Law Firm Signal and Noise: Telltale signs of signal
In Part 1 of this post, I noted how law firms had become so adept at creating “noise” about various topics–client service and AFAs for example, they they effectively drowned out any signal on these topics. Much of what firms have to say about these topics is nothing but gibberish, but it accomplishes the objective of allowing a client to effectively distinguish between firms on the topic of importance. With so many firms trying to be “all things to all people,” all firms become nothing to everyone.
So a client who wants to partner with a firm who is actually focused on client service and good at it, or a client who wants a firm that offers real alternative fees, not just hours dressed up as an AFA, has to do some work to do. While a complete investigation could be time consuming, here are ten questions clients should ask that will provide revealing insights:
1. Are your associates eligible for bonuses based on the number of hours they bill?
If the answer is yes, you know for sure that the firm has not moved away from the hours based environment that makes it successful only if you spend more on them. You know you can count on annual rate increase letters that always come after your budgets are established. You know that the associate doing your work today will soon bill much more simply because another class has entered the firm below them. How do these things help you?
2. Is your satisfaction with performance and service a factor in compensation?
If the answer is anything other than an unqualified “yes, and here is how we determine it and how much it impacts the associate/partner,” you know that everyone in the firm knows your satisfaction does not influence how much people are paid. If you believe you get what you pay for, no one is being paid for your satisfaction.
3. Does the firm provide alternative fee quotes on every matter or only on request?
There is a huge difference between doing something you want to do and doing it because you have to.
4. What percentage of a firm’s revenue comes from alternative fees? What is the firm’s definition of an alternative fee?
A firm committed to AFAs knows exactly what percentage of revenue comes from AFAs and what the firm’s definition of an AFA. If the firm does not categorically and unequivocally excluded blended hourly rates, discounted hourly rates and capped hourly rates from its definition of an AFA, you know they are playing games to make their AFA revenue number and percentage look higher. Anything with “hourly” in the description of the rate structure is, well, hourly.
5. What changes has the firm made in how it handles cases in the last 5 years?