“Our Fees Are Our Fees” and Other Cringe-worthy Things Said by Lawyers about Their Billing Practices

In my 19 years of law practice, I have been in more client pitch meetings than I can count.  They generally follow the same format: You tell us about why you are looking to engage legal counsel and then we tell you about our firm’s capabilities, the specific skills of the attorneys in the room, and how we are going to solve your problem. Toward the end of the meeting, when we have convinced you of how wonderful we are, you approach the third rail topic of fees and we all brace for the jolt as the lawyers in the room deliver the shock of various hourly rates and retainer amounts.

You would think that after delivering the shock of hourly bill rates, lawyers would then offer some words of comfort or assurance to reduce some of the sting that they have just caused. They don’t and, in some cases, when clients recovering from the shock of hourly rates ask about flat fees, capped fees or other alternate billings arrangements to try to set some sort of budget, they are met with the response of “Our fees are our fees.”

“Our fees are our fees” is a succinct and firm way of telling clients that the lawyer or law firm alone is determining the value of the services it is providing, that the value provided is not open to question, and that all financial risk in the relationship falls squarely on the client alone.  Even when the lawyer discusses a budget and says that the firm will try to stay within the budget, “Our fees are our fees” is the lawyer’s version of “it is what it is” and serves as the get-out-of-jail-free card that absolves the lawyer and the firm when it exceeds that budget. It sets the power dynamic in the relationship to ensure that the firm retains control, not the client.  Like I said, cringe-worthy.

Another common phrase that I have heard uttered by lawyers over the years to clients is “We sell time.” There are two very serious problems with this statement.  First, it is premised upon the assumption that all time is equally valuable.  This is not true.  Imagine a situation where you and a friend or loved one are sitting in a room together but both are looking at smart phones and not generally engaged in conversation. Would you consider this time spent to be “quality time” with your friend or loved one? Of course not.  Likewise, when you call a lawyer and spend the first few minutes discussing recent vacations before moving onto the legal matter for which that attorney is engaged, was the lawyer’s time discussing his or her recent vacation of equal value to that portion of the discussion spent on your legal problem?  Again, the answer here is no. All time is *not* equally valuable.

The second problem with “We sell time” is that this statement shows that the lawyer’s interest is not fundamentally aligned with his or her client’s interests.  If you are focused on selling time, your priority is accumulating (selling) as much time as possible. Clients’ priorities, in contrast, are focused on outcome and efficient resolution. The lawyer’s priorities and the clients’ priorities end up competing against one another.

Many lawyers do not do a very good job articulating their value proposition but the real value of what lawyers provide to clients is not time but access to knowledge and skill that can be deployed to produce a desired outcome (or to come as close to the desired outcome as possible). Knowledge, skill and outcome are what clients truly value. However, instead of coming up with a fee structure that is based upon knowledge + skills + outcome = value, we use time as a crude approximation of these three things. Having used the crudest method of measurement available, some of us then resort to trite statements of “Our fees are our fees” and “We sell time” to defend us when a client, upon receiving an invoice, determines that time does not equal value.

Fortunately, there is a small but growing number of lawyers working on coming up with better ways of aligning what client’s value with legal fee structures. There is no perfect answer yet and my expectation is that there will continue to be much more trial and error before new billing models firmly take root across many more firms.  Until then, try to find the lawyers and firms that are leading the way with offering alternative fee models or, at the very least, do not say “Our fees are our fees” or “We sell time”. You and your wallet will likely have a much better experience with that law firm if you do.

A Firm for the Charlie Buckets of the World

I can’t say that Willy Wonka & the Chocolate Factory was a favorite childhood movie of mine.  When I was younger, I found the movie to be weird and scary (in some parts) but would nonetheless watch it when it aired on television from time to time. However, you do not have to like something in order for it to make an impression on you and in the intervening years since childhood, I have come to appreciate the film on a number of levels.

As we’ve been thinking about how to build Abridge Law and create a next generation law firm, my thoughts keep coming back to the characters from the Willy Wonka movie. I do not know why (we are attorneys, not psychologists).

For many law firms, the perfect client is a combination of Augustus Gloop and Veruca Salt.  Augustus was that insatiable little fellow excessively consuming chocolate, sticking his face into the chocolate river to slurp up chocolate without much regard for the risks to his health or personal safety. Veruca Salt was that sassy little girl who wanted the best of everything, wanted it now and wanted it regardless of cost. A combination of those two personalities makes the ideal client for most law firms ““ the client who is in constant need of attention and service (perhaps even excessively so) with little regard to cost.

But what about the Charlie Buckets of the world?  The guys and girls who work hard, who want and enjoy quality, but are more modest in their consumption given their more limited financial means. Well, just like in the movie where much of Willy Wonka’s time and attention was consumed by responding to the situations created by Augustus Gloop and Veruca Salt, the Charlie Buckets usually take a back seat to the more demanding (and more lucrative) clients and receive far less attention.

To us at Abridge Law, part of the mission of being a next generation law firm is to create platforms and processes that the Charlie Buckets of the world can afford while feeling like they are getting the same quality and attention as the Augustus Gloops and Veruca Salts.  It requires the inventiveness and creativity of a Willy Wonka. It also requires commitment to Grandpa Joe’s notion of equal treatment for all.  Finally, it needs the Charlie Buckets to take a chance on finding that hard-to-find ticket to the wondrous place that is the chocolate factory.

To the Charlie Buckets of the world, consider this post to be your golden ticket. Our (virtual) doors are open to you and we hope that you will be delighted by what you find inside.

Why Big Law Firms Are Like the Cable Company (and why clients should cut the cord)

For the past several years, statistics have been showing that increasing numbers of cable subscribers are “cutting the cord” on their cable TV packages and opting for cheaper online streaming services that offer limited but more curated content to specific viewing audiences. We all know them and perhaps subscribe to a few of them ourselves – YouTube TV, Netflix, Amazon Prime TV, Hulu, Disney+, etc.

Why is this migration away from cable TV subscriptions happening? Simply put, there is a complete disconnect between the cable company’s outdated business model and the consuming preferences of their subscribers. The cable company business model is premised on being the gateway for *all* media content – network news, local broadcast stations, sports, movies, culture, reality TV, children’s shows, international content, premium channels, etc. The cost of acquiring and managing all of the content is huge and gets passed along to customers in the form of monthly bills averaging about $200 per month. However, it is estimated that cable subscribers only view about 15% of the channels available through their cable subscription. In other words, cable subscribers are paying for more than what they really want and the result is that they are willing to limit their viewing options by selecting more budget-friendly streaming services instead.

This disconnect between the cable company’s business model and subscribers’ viewing preferences has been going on for decades, even noted in the title of one of Bruce Springsteen’s songs, 57 Channels (And Nothin’ On), released in 1992! With streaming technology becoming cheaper and faster, new online competitors have come onto the scene to offer more limited content for far less money than traditional cable companies which has made it easier for cable subscribers to cut the cord.

Four years ago when our household cut the cord on our cable TV subscription, we were delighted to have a service that gave us just 40 channels – all of the ones that we most watched – for $50/month. No one in the household suffered. Sports fans were able to watch sports. Network sitcom lovers were able to watch their favorite sitcoms. Since then, we have added a few more streaming services – Netflix a few years ago and Disney+ earlier this year (we have some Star Wars junkies in our house) – and we still are paying less than what we were paying for cable and have all of the access to the content that we want. We do not regret our decision at all. And should someone in our household develop a new interest in independent films or other content that we don’t currently have, we will evaluate the costs and benefits of adding a new service – perhaps at the expense of unsubscribing to an existing service – when that day comes. Until then, we can happily live without the IFC channel.

Big law firms are a lot like cable companies. If you look at the websites of most big law firms (and by “big” I’m talking about firms with 30 or more attorneys), you will see them promoting themselves as a “full service” law firm. This means that whether you have a business issue, estate planning problems, real estate matter, family law or litigation case, the firm has the talent and tools to assist you with your issues. Similar to cable companies, the acquisition of such diverse talent and the infrastructure needed to handle such a variety of work requires a great deal of resources and expense which gets passed along to clients in the form of really large hourly billing rates. As with cable subscribers who view just a small portion of the channels available to them, most law firm clients rarely have need of *all* of the services that a big law firm offers and certainly never all at the same time. After all, a restaurant owner is likely never going to need an attorney specializing in energy law. Yet clients find themselves stuck with a model that requires them to support the cost of more services than they actually need or want.

Currently, the options for legal services other than through big law firms are not great. Online services like LegalZoom and RocketLawyer offer legal documents but not legal advice. Many smaller firms structure themselves like big law firms, sometimes with lower billing rates that are still not entirely affordable. A small but growing number of firms, including Abridge Law, are beginning to offer subscription plans, flat fees and other service delivery models in specialized areas of practice. They are the YouTube TVs and Hulus of the legal industry trying to disrupt an industry that resists changes to an outdated business model. The ultimate success of these disruptors will rest – as it usually does – on large numbers of consumers willing to make a change and demand more customizable and efficient service delivery models for their legal needs.

Are you ready to cut the cord and find a better service to fit your actual legal needs?

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I co-authored an article ten years ago examining the billable hour model as used by law firms. The article examined both the history of how the billable hour model came into existence and made the argument that the model was unsustainable in modern law practice. If you remember, ten years ago was around the time of The Great Recession and every business was hurting. The Great Recession was supposed to be the turning point when clients rose up to demand more predictable and fair pricing from law firms – except that never really happened. Clients asked for better pricing and law firms responded by slashing their overhead, mostly in the form of laying off associates, and offering short-term discounts on their hourly rates. Once the worst of the economic hardship passed, law firms began rehiring and slowly increased their rates again. The broken model continued.

I have never lost my belief that the billable hour is a terrible way to bill clients, especially in areas of law, such as business and transactional law, that are not as susceptible to wide variation in output. I have spent ten years thinking about alternative fee arrangements, experimenting with flat fee billing arrangements, and tinkering with automating and streamlining document and administration workflows. I have learned what is important to clients (responsiveness and a genuine, caring attitude) and what is not (fancy office space). I have also learned new technologies and how to harness them to work together in the most efficient way possible.

So now, right now in the middle of a global pandemic, the stars have aligned to bring me to a place of launching Abridge Law.

Why “Abridge Law”?

There are numerous studies and reports circulating in the legal industry that indicate that law firms currently only serve about 20% of the actual legal need of the U.S. population. That leaves 80% of the population either going without legal support or seeking support through cheap online alternatives that promise fast and simple solutions but deliver low quality documents and services that often times leave the user no better off than when they were on their own. “Abridge Law” is the embodiment of my commitment to try to close the gap between those with legal needs and the professionals who can serve them.

Do I have this new law firm model all figured out as a write this first blog post? No. Innovation is the combination of the creative process and regular experimentation. There will be adjustments and pivots along the way and I’m ready to take them on. I’m excited to see what we, as a firm can do in partnership with our clients, to bring about this sorely needed change in the legal industry.

Onward!

There is only one thing stronger than all the armies of the world: and that is an idea whose time has come.

– Victor Hugo