- There’s a fundamental asymmetry in the conversation:
- One asymmetry is that of consequences. If the client chooses a firm that delivers a wonderful result, everyone wins; but if the chosen firm delivers a disappointing or even deleterious outcome for the client, the firm still gets paid. Pretty much in full.
- The other asymmetry is one of disclosure and, to be pointed about it, candor: The client needs to tell the firm as much as honestly possible about the engagement and what the client knows, while the lawyers’ instinct and practice is to guard information, hedge predictions, and avoid definitive statements. This is true even when the firm is posed direct questions about simple business arrangements and not ultimate outcomes, such as “Who will be working on my matter?”
- Most commercial transactions in B2B land involve meaningful risk-sharing. (B2C is quite, but not utterly, different; while there might not be personalized or bespoke “risk sharing,” retailers accept returns and any self-respecting service provider will provide discounts or accommodations for disappointment–think of the totemic free drink at the bar while you’re waiting for your tardy reserved restaurant table.)
Not to reprise an old joke, but the lawyer/client relationship is like the pig and the chicken’s involvement in your breakfast of bacon and eggs: The firm is involved, but the client is all-in. “Risk sharing” has no seat at the conventional lawyer/client table. - Finally, there’s an asymmetry, or more precisely a connection so indirect it strains common usage to call it “tenuous,” between the firm’s fees (please feel free to call it the price, since that’s what it is), and the value delivered to the client. When clients talk about receiving “value” from their law firms, they’re not speaking in metaphysical terms or trying to be difficult or oblique: They mean what is the benefit they derive from your services compared to the price they pay? (The topic of “value” is, in and of itself, worthy of another column, or more than one other column, but suffice for now to say that value can be delivered at all price points and quality levels from the top of the food chain to the bottom. Ferrari’s provide value, but so do Honda Fit’s.)
A final point.
Let me invite you to surmise how this left me all feeling about the state of our industry, viewed from the client’s seat. No, you don’t have to wait for the answer.
My impulse on leaving the more unsatisfactory of these meetings was straightforward: The arrival of truly useful solutions to this type of sophisticated but not profound question cannot come soon enough.
When, oh when, will Axiom, IBM Watson, or Google’s hypothetical embedding within what Thomson Reuters “knows,” be ready to address this kind of problem? Fast. Cheap. And most important, Right.
If you wonder why clients are pushing back on fees and what that objectionable word “value” really means, all I can say is: You should try this for yourself some time. Move from the audience to the stage, just for once.
Great article.
Your wish is granted. Premonition has a system to measure Attorneys and their actual success(as opposed to peer recognition perception).
I think you’ll like this article:
http://premonition.ai/everything-you-know-about-lawyer-selection-is-wrong-big-data-analyzes-litigation/
Great article, Bruce. I really like your description of the asymmetries. The foundations of the house of cards shake more by the day.
I’ve seen this article/blog post shared widely in the UK (legal circles of course), but, so far, I ‘ve seen no lawyer push back against any of the points — perhaps silence connotes acceptance!
I’m bound to ask, though, why the lack of transparency about the firm/s name who made the pitch, who clearly don’t get it! Tell us who they are, and perhaps that way they might improve.
I’m not sure the legal market is hugely different apropos any other professional services market (or medicine), meaning the client/customer will always be at a disadvantage in being imbued with the necessary knowledge to make a fully informed decision.
One wonders if perhaps a better form of ‘selection’ might not have been adopted that pre-screened those firms that clearly were less interested in the client than serving their bottom line but, whatever the position, I wouldn’t necessarily conclude from this that all firms are the same, in fact I know they’re not (I’ve worked for enough in my time). In my case, I was very happy to share the risk with a charity client who wanted to sue its previous accountants. In fact, from memory I was the first lawyer in my firm (a large commercial practice) to offer and undertake the work on a full conditional fee. (This was as long ago as 2004.) The bigger point to my mind is that lawyers still have a long way to go to really understand their clients’ interests beyond the transaction. In this case, I can’t comment on separate representation but I would want to have nailed the various aspects of the job well before I did the pitch meeting.
Julian
Julian: First of all, thanks for contributing to the conversation. A few quick observations:
Bruce, thanks for another great article. The irony is that the truths that you speak are so utterly self evident (“put yourself in the other guy’s shoes for a minute”) that it’s hard to understand how so many of us in the profession don’t get it. The funny thing is that you would think that those white shoe guys who were coming to the interviews would have read a few of your blog posts before coming! All the best from Toronto.
Paul Bannon, B.A., LL.B., LL.M.
Barrister & Solicitor
#360-33 City Centre Drive
Mississauga, Ontario L5B 2N5
(905) 272-3412
(905) 272-0142 fax
Paul@BannonLaw.ca
Bruce,
Welcome to the world of real estate speculation/development. Maybe I am missing something here, but the question of value here seems pretty straightforward to me, assuming baseline levels of competence and client service. At the end of the day, most developers approach legal fees as just another vendor line item on the financial pro forma to be tweaked to get the projected returns warranted by the developer’s specific risks in the transaction. This is true whether you bundle or unbundle the various services that would be required here. And most developers will usually pay some kind of premium for timeliness of delivery and certainty of amount. Admittedly knowing very little, those seem to be the value drivers here as well.
It is a little scary the firm reacted like that. Not to be a Monday morning quarterback, but anyone working in this world regularly should know those kinds of questions are coming because bottom line costs drive the very feasibility of the entire project.
The representatives of the composite firm whose responses you summarized said:
1. We don’t know what services you need.
2. We don’t know what we will charge you for providing them.
3. We don’t know how we will charge you for providing them.
4. We don’t know who on our staff will provide them.
5. We ourselves have never handled a 74-711 exemption and we don’t know if anyone else in our firm has done one either.
6. We ourselves don’t have the experience in land use to even guess how likely you are to get your permit, and it didn’t occur to us to bring someone along who does.
7. We are, however, very smart, and we work with other very smart people, and can answer any other questions you have.
Contrast your legal representation bidding experience to that of a competent contractor’s bidding experience:
– Let’s go through what you need.
– I’ll make gentle suggestions along the way during the walk through to improve the project. (Free of Charge!)
– I can get you an itemized bid for labor and material cost, along with a projected due date. I’ll have it for you within 48 hours. (Aside: The experienced contractor already has a back-of-the napkin estimate of the business costs to do the work. Contrast this to the partner in your example who will need to poll his office colleagues when he gets back — and probably not all the necessary ones.)
– Upon request, I can provide receipt copies for materials. Or you can purchase that materials you want for the job. I can handle the labor.
– Yes, there are unforeseen problems, but I will inform you if it is material to the job and mutually adjust the bid proposal accordingly. (Unlike the “surprise monthly legal bill” followed by the client “I’m asking for discounts on this bill” communication.)
– Yes, I will handle any of the necessary permits to do the work. Typically, those are permits A and B. If I encounter X situation, I may need permit C too. I can itemize those costs.
– We can agree to clauses for missed performance. (e.g. Discount by 10% if past due date or start date, absent any material changes.)
– You can view photos of prior work or visit other ongoing site work similar to yours.
– I will return for minor touch-ups as part of the bid. (Again if it is not a material change to the original job.)
– If you are happy with the work, can I use you as a future reference?