This is Value Billing
Enormous effort has gone into attempts to construct billing arrangements that reflect a law firm’s contribution to a case because of the belief that hours spent was not necessarily a relevant indicator of that contribution and may actually create an incentive to distort billings. In-house lawyers have often had to argue about the value of their contribution to a company’s business objectives, often hiring firms like Altman-Weil and others to create some measureable criteria to support the value of their contribution.
Recently, I vicariously experienced that real way value billing should be done, and perhaps was done when the legal community was more closely connected to their clients. Yes, constructs of value billing it appears are necessary when the value of a lawyer’s contribution is not obvious to his or her clients. Hourly billing is a necessary construct when the need to support the law firm predominates over the objective of providing valuable services.
These facts became clear to me when a former colleague, now out on her own, called with a great deal of excitement to tell me about a recent experience with her client. Her client called to say he had not received a bill. She responded that she had just sent one out billing at a certain hourly rate. His response is that it was his intention to pay a larger amount, not based on the hours spent, but on the value she contributed to the business transaction. Both pleased and surprised, she called to share this experience with me.
I am sharing it with you because that is the objective to which we should all strive. Our contribution should be obvious to our clients as our outside counsel’s contribution should be obvious to us. When there is a sense of disparity with our in-house expenses or the bill from our outside counsel and the payers’ sense of the value that it represents, we have to think about why my colleague was able to obtain higher fees without even asking for them. What was she doing that we are not doing or our outside counsel is not doing?
