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LawBiz® TIPS – Week of June 23, 2015

LawBiz(r) newsletter

Best wishes to all for a very healthy, happy and safe summer.

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Hourly Rates: In Their Darkest Hour

Objections to hourly rates are accruing as fast as, well, the hourly rates for a client matter.

There are eight key concerns:

  • Perceived abuse in terms of overbilling

  • Lack of predictability in the overall costs of the matter

  • Lack of control over the factors involved in setting the bill

  • Discouragement of efficiency

  • Discouragement of value-added services

  • Disconnect with technological efficiencies

  • Inequality in hours spent delivering the same services

  • Discouragement of risk and benefit sharing

The hourly rate is also the focal point of other pernicious effects on the business of law:

Client Communication

Lawyers who are intent on piling up billable hours tend to focus on the task at hand without communicating to the client exactly what work they are doing. Such lawyers fail to build up the client's confidence and trust. Thus, no matter how successful the end result is, the client doesn't understand what has been accomplished and may even refuse to pay the bill when it comes due.

Firm Governance

Many states require that partners and other lawyers with managerial authority in a law firm take reasonable measures to ensure that all lawyers in the firm conform to the Rules of Professional Conduct. This is a heavy burden that many lawyers fail to attend to because they incline toward focusing only on rainmaking and their own billable hours.

Lawyer Succession

Because law firm compensation is generally based on hourly billing output, senior partners may not want to share information about clients or prospects with a next-generation lawyer due to fear that the younger lawyer might "steal" business before the first lawyer is ready to step away from active practice. This creates a problem of client service continuity as older lawyers retire.

Financial Performance

Lawyers often think that financial success means ever-rising billable hours. The truth is that a lawyer's inventory is not billable (or billed) hours—instead, it is the cash, or collected billables, that those hours represent.


Hourly Rates: In Their Darkest Hour

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LawBiz® Registry: Buy or Sell Your Practice

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"I requested that (my partners) allow me to take on the management of the firm and suggested the creation of a business plan.... (Our practice) is a successful practice, but in dire need of a direction -- and a business plan. They agreed to give me a shot and entertain a rough outline of my ideas. I was shocked when they agreed, but then horrified at the task before me. However, sitting on my shelf is "The Business of Law" that I purchased from you a few years ago. I began to read it and a whole new world has opened up for me. I just wanted to express my gratitude to you for writing the book... I am excited about the opportunity I have and just wanted to let you know that I appreciate all you do for the field."

Pleasanton, CA

"I was an associate at a large national law firm and I felt "stuck," but I didn't know how to market myself to clients or to other firms. Ed's focus on the business side of the law firm provided a solid grounding for me to evaluate my current situation and a platform from which I could start growing my own practice. In many ways, working with Ed is like working with a therapist. Part of my coaching process with Ed has been getting to understand more thoroughly my strengths and weaknesses as both a marketer and as a lawyer. After working with Ed for six months, I was ready to market myself to other firms: I developed a clearly articulated set of objectives and Ed has gave me the tools that I needed to increase my exposure. Today, I am working for a law firm that provides better opportunities for my professional growth."

San Francisco, CA


Ed Poll, LawBiz® Management   |   |   |   |


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