New Year’s Resolutions for Lawyers
Cure your chronophobia and improve your mental health
Every year millions of people make New Year’s resolutions. Many of us will already be thinking about the ways that 2022 can be made better than 2021.
So, what New Year’s resolutions can a lawyer make…and keep? Sure, there will be the usual ones of get more exercise and lose weight, try and spend more time with family and friends etc. But these are all time consuming and if there is one thing a lawyer is usually always worried about, it’s time. Chargeable time in particular.
I would go as far as to say that many lawyers suffer with chronic chronophobia (a fear of time). Let’s face it, it’s not surprising! Law firms dictate that lawyers allocate time to matters based on whether it’s chargeable or non-chargeable. Some law firms have in fact stated that if lawyers think about matters when taking a shower, they should bill that time to the client! Lawyers are encouraged to bill travel time, waiting time, thinking time, drafting time, reading time…all time working on the matter. Lawyers live their professional lives governed by the dreaded clock. Most time recording systems open a stopwatch image when you open a matter on the firm’s case management system and the clock starts ticking. It’s draining having to allocate the appropriate number of 6-minute chargeable units to justify a day’s work.
However, all is not lost, and in 2022 some enlightened lawyers will have no such concerns, as they make the decision to ditch the billable hour as a measure of charging and take the a major step (for a lawyer) of having an detailed upfront conversation with a client and agreeing a price for delivering a piece of work before actually doing it, then doing that work and getting paid. Radical! The difference here is that the cost of the work undertaken is not linked to the time it took to produce the piece of work the client wanted.
I am of course here talking about lawyers realising there is a new way of doing things and embracing value pricing.
They say a picture paints a thousand words. I am very grateful to the very talented and very funny US accountant, cartoonist, and part-time comic, Greg Kyte (@gregkyte) for allowing me to reproduce his cartoon which explains in a picture the point I am trying to make.
Value pricing is not new. It is, however, not widely practiced in the legal profession.
The IT company, BigHand in October 2021 released a well drafted report into pricing and matter budgeting. You can access the full report via this link.
BigHand surveyed over 800 firms in the UK and USA. The report identified, that 82% of firms were experiencing escalating client demands for financial transparency. Let’s call this price certainty. That 27% of firms were finding that clients wanted more Alternative Fee Arrangements – Let’s call this choice.
Now call me an old cynical litigation lawyer (by the way, I am an old cynical litigation lawyer)- but is this really news? Really?
Clients have always wanted to know what a matter will cost. People also appreciate choice. Clients come to lawyers seeking a solution to a problem, but they do want to know what the cost will be. Historically the legal solution has been, I will charge you an hourly rate and you the client will pay that.
I attended a webinar in early November when the BigHand report was discussed with a global audience. I asked the question, “Of the 800 firms who participated in this survey- how many of them had ditched the billable hour?”. The answer given was “none”. Not one. Now we know the BigHand report confirmed 82% of firms have clients asking (in truth probably screaming) for pricing transparency. Those firms now know that the clock and billable hour may not be the solution for all of those clients, as it is clearly not giving the client the information and transparency they want.
Embarking on the journey to ditch the billable hour is a path well worth taking. It has huge benefits, including, but not limited to (sorry – it’s the lawyer in me): -
Lawyers will have better conversations and better relationships with clients about what they want to achieve and how the lawyer can help them do it. It’s a step towards the holy grail of the “trusted advisor” status.
Client selection within a law firm will become paramount – lawyers can expect to act for fewer but better.
Lawyers can expect to attract better quality work.
Lawyers will not have to treat all clients equally- because all clients are not equal.
Lawyers will understand that value is in the clients’ eyes not theirs.
Lawyers will agree payment terms up-front and get paid up-front.
Lawyers can stop doing work for free.
Lawyers will feel valued by clients.
Lawyers will be able to (in most cases) scrap time recording altogether and focus on outcomes and results not inputs and hours.
Lawyers’ businesses will become more profitable as they have dispensed with artificial caps on income earning potential.
However, in my respectful submission … (sorry becoming a lawyer again there), one of the most compelling reasons to embark on the value pricing journey, is to seek to cure lawyers chronic chromophobia, preserve mental health by working smarter not harder, and improve the work-life balance. Surely that is a great goal for a 2022 New Year’s resolution.
Happy New Year when it comes and roll on a prosperous 2022.
Shaun Jardine
Big Yellow Penguin
To learn more about value pricing and the impact it can make on your business and your people, please visit the section on my website or give me a call.