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April 07, 2006

Catching Up With Exemplar Law: "No Hourly Bills, No Hourly Bull".

Boston-based Exemplar Law Partners made news in mid-February when it announced that it was launching a new firm which would use exclusively a fixed price model for corporate and high-end legal services. At the time, legal weblogs (see post here) reacted, and to this effect: (a) "great news, guys, and God speed" and (b) "if you can make this work, teach us how you did it--because we don't have a clue". Well, according to ELP's CEO and lawyer Christopher Marston, who I exchanged e-mails with last week, ELP is still kicking, practicing law and building the dream. ELP soon may have a blog of its own to give us a better view of this "next generation" law firm and laboratory for new ideas. If ELP starts up a blog, I'll subscribe. A few thoughts:

1. ELP is of course on to something. If fixed price corporate law models were adopted throughout the U.S., even as an evolving alternative to the billable hour, it would change the terrain a lot. For lawyers in firms which adopted them, the "12 Client Service Rules" I've discussed in this blog would be either much easier to follow or completely unnecessary since so may of them go (directly or indirectly) to the issue of controlling hours. No problem. I would be happy to blog about something else.

2. The Billable Hour ("BH") is: a business problem for clients simply because it needs to be controlled as a business cost; and a trust and confidence problem for clients and lawyers because it gets in the way of real relationships. In the wrong lawyer hands, especially in "one night stand" situations, BH chips away at value by encouraging unnecessary or inefficient work. It makes clients grumpy and often angry slaves in a "where will it all end?" game which lawyers, clients think to themselves, apparently need to survive.

3. For good reason, BH makes clients doubt lawyer advice--especially if the advice once taken requires lots more BH. BH is a main reason why relationships between clients and their time-keeping professionals everywhere tends to be quietly but bitterly adversarial. Maybe worst of all, BH contributes to the perception of business people that their business lawyers at some of the best business law firms just don't get business. If they bear no real risk, how could lawyers ever understand in their gut what we think and do? If they are dependent on hours, how can lawyers ever have our real interests in mind?

4. At some point, ELP's against-the-grain idea will work. A fixed price model for outside corporate lawyers makes business sense, and is both a winning and logical idea. ELP apparently has more than enough talent to make it work. Motivated Americans have a history of making "eccentric" good ideas work. And "no hourly bill, no hourly bull" is likely very compelling to business clients, who've been wondering all along when lawyers are going to "get it" and start thinking like business people. As a competitive device, it should threaten the hell out of a lot of us. It does me.

5. In implementing a new fixed price scheme, there are issues and pressures. You still have to make a buck and keep the doors open. You must survive. And cultural difficulties, too. Clients are wonderful but mercurial creatures. You've got to sell this to the very people who say they've wanted it along, but maybe never thought it through. Are corporate clients really ready for it? Will they think they'll be getting less?

So it's an experiment, and ELP is the lab. In having an alternative to BH that works, clients win big. And we business lawyers will need to do what our clients do: plan, decide, commit and share risks. If ELP is successful, the alignment of the client's and the lawyer's interests come closer together than ever before in our business.

Posted by JD Hull at April 7, 2006 06:16 PM

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