Originally published on June 23, 2008 in our free SmallLaw newsletter.
So June is nearly over and TechnoLawyer expects me to submit a piece every month ... starting in April. They don't call me "Crazy Mazy" for nothing (or at all). Sure I "think different" as the famous commercial goes, but that's the problem. Let me explain.
Think Different ... But Not Too Different
In case you want to begin innovating in the legal space, let me stop you right now. Challenging the status quo over the past few years has cost me relationships with my employees, clients, and colleagues.
For example, take my oft-stated disdain for the billable hour. So sure was I of my position that I decided to put my money where my mouth was and wean my office from the teat of this scourge. Despite scratching out a reputation as a respectable trial lawyer over 10 grueling years and making a passable living by billing clients, I switched to value billing (aka the flat fee) to deliver ... well, value.
My theory was that if I had already been paid, I could concentrate on the work. This new tack would require that I avoid litigation, which often amounts to a bottomless pit for time. I took the plunge, began to rid my schedule of litigation, and felt good about it right away. For a while.
First the Good News ...
At first it was exhilarating not having to spend days writing up billing every few weeks, and the time it freed up on a daily basis was a bonus. Nobody would have to watch the clock. We could focus on our work and clients could call when they needed us ... and they did. Morning, noon, and night.
But that wasn't all. Many came in complaining of one problem for a given fee, only to sneak in new, often unrelated problems. Try explaining that distinction in an engagement letter or trying to charge extra for services under that circumstance.
Worse still, the complaints didn't stop. Our fees were still too high for their taste. As if. Value billing drove down cash-flow, depleted my savings, and resulted in defections or resignations by employees. But the fun was just beginning.
The Beginning of the End of the Beginning ...
The next casualty in my war on convention was the ability to repay creditors on time. Having built up the office, hired, and entered into contracts with vendors based on a steady diet of labor-intensive, hourly litigation, the switch to such flat-fee standards as bankruptcy, real estate, and immigration was ... not smooth.
Soon we began defaulting on obligations and ordering less from suppliers. Next, our credit lines were shut down one after another. Without lines of credit, it became risky to hire suitable employees to replace those who had departed for fear of a cash crunch. But not content (or willing) to complete the backed up work by myself, I hired less qualified, less costly replacements. That didn't work either, and in the end I fired even those employees.
The cycle was complete and I was alone. I had not been without employees for 10 years, but in one fell swoop I had reversed all hints of progress, all in the name of a better way to bill.
Epilogue (Don't Try This At Home) ...
For the past four months I've been putting in 12 hour days, working 6 and 7 days a week without any associates or clerks (except for an intern who has little to offer in the way of practical help). Instead of finding new work though, I have to fix or complete projects my employees claimed to have completed over the past 9 months. Yes, 9 months.
Sure, my life sucks. But it sucks slightly less than it did when I was throwing away thousands of dollars on employees that couldn't get things right or screwed up so badly that it cost me more to complete the project than the job was worth in the first place. Nor was value billing the answer because, let's face it, flat fees are just a way of saying "Here I am, use me!" Clients respond to that like wolves to red meat.
In the end I miss the billable hour. I admit it. I was too hasty in dismissing it. In the future, I plan to return to the practice of billing my time, and God help the next client that asks for a flat fee or the next employee that says they can do something they can't. They won't find a home in my office.
Oh, and by the way ... that's why this piece is late.
Written by Mazyar M. Hedayat of M. Hedayat & Associates, P.C.
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