I am a lawyer/stand-up comedian/teacher-turned-entrepreneur who is passionate about start-ups and new ideas, especially in the content space. I'm a co-founder of ReplyAll.me, the world's first Blogcasting platform that makes creating content as easy as emailing with friends. I'm a diehard Texans fan and a huge "60 Minutes" nerd.
The key take away is that quality comes first. You must invest in the long term culture of the firm and turn away short term opportunities that do not serve the long term interest.
This is very hard to do at first, but over several years we have really seen the benefits of this approach. With our talented team of lawyers and staff, we are able to continuously improve the firm model and its infrastructure. This becomes a virtuous cycle of innovation and excellence that keeps us strong and excited.
Obviously some clients and firms are more advanced than others, but as a whole, I don't think the legal industry is where it needs to be on this. As Ken noted, however, change is happening -- slowly but surely. Best practices around alternative fees and efficiency are quickly evolving but take time to implement, test and scale.
On Zach's risk question, tying compensation to risk makes a lot of sense, and clients are certainly asking for this. I believe Patrick's book speaks to this issue as well, but when firms are asked to defend extremely difficult cases, risk-sharing is less feasible. So, again, no one-size-fits-all approach.
This has been an interesting discussion, but it confirms the lack of progress in movement toward value pricing. We have not found best practices for AFA pricing. Most firms that claim to offer AFAs do nothing more than disguise estimated hourly fees. That approach perpetuates the concept that equals value, the concept that troubles so many clients. At the same time, when firms do no change their fundamental approach to work and simply call one type of fee by a different name, what is a client to do.
That said, the evidence of client dissatisfaction with hourly billing is all around us. If clients loved hourly billing, why the constant demand for larger and larger discounts, and, having obtained larger discounts, the continually falling realization rates. Happy clients pay their bills.
We have to keep in mind that fee structures are about incentivizing behaviors. Hourly billing incentivized time-based thinking. It does not incentivize rapid resolution (begging the question of why firms so mightily resist meaningful early case assessment), nor does it incentivize a relentless focus on results.
AFAs do not exist in a vacuum. To be effective, lawyers must focus on process and project management--doing the right things the right way. Lawyers must focus on value delivered, and must be prepared to be rewarded when delivering the results the client seeks, but also being penalized when they do not.