Leaving Big Law Behind

Much of what we've been discussing on this blog for the past year went mainstream last week, with Slate profiling the evolving Big Law model as a field "rife with upheaval".

Listed as one of Slate's five most read articles, the piece touched on many of the hot buttons that insiders have been watching, including:

• The assault on the billable hour, via The Economist.

• The wide range of alternative models currently testing the waters.

• Outsourcing internationally to teams of attorneys in India, via the New York Times.

• Onshoring to lower cost regions within the U.S., via The Washington Post.

• The Great Recession's squeeze on the legal field.

The article also identifies "companies below the $100 million revenue level" as the primary target clients of Big Law ex pats.

Finally, the piece notes that the transformation taking place in the business of law is not unique; rather it is simply the legal profession catching up with most other industries:

"Partners who ditch overcomplicated Big Law practices for nimble, flexible shops that facilitate simpler client relationships are like other denizens of the little-guy economy."

The Culture of the Billable Hour

There is no shortage of talk about redesigning the billable hour model. And many firms are making inroads with fixed-price offerings for specific services.

However, there is a huge chasm between a billable hour firm that also happens to have an a la carte fixed price menu and a firm that has entirely stepped away from the billable hour.

The stark difference between the two is the corporate culture. As the vast majority of Big Law associates will attest, work-life balance can become distorted in a billable hour culture, because the hour is the final product, not the service itself.

So it's worth shining a light on a firm that bills itself as the first corporate law firm in the nation to exclusively adopt fixed price billing. Exemplar Law Partners.

As a growing chorus of industry analysts and consultants have noted, the legal landscape is poised to reward firms willing to deviate from a business model that made sense prior to the internet -- before the commoditization of legal service, before exponentially increased access to information, before virtual offices erased the historical limitations of distance.

Consistent with that sort of forward thinking, Exemplar is entrepreneurial at every level, treating their firm as a startup company rather than a partnership or solo law practice.

According to a profile at Legal Rebels:

"There simply is not a billable hour, and the culture of the company from the top down seems to be to discourage that mode of thinking entirely.

“We don’t count time. We are a timeless culture,” Marston says of the firm’s commitment to abandon hourly rates as well as time-tracking for its employees. “The only way to be profitable in business is to be profitable, not in six-minute increments or only at 30 percent [profit].

“We know how much work our professionals turn around each month; we know what value they provide, and we know what we are charging. We track it at a macro level rather than at a micro level. And they get paid for being effective and efficient.”

Which brings us to the magnitude of contrast between the billable hour firms and a firm that is completely divested from the billable hour.

Putting mechanisms in place to create a fixed price model is a matter of execution. But changing the mindset of an organization is the real hurdle, and the real reward.

Eliminating the culture of the billable hour is a tall order, but one that Exemplar's growth (doubling revenue each of the last three years) seems to support.