prepared, virtually all of the pieces of information needed to decide whether to bring suit are available except one: the outcome. There is typically...
    • 24 Feb 2010

    What Good is a Litigation Budget?

    The first in a series of articles about how to reduce litigation costs while getting better results. The following is adapted from Chapter I.B of Bensen & Myers on Litigation Management . There is probably no other part of the litigation process where the cold hard reality of hindsight has less in common with the lofty expectations of planning than the much demanded, but universally dreaded litigation budget. Budgeting...
    • 27 Jan 2010

    Milking a Cash Cow

    With all of the reporting capabilities of sophisticated time and billing systems, it is easy to lose sight of the most basic rule of law firm economics: Cash in must exceed cash out. To that end, one of the most valuable assets any business can have is a cash cow. Yet, many law firms never benefit from practices that could be cash cows because they just don't seem to understand the concept. It sounds pretty simple...