Katie Rudder, The Daily Record Newswire
It's no secret that the fallout from the 2008 recession has brought significant change to law firms and the procurement of legal services.
Consultant Timothy B. Corcoran, 2014 president of the Legal Marketing Association, recently spoke to LMA's New England chapter on how the law firm revenue model is changing and the direction in which the industry is - or should be - heading.
According to Corcoran, the billable hour is an inefficient model and needs to evolve, especially since the demand for legal services is not down. Corcoran reviewed the traditional R.U.L.E.S. approach employed by law firms, by which Realization, Utilization, Leverage, Expenses and Speed of collections are the standard means to generate revenue and profits.
Today, the increased responsibility of procurement departments in purchasing outside legal services, coupled with client demand for greater efficiency and predictability in matter management, challenges the R.U.L.E.S. model.
The legal industry is notoriously slow to embrace change. Corcoran likened the inability of law firms to adapt to characters in the book "Who Moved My Cheese?" in which the mice and "little people" resist change but ultimately change when they see it can lead to something better.
Corcoran's message was that law firms not only can profit, but can profit more by utilizing alternative fee arrangements and amending internal processes that help them operate more leanly and efficiently. He described how firms are accomplishing that through the "learning curve" approach.
One of the keys includes getting creative with AFAs, and that means not simply discounting your billing rate, but utilizing true alternatives. Examples include contingency fees that the firm collects as a percentage of the money won at trial or on settlement; fixed fees, by which the firm handles a single case or part of a case for a pre-specified amount; or flat fees, for which the firm handles a "book" of multiple similar cases for a negotiated total.
Another "learning curve" principle that is gaining traction is legal project management, or LPM, which in its simplest definition is applying concepts of project management to control and manage cases, and incorporating them into the daily operations of the firm.
Through business process improvement, or BPI, firms can analyze current processes and come up with new ways to operate and deliver legal services more efficiently, whether through outsourcing back-end support functions (legal process outsourcing, or LPO) or using big data and predictive analytics to gain a competitive edge.
In the long run, the law firms that will consistently win new business and improve client retention will be those that are embracing the kinds of change that allow them to operate in the best interest of the client.
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Katie Rutter is a marketing and business development professional with 17 years of experience working with lawyers and law firms. She can be contacted katie@krutterconsulting.com.
Published: Tue, Nov 25, 2014
