Happy New Year!
Every time there is an economic downturn businesses look for ways of saving money on legal services, particularly in intellectual property (“IP”) and technology, media and telecommunications (“TMT”). The beneficiaries of the last downturn were regional firms such as Addleshaws of Manchester, Eversheds, Pinsents and Wragge’s of Birningham, A V Hammond and Last Suddard of Bradford and, above all, Dibb, Lupton, Broomhead of Leeds and Sheffield which grew rapidly because they could provide high quality services for less than City practices. This time clients will want to make much greater savings given the severity and probably duration of this downturn, advances in technology and Part V the Legal Services Act 2007.
One of the talking points of several American blogs is “Kill the Billable Hour” by Evan Chesler which appeared in Forbes just before Christmas. It is subtitled “Lawyers should bill the way Joe the Contractor does.” The piece begins with the words:
“I’m a trial lawyer. I bill by the hour. So do the associates who work for me. I have lots of clients, so I can pretty much work, and bill, as much as I want. This needs to be fixed. Yes, you read that correctly.”
One reason why the practice of charging by time and disbursements needs to be fixed is that very well established lawyers like Mr Chelser are facing challenges from all sorts of competitors.
Some of those competitors will be bricks and mortar firms like Valorem of Chicago which seems to have more in common with a set of barristers’ chambers than a conventional legal partnership. They charge by results rather than by the hour and one of the most audacious things they do is to allow clients to adjust any and every bill. They call that the “Value Adjustment Line” and note on their website:
“Some have said that the Value Adjustment Line is extremely risky. We agree. If we aren’t willing to risk our own fees on our service, do you really want us advocating for you?”
How many of the Legal 500 dare do that? Valorem also offer a “tool box” with early case assessment, decision trees, monthly case summaries showing the status of a case with charts showing current cost to budget, phases completed and a breakdown of work and cost, adjustable invoices and after-matter assessment and recommendations. Are these people hacving any effect? See “A Brief Look Back. A Sober Look Forward” written on 9 Jan 2009 by the firm’s founder Patrick Lamb and find out.
Since businesses are used to getting all sorts of other services over the Internet, a potentially even more serious challenge is presented by virtual law offices (“VLOs”) like Kimbro Legal Services, a one woman practice in Wilmington, North Carolina. In a podcast interview with Ed Poll of LawBiz, the principal a founder of of that practice, Stephanie Kimbro, described a virtual law office as a web based practice. Stephanie is also a founder of Virtual Office Technology LLC which developed the application that she uses in her practice. It seems to be remarkably cheap to run – a set up fee of US$500 and a monthly rental of US$260. Consequently the fees she charges for her services seem eminently reasonable by our standards – US$150 for drafting a will and US$300 for a commercial lease. In addition to running a law practice and a web 2.0 business, Stephanie somehow manages to find time to teach at the “Solo Practice University”. The University’s website describes it as “a revolutionary new web-based educational community that picks up where your legal education left off.” Courses include planning, building and growing a private practice, differentiating oneself from the competition and attracting and engaging new clients more easily.
Of course Stephanie, Valorem, yours truly and, if you are a lawyer, you – have to come to terms with the realities that Richard Susskind first discussed in detail 10 years ago in “The Future of Law” and revisited recently in “The End of Lawyers”– commoditization of legal services, outsourcing services to professionals and paralegals in low cost countries, the use of expert systems et cetera. I have been familiar with Richard’s ideas ever since I served as a member of the Council of the Society for Computers and Law when he was the Society’s chair some 20 years ago. They were very much in my mind when I first set up NIPC as a new and very different sort of barristers’ chambers in 1997 and they are still at the forefront of my strategy now.
I remember discussing Richard’s ideas with a young instructing solicitor who had just been taken on by Philip Conn & Co., then one of the few firms of solicitors in Manchester with expertise in intellectual property and technology, media and telecommunications law. This young lady had done well at Oxford and indeed well in her firm but she regarded the whole Susskind thesis as pie in the sky. She was not even persuaded by his book which I lent her and which I found to be one of the most incisive and persuasive on any legal business topic that I have ever read. Ten years later Philip Conn & Co.are no longer with us but NIPC is stronger than ever.
There is a lot of despondency at the Bar right now, particularly in Manchester, since Peel Court (arguably the strongest criminal set in Manchester) and 8 King Street (once one of the strongest civil sets and where Judge Ford (the first judge of the Patents County Court) started his career) have recently disbanded. However, I think that the Bar has a better chance of surviving the downturn than most so long as we keep agile, control our costs, pass on cost and efficiency savings to the public and make good use of technology. After all, folk like Patrick Lamb and Stephanie Kimbro don’t work all that differently from the way barristers have worked for centuries and look how well they are doing in America.