The tyranny of the billable hour: bridging the divide between law firms and their clients
Both sides need to improve communication and explore alternative pricing structures, writes Laura Vosper, which requires breaking down traditional structures and hierarchies
What do clients really want? Is law firm culture perpetuating frustrations on both sides?
There remains a disconnect between law firms and their in-house lawyer clients. In-house lawyers complain that their law firms aren’t listening to them and don’t understand the commercial pressures they are under. Lawyers in private practice on the other hand feel frustrated that they can’t get in-house lawyers to open up to them about their wider business challenges and needs.
Too often we hear of lawyers at law firms toiling into the early hours to get 20 pages of advice across to their client, when the client would have preferred two clear and concise pages delivered at 9am – what’s going wrong?
Tyranny of the billable hour
The billable hour has a lot to answer for. It’s not uncommon for in-house lawyers to sense that the advice they have been given is padded out by lawyers under pressure to meet billing targets. They are overserviced, receiving reams of detailed advice when they really want a concise summary that they can pass directly to their commercial colleagues. They don’t want the added work of filtering and translating it into something non-legal business people can understand and act on.
This is not to denigrate private practice lawyers – their clients are paying for expert, detailed and indemnified advice. Few in the industry have found a way to value work done, other than through an hourly rate, even when using fixed fees, which usually boil down to a cap on hours. Whilst billable hours can be a frustration, they are an easy measure. Alternatives, such as value-based pricing, require a detailed understanding of the value an individual piece of work brings to the client’s business, something many in-house legal departments are still not geared up to track.
As legal operations become more established as a function within in-house legal teams, we will see them grow in confidence when it comes to articulating the value that they, and by extension their service providers, deliver. More sophisticated procurement processes, e-billing platforms and workflow/ticketing systems can all work together to give in-house leaders a better handle on what they’re spending and what the business is gaining in return. Better visibility of the data isn’t just about cost control – shared appropriately it can encourage innovation in pricing and service delivery that benefits both sides.
During the first lockdown in 2020, in-house lawyers told us what they valued most was the contributions of service providers who both provided insights into the crisis issues in front of them, tailored to their business, and maintained a high level of accessibility.
The pandemic has driven an increase in the adoption of technologies such as video conferencing and instant messaging but effective communication is still too often lacking between in-house teams and their firms. Feedback appears to be an area that lawyers find particularly difficult.
In truly innovative customer-centric businesses, such as the large tech companies, customer feedback is prioritised. Measures such as NPS (Net Promoter Score) and CSAT (Customer satisfaction score) are used to structure incentive plans and drive business behaviour. By comparison, law firms are lagging behind, with profits per equity partner or similar still often the priority measure internally.
With a lack of available feedback channels, clients will often end up voting with their feet rather than tackling issues head on
This leads to clients being reticent about sharing honest feedback. With a lack of available feedback channels, clients will often end up voting with their feet rather than tackling issues head on.
Consumer law firms are beginning to make inroads in this area and the Solicitors Regulation Authority, alongside CILEx Regulation and the Council for Licensed Conveyancers, is currently working on an online reviews pilot, bringing together law firms, comparison websites and review site providers. The aim is to increase information about the quality of legal services available to consumers and drive openness in this area of the profession.
Large law firms can learn something here. In addition to more training on asking for and giving feedback, investing in technology can help to collect and mediate feedback at every touchpoint in the relationship. Sharing this data inside and outside the firm can help to build a culture of continuous improvement and stronger client relationships. Legal operations teams in-house have a part to play too. They need to make sure that the tools and processes put in place to make managing providers more efficient enhance rather than disrupt open communication and individual relationships.
Law firm hierarchies
The hierarchical nature of traditional law firms is another factor that causes frustrations and a conflict between private practice culture and client expectations. In-house lawyers want access to the skills and expertise found at associate and partnership level whilst law firms also need to give work and exposure to those who are training or are more junior.
Whilst this exposure is a vital part of the legal services ecosystem and ensures the training of the in-house lawyers of the future, there needs to be transparency, with billing adjusted accordingly so that in-house teams feel they are getting the advice they are paying for in the format they prefer.
Management and leadership are crucial in all of this. A recent Law Care report in the UK found that only 48% of those in a position of management or supervisory capacity had received leadership, management or supervisory training. Placing more emphasis on equipping senior lawyers with an understanding of a range of leadership styles and techniques can enhance the client experience. For example, if a partner with a traditional ‘command and control’ management style instructs a junior on how they ought to lay out advice and to what time scale, they will do as they are asked. Given more autonomy, that same associate might be more willing to innovate and put forward suggestions gleaned from working with the client at close quarters.
As the client/lawyer relationship evolves, both sides need to become more adept at opening new feedback channels, exploring alternative pricing structures and communicating effectively. That means looking afresh at some of the traditional structures and hierarchies that get in the way, consciously developing lawyers’ leadership skills and investing in opportunities where technology can help work get done in a smarter way.
Laura Vosper is chief operating officer at Obelisk Support