Now that “Layoff Friday” has given rise to “drop in profit Tuesdays” the conversation continues to migrate over to hourly billing rates. I wrote here about how Linklaters’ chief, David Cheyne, rejected the call to cut legal fees.
Legal OnRamp’s Paul Lippe has a great piece in today’s The AmLaw Daily, Welcome to the Future: Quality, Suicide, & LawBall where he questions: does quality = cost?
When I was a summer associate twenty-five years ago, quality meant the absence of typos or grammatical errors, correct and complete citations, adherence to proper document forms, and identification of low probability issues. As a general counsel, quality meant managing legal issues to maximize opportunity and minimize losses by understanding the interplay of business, law, and people. Quality had to be measured in outcomes, not intent; in terms of relevance, not cost. What I found was this–the less I spent, the better the quality, and the more profitable the firms who worked with us.
If quality = cost, then the only way to improve quality is by spending more. But clients are going to be spending less. Does that mean an inevitable decline in quality? Not at all. Cost reduction will almost certainly result in an improvement in quality, because it will force clients and lawyers alike to get serious about defining and managing quality, and move beyond the sterile rate increase–rate discount discussion to real shared understanding and win-win. And the firms who move first will gain work and improve profitability.
As a consumer of legal services, I look at the project at hand, the hourly rates of the attorneys, and estimated costs associated with the case. What I have found is that I can get great representation for $375 an hour, or $575. The decision for me, as a consumer of legal services, is not whether or not either attorney can do the job (they both can), but to decide if there is value in spending the additional $200 an hour.
Is that not the question all of our clients are asking these days?