In Search of Perfect Client Service

Illinois Privilege Law: A Trap For The Unwary

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Mon, 08 Feb 2010 16:43:17 -0600

The Chicago Daily Law Bulletin just published a short article by my colleague, Reeghan Raffals, on Illinois courts' narrow definition of the "control group" entitled to privilege and Illinois' rather restrictive choice of law rules used to analyze privilege issues. Those considering litigating in Illinois are well-advised to understand the significance of the rule before pulling the trigger.

Welcome Confluence Law Partners to Blawgo-sphere

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Fri, 05 Feb 2010 13:50:18 -0600

My partner Nicole Auerbach and I had a chance to meet yesterday with Dave Bohrer and Michael Kallus of Confluence Law Partners. We love these guys because of their approach to pricing legal work in their area--IP litigation. CLP does flat fee IP litigation. That's right. I'm not making this up--check out their website.

Dave and Michael told us about their new blog--Flat Fee IP. I just love the premise of the blog--sharing the experiences, good or bad, of flat fee pricing. Be sure to check it out.

Customer Service In Action: A Great Story

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Mon, 01 Feb 2010 13:40:54 -0600

Kayak.com is a way cool company. If you travel and want to choose amongst the best options, rather than having the choice made for you, it is the best place to go. But that's not why I am writing this post. My partner Nicole Auerbach shared this great article about one of Kayak's founder's, Paul English. It begins with this quote from English, surely designed to capture the attention of anyone who cares about customer service:

"When the phone rings, I jump over desks to get to it. I love talking to customers, even angry ones."

But read on and you'll see the approach of someone who's serious about customer service:

"The engineers and I handle customer support. When I tell people that, they look at me like I'm smoking crack. They say, "Why would you pay an engineer $150,000 to answer phones when you could pay someone in Arizona $8 an hour?" If you make the engineers answer emails and phone calls from the customers, the second or third time they get the same question, they'll stop what they're doing and fix the code. Then we don't have those questions anymore.

There's so much more in the article, including the red phone story, that illustrates the thinking of someone who is into customer service. Great company, great article.

PS--Kayak is a client of ours, and Karen Klein, the company's General Counsel serves on our advisory board, so I don't claim neutrality here. But I do use Kayak in planning my trips!

Responsiveness is damned important

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Sat, 30 Jan 2010 10:24:19 -0600

I have a new matter on which I inherited local counsel. I send emails asking simple questions, like "did you do a choice of law analysis before saying State A's law applies." Days later, I'm still waiting for a response. I am waiting for, literally, a one word response. The fact that I haven't gotten an answer is interfering with my ability to plan what I want to do on this case.

Will I survive. Absolutely. Will I hire this law firm again? Never.

Think about the last question. I sent my email query to 3 lawyers, all partners. And because of the poor service of those 3 lawyers, I have now ruled out the entire law firm.

Do you think clients think about their lawyers the way I do? Ask yourself this question: are you prepared to wager everything that all clients don't?

Client service may not be the reason you get a new client, but it certainly is a critical factor in whether you get new matters from a client.

Change And The Art Of The Possible

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Sat, 30 Jan 2010 10:14:36 -0600

I can change things I have control over. I cannot force others to change things that others control. I cannot force clients to forsake their rule that lawyers must submit timesheets. I cannot force every court I practice before to abandon their practice of relying on heavily on timesheets when reviewing fee issues. I can discuss those issues with clients and courts and urge them to change, but I cannot force them to do so. One I have made the effort to persuade them and they choose not to change, I am left with the decision to either play by their rules or move on to find others who allow me to exist solely in the space I want to be in.

Change is a process. People do it at different paces. Some take giant steps, some none at all. It's messy. And it takes time. Unless you are one of those people who can define your space and survive by requiring those who play in your space to play by your rules, you have to expect this messiness and deal with it.

Voltaire is reported to have said "the best is the enemy of the good." In the context of change, let's not let perfect become the enemy of better.

Timesheets. Are They Core To Your Business Model?

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Wed, 27 Jan 2010 14:29:08 -0600

Yesterday on Twitter, a query was made as to whether there were any truly new law firm business models. A highly regarded legal consultant identified Valorem, Bartlit Beck, Traverse Legal and Shepherd Law Group as examples. There ensued a debate whether any of these firms other than Shepherd Law Group were different. According to the protagonist in this dialog, if a firm used time sheets, it was not "different."

At one point, I was laughing so hard that I started to cry. The idea that your business model is different and acceptable if you eschew timesheets but not different or acceptable if you use timesheets is lawyer-centric (or consultant-centric or accountant-centric) in the extreme. The debate on Twitter (perhaps owing to the 140 character limit) seemed to devolve into a "my way is better than your way" argument where there was precious little recognition of the business realities driving the choice of whether timesheets are used or not.

Let me begin by acknowledging that my preference is for a world without time sheets. If I am ever a buyer of legal services, I won't have my lawyers use them. But right now, I live in a world where I serve clients. Our clients are sophisticated buyers of legal services. If they tell me they want to see time records with a bill, even if the bill is not hourly based, I provide them. For many clients making the transition to non-hourly billing, the hourly records are important as they gauge value. It would be nice if they all believed as Ron Baker does, but that's not my world. I suppose I could refuse to take on such clients, but I have mouths at home that clamor for food. I can just hear the voices out there telling me I am a coward for not abandoning time sheets completely in the hope that clients will come as they have to others. With due respect to these voices, I do not see enough clients willing to go that road that I am willing to write-off the chance to represent 99% of corporate America. If I had a practice dealing with smaller matters or individuals or a more local clientele, maybe things might be different.

Beyond this point, both the expectation that courts have that any fee requiring court approval have time records to support it and the need to internally know who is available make time records important or useful. One person on Twitter wrote "since time records are an inherently inaccurate tool, how can they be used in court?" I have not debated the wisdom of this eons-old practice with any judges. But since I expect to be asking several to approve fees, I don't want to run the risk that I come across a judge who chooses to follow lines of authority basing approval of fees on time records. The visual of spitting into the wind comes to mind.

I've never told another lawyer that he or she should or should not use time records. I couldn't care less. I have spoken and written at length about aligning economic interests with clients. I know that this has to be done in a competitive marketplace and even those who don't use time sheets compete on price, at least to a degree. If they are more expensive than a comparable lawyer, the odds are many clients will chose the lower priced alternative. So if the lawyer factors into his or her pricing what a competitor is likely to charge, they have created a fee based, to some degree, on time.

If the debate is whether use of time sheets is relevant evidence of employing a different business model, I will pass on that debate as useless and a waste of, dare I say it, time. If the discussion is about how lawyers are aligning their economic interests with their clients, how workflow is different, how people are engaging in practices that deliver better results by eschewing use of baby lawyers, how lawyers are creating "wow" customer experiences and whether a model that is based on those things is different, I'll spend some time on that discussion because its about what the customer gets out of the relationship. But even these kinds of discussions are like talking about which team is going to win the Superbowl before the game is played. The conversation might be fun, but it really doesn't matter all that much, does it? The game still has to be played.

Instead of criticizing those who dare to change for not changing enough, it seems more prudent to be applauding anyone who tries something that's even a little bit different. A bunch of little changes will eventually beget big change. A larger scale change will benefit our clients, and that, to me, should be the focus of discussions.

Storytelling ... and Client Service

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Tue, 26 Jan 2010 11:09:30 -0600

It is amazing how one well-written sentence can communicate volumes and engage the reader to think beyond the sentence. My friend Dan Hull writes my favorite blog, What About Clients?. He had a post the other day with the simple title, Storytelling. The entirety of the post was this quote from Anton Chekhov:

Don't tell me the moon is shining; show me the glint of light on broken glass.

One sentence. Huge imagery. Huge.

I immediately posted a comment to the effect that Dan must be one hell of a trial lawyer. But I continued to marvel at the sentence, and I started wondering about my dealings with clients and colleagues. Do I tell them the moon is shining or do I show them the glint of light on broken glass? Do my clients see in their mind's eye the reflection of moonlight on a shimmering lake or do they hear my voice declaring that they must believe the moon is shining. Am I creating the image, the feeling, that I want or am I simply passing along information. Imagine one client telling a friend, "my lawyer shows me the glint of light on broken class." That lawyer is who I want to be.

Valorem's Mark Sayre: sharing insights on securing insurance coverage is great client service

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Tue, 26 Jan 2010 10:21:14 -0600

My partner Mark Sayre spent a lot of years trying cases on behalf of insurance companies. Turns out, all that work for insurance companies not only helped him become a great trial lawyer, but it also gave him loads of insights into the netherworld of insurance coverage. Mark has written a paper on how businesses can maximize their coverage, and wanted to share it. Here it is.

There are a lot of lawyers that would not share this information with the world at large. But it's a web 2.0 world, and Mark is a Valorem 2.0 lawyer!

Data Point: Experience and Size save money

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Fri, 22 Jan 2010 11:31:50 -0600

I don't know why I didn't see this article before, but I just read Inside Counsel's September 2009 article on game-changing law departments. CN, a multinational transportation company, shifted work from large firms to smaller firms. How has that worked out? Well, it seems.

The results have been surprising.

"I was expecting to pay X per hour, for Y number of hours," he explains. "So according to my calculations, we should have achieved a 25 to 50 percent reduction in legal spend."

But what Rudnikoff didn’t expect was that the work at these small firms would be handled by more experienced lawyers than the large-firm associates who previously handled the company’s less sophisticated work. As a result, they complete the work much faster at a smaller hourly rate, generating closer to a 75 percent reduction in cost.

And the risk of not having the work done by big firms? Not a risk at all, as it turns out.

He adds that there is less risk in this approach than many companies may think. "Because we can afford to go with the most experienced lawyers in the small towns, the risk is lower," he says.

In this day and age, with so many big firm lawyers having left those firms, it is easier than ever to have the same lawyer you would have had at a big firm just a few years ago now doing your work at a fraction of the cost. It's not like lawyers have their brains siphoned when they leave the halls of BigLaw, after all. But BigLaw alums aside, lawyers who have run their own firm, who have dealt with the issues of meeting payroll and paying health care costs, have had an infusion of business experience that counts for something as well. Brand counts sometimes, but too often it is just an excuse.

What Were The Firm's Incentives Under This Fee Agreement?

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Fri, 22 Jan 2010 07:44:30 -0600

Not every alternative fee creates the same incentives. Check this one out, as reported in the AmLaw Daily:

Drinker took on a patent case for a company called AgriZap and signed an agreement under which the firm would be paid its full fees over an 18-month period if AgriZap lost at trial. But if Drinker were to win the case for AgriZap, the agreement called for the company to pay the firm triple its hourly fees (plus costs)--and to pay it immediately.

This creates a strong incentive to win the trial. But is there any incentive to control the cost of doing so? It appears not.

Check out the outcome:

When AgriZap did win, Drinker submitted a bill for about $5 million---about double the $2.7 million the jury awarded AgriZap in the patent case.

Drinker won the ensuing lawsuit, so it was good for the firm, but I think it is safe to say that this is not an alternative fee arrangement that should be emulated.

Great Article On The Ethics Of Ediscovery: Implications for AFAs?

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Mon, 18 Jan 2010 12:28:44 -0600

Consider this simple fact: because of the way duplicate electronic documents are handled (or, more appropriately, mishandled), clients overpaid or grossly overpaid for their documents review nearly half of all productions. This comes from a survey that is discussed at length in a terrific article, Ethics and Ediscovery Review, published in the ACC Docket. The article is authored by Patrick Oot, Anne Kershaw and Joe Howie.

Some lawyers agree to have each person's email "de-duped," but do not have the entire population of documents "de-duped." This means that each person on an email will have one copy of that email in his or her population of documents. Multiply that by scores of people and thousands of emails and pretty soon you're talking about real money.

The authors discuss this from the point of view of lawyers' ethical obligations. I invite you to think about this from the standpoint of efficiency. Are you more or less likely to experience this problem with lawyers working on a value fee or by the hour?

The ways, whether intentional or utterly inadvertent, that clients lose while lawyers win, and many and varied, and frequently not even on an in-house lawyer's radar screen, particularly in companies that do not have the litigation bandwidth to have an in-house lawyer specializing in the nuances of electronic discovery.

Writing plainly is good client service

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Sat, 16 Jan 2010 11:04:21 -0600

I am a huge fan of Ken Adams' blog, Adams Drafting. His post, The Perils of Definedtermitis, wonderfully illustrates both clear writing and the cost to clients when lawyers write like, well, lawyers. Here's the setup:

I was reviewing a clause in a software sale agreement with a major third-party distributor. I got to the assignment clause, and it was very peculiar:

“Assignment. Either Party shall neither assign any right or interest … nor delegate any obligations …”

I revised the clause:

“Assignment. Neither party can assign any right or interest … or delegate any obligations ….”

All's well, right? Not so fast:

I get the following comment back:

“‘Either Party’ is a defined term, see first paragraph of cover page.”

It was, I remembered reading it, but I struck it because it read:

“‘Either Party’ means either Licensee or Company.”

In any case, sticking the definition of “Either Party” into the clause doesn’t help the clause, it only makes it worse:

“Assignment. Either Licensee or Company shall neither assign any right or interest … nor delegate any obligations.”

The other lawyer didn’t take to kindly to my mental exercise especially when I said I could make heads or tails of how it ought to apply. “It’s the assignment clause, for Pete’s sake. We’ve already wasted too much money thinking about it!”

How much did poor writing cost the drafter's client? If her or she did this to the assignment clause, imagine how the rest of the contract must have been drafted.

Good, clear, simple writing is good client service.

Document Review: People or Machines?

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Fri, 15 Jan 2010 08:50:52 -0600

One of the great battles law firms have fought with their clients is over e-discovery. Law firms have wanted to have their people do the document review because they then capture the profit associated with that review. Smaller law firms that do not have the manpower to conduct internal reviews have urged use of outside resources, and clients generally push for the approach that is the cheapest while still being effective. My partner Hugh Totten just shared with me a study, Document Categorization in Legal Electronic Discovery: Computer Classification vs. Manual Review, published in the Journal of the American Society For Information Science and Technology (January 2010). The study concludes:

This study is an empirical assessment of two methods for
identifying responsive documents. It set out to answer the question of whether there was a benefit to engaging a traditional human review or whether computer systems could be relied on to produce comparable results.

On every measure, the performance of the two computer
systems was at least as accurate (measured against the original
review) as that of a human re-review. Redoing the same
review with more traditional methods as was done during the
re-review had no discernible benefit.

There may be other factors at play in determining legal reasonableness,
but all other things being equal, it would appear that employing a system like one of the two systems employed in this task will yield results that are comparable to the traditional practice in discovery and would therefore appear to
be reasonable.

The use of the kind of processes employed by the two
systems in the present study can help attorneys to meet
the requirements of Rule 1 of the Federal Rules of Civil
Procedure: “to secure the just, speedy, and inexpensive
determination of every action and proceeding.”

If we are not there already, we will soon be at a point were determinations of which must be produced will largely be handled via computers. Indeed, given the error rate reported for human production, it is easy to envision a motion attacking that manner of selecting documents for production, at least in large cases.

Alternative Fees: "This, too, shall pass." Really?

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Wed, 13 Jan 2010 09:39:57 -0600

Let's start with a huge caveat. The guy doing the talking in this interview, Stephen French, is the Managing Director of Legalbill. According to the firm's website:

Legalbill is committed to providing corporations worldwide with unsurpassed solutions for legal cost analysis and management.

So, in real world terms, Legalbill manages hourly billing data, slices and dices in ways that are then used to help companies save money when dealing with hourly rate lawyers and firms. If there is no hourly billing, there would be scant need for Legalbill, at least unless it came up with new, more relevant offerings. So Mr. French's company has dog in this hunt. But even with that caveat, he has some interesting things to say.

Watch AmLaw's video interview of Mr. French here.

Alison Frankel of AmLaw reports that:

There are two big problems with fixed rate or flat fees, as French sees it. First, clients don't get the same level of work from their lawyers. "When you get [fees] down to the lowest common denominator, it also has an impact on the responsiveness of counsel," he says. "It has an impact on the qualitative nature of the representation, and it also has, certainly, an impact on the cost effectiveness."

And second, alternative fees erode the very economic foundation of law firms. Especially with so much lateral movement and merger activity, French argues, it's very difficult to measure and compensate performance without hourly billing.

The second claim, that alternative fees erode the economic foundation of law firms is true. That is why the firms need to change their business models, something at least some have started to recognize. But to say that a business selling services should not change to meet the needs of the buyers of those services is an argument that, if accepted by law firms, will lead to their eventual demise.

The first argument is premised on the mistaken notion that "fixed rate or flat fees" are the essence of non-hourly fee arrangements. There is scant data to support that assumption. In-house lawyers who move toward use of non-hourly arrangements understand that every fee structure has strengths and weaknesses, but modifications to those structures can avoid the problems. The problems identified by Mr. French are eliminated by including performance-based payments in the fee formula.

I found it interesting, though, that Mr. French was straightforward in admitting that, for most law firms, the use of alternative fees is a marketing gimmick to appease clients. There is evidence to support his impression, found in the fact that many law firms have not made the kind of systemic changes needed to maximize the profits from alternative fees.

Nothing in this interview is going to change the course of human events, but it is interesting to hear a robust defense of hourly billing.

A Call For Benchmarks II: comments and response

patrick.lamb@valoremlaw.com (Patrick J. Lamb) — Tue, 12 Jan 2010 21:06:03 -0600

I received a couple of interesting comments in response to my earlier post, A Call For Benchmarks, and it seemed prudent to share them in the most public way.

Comment 1 was from Steven Levy, renowned expert on Legal Project Management, with whom I will be presenting in March:

Many of these are substitute metrics, which are bad juju. For example, win/loss record: Think of the DA who tries only slam-dunk cases and pleads out anything difficult; is that better than someone who takes on the toughest cases and wins 75% of them? (Are the 9-4 USC Trojans better than the 5-11 Seattle Seahawks? Different leagues.)

Partner/associate time may be distorted based on the type of work partners take on. I've seen situations where partners are doing associate-level stuff; is that good or bad? What if they're 3x efficient at 2x cost? Or 2x efficient at 3x cost?

And so on.... I'm not suggesting that metrics are bad, just that it's a bad idea to take them in a vacuum and make a decision solely by comparing these numbers.

That said, I'd add one: What percentage of the time do you refund (or not charge) part of an anticipated or agreed fee because you solved it well ahead of schedule? If firms don't do this at least once in a while, are they really acting in your best interests? On the other hand, if they do it too often, they're probably padding their estimates.

Not everything that counts can be counted, said Einstein, and not everything that can be counted counts.

Response and Comment:

No metric I know of provides "universal knowledge and enlightenment" to prospective clients. But clients frequently ask about wins and losses because they would rather hire lawyers who win trials than those who lose them. If you don't have a record, most clients will reasonably infer that is so because you are reluctant to try cases. You may be able to explain the problem away, but the information is useful. The Trojan-Seahawks comparison is always an issue, and some judgments cannot be made on win-loss record alone. But that doesn't eliminate its value.

Partner/associate ratios can mean many things. It may mean that the firm is using an experience-based model. Or that it is highly leveraged. Again, the statistic is a starting point for discussion, but not knowing the answer suggests a lack of sensitivity to the leverage issue, which is important to clients.

On the benchmark you raise, we give every client the right to adjust our fee. That said, the reason you offer--"because you finish ahead of schedule"--is not a reason to adjust a fee in my view. With us, the client is not buying time, but a result. It should be indifferent to how long it takes to produce the result.

Comment 2 is from Bradley Clark:

I believe the benchmarks differ across the client spectrum. Where an institutional client employing BigLaw on a matter may look at some of the benchmarks you have identified I know twice as many - if not more - that buy professional services based on relationship, trust, knowledge, and integration.

Response:

The factors you identify, Bradley, are factors that playing varying roles in every retention decision. That doesn't mean clients, including small clients, don't benefit from seeing your performance data on whatever benchmark is important.