This is the first column written by our new colleague here at Adam Smith, Esq., Richard Rapp. Trust me, it won’t be the last–Bruce.
I enjoyed reading the recent exchange here (“What’s Your Client Mix,” April 9, 2013) triggered by reports of the lawsuit accusing DLA Piper of overbilling. As expected the comments included a few laments about lawyers’ strange practice of charging clients for inputs in the form of billable hours – strange in the sense that when we buy a quart of milk we expect to pay for milk, not bushels of livestock feed and hours of dairy workers’ time. Like you, I’ve heard and read that the profession falls short in failing to invent and adopt different charging models. What I notice in these discussions is how the critics of the billable hour often fail to grasp the bigger part of the story – what it is that clients expect in exchange for what they pay.
Assuming the role of the clients, we may say: We know exactly what we want from our suppliers of outside legal services – we want high-quality outputs:
- We clients want excellent and efficient performance of legal services whether delivered as advice, management of legal affairs or “wins” in adjudicated controversies
But it doesn’t end there. That’s not all that clients demand of their law firms. That’s just item one on the list. Here’s the rest:
- We clients want the capacity to commit legal resources to a problem or project with hardly any investment on our part
- We clients want our suppliers of legal services to bear the full risk of building capacity but we don’t want to agree to long-term contracts or exclusivity arrangements in support of the associated long-term costs.
- In fact, we want to be able costlessly and instantly to stop work for any reason and to drop one supplier and employ another at will
- We want our legal suppliers to be able to provide, on demand, teams of varying size and experience to match the scale and scope of different problems as they arise, typically with very little predictability
- We want suppliers to compete with one another and we want to rely on multiple suppliers, sometimes even within the scope of a single project
- We want the ability to supervise, insofar as possible, the level of activity and expense associated with a given project
- However crucial success in legal affairs is to the value of our enterprise, we want to keep legal expertise outside the realm of our core competences – what investors buy when they acquire our shares. We don’t want to be evaluated by markets as creatures of the legal system
On top of all that is the fact that we can’t define legal services outputs as we can quarts of milk. In litigation for example, the output isn’t just wins, it’s also settlements, reductions in the cost of losses and enhancements to the client’s reputation for not knuckling under to legal threats.