There’s a dialog that’s been going on in the legal services industry for a long time. There are so many articles, discussions and even conferences built around the concept that the billable hour in legal work needs to be abolished—that it’s not the right way to price things because there’s no economic incentive for efficiency in the law firm model. And, I even included a discussion around the billable hour in my legal services industry book, Unbound, advocating for a pricing model change (www.unboundlegal.com).
However, I now propose that we switch to another dialog, one that will put to rest such exchanges in the future. The conversation that we should be having now is about trust.
If law firms can demonstrate to corporations that they’re doing the work in the most efficient way possible—using innovative labor resources, technology, and planning tools—then would it ever really matter to the purchaser how the law firm bills for services?
I don’t think so. I think what the purchaser really wants is the most efficient legal services available. If we can shift the dialog in the industry between purchasers and providers from an “us vs. them” mentality to a collaborative discussion about trust, both parties could win. That’s my challenge to the industry for 2012: Stop talking about the symptom and get to the core of the issue, which is a lack of trust.
Whenever I look at survey data, I see corporate purchasers expressing low satisfaction with regard to communication from law firms. They also are unhappy about the lack of transparency that surrounds the law firm business model.
Law firms can dispel that dissatisfaction by reaching out. They can ask corporate purchasers how they can best design their legal services delivery model and pledge to work with them as they innovate. They can build a partnership, through communication, that leads to innovation.
Law firms may initially be wary about this. But, I maintain that transparency will lead to greater understanding because when you extend trust, generally, you receive trust in kind. Corporate purchasers will need to understand that they might not be able to capture all of the savings that comes from innovation–because law firms still need to maintain profitability. This is where corporate purchasers need to stick their necks out, too, requesting great ideas that create efficiencies and drive down cost, but realizing they will not garner the total economic benefit of that innovation.
What happens if a law firm extends trust and is met with hostility, or if trust isn’t extended back to the firm by the corporate purchaser? That’s a good indicator that the law firm might not want to continue to work with this client on a long-term basis. Business has to be a partnership.
Corporate purchasers also need to make it a department imperative to reach out to law firms as part of their supply chain and share best practices to help them become more efficient, and even more profitable. Driving efficiencies—better, faster, cheaper—through their supply chain will only cause better results.
We can and we must shift the conversation. An open and honest dialog can create a partnership. And, this kind of collaborative ecosystem can only lead to long-term success.