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4 | EDITORIAL
Editorial
Rebecca J Lee Editor, Brief Journal
Dr C h r i s t o p h e r Kendall a n d Gregory Boyle in t h e letter pages for t h e o u t s t a n d i n g c o n t r i b u t i o n o f Ronald Bower, m y predecessor, t o t h e c o n t i n u i n g success of Brief. This was d o n e w h i l s t c o n v e n i n g e n j o y a b l e as w e l l as efficient c o m m i t t e e m e e t i n g s . Fortunately for us, Ronald w i l l c o n t i n u e t o serve o n t h e Editorial C o m m i t t e e . A n d I believe I have b e c o m e 'a f i r s t ' - t h e first f e m a l e Editor o f Brief. W h o k n e w t h e r e w e r e such bastions left t o be c o n q u e r e d ? Our cover article this m o n t h is w r i t t e n by Mr David Vilensky a b o u t t h e use o f fixed fee p r i c i n g by his f i r m . M r V i l e n s k y expressly refers t o t h e speech given by t h e Chief Justice of Western Australia o n 17 M a y 2010, at t h e Perth Press Club Law Week L a u n c h , available o n t h e w e b s i t e o f t h e S u p r e m e C o u r t o f Western Australia. This is a m u s t - r e a d for all practitioners, because in it t h e Chief Justice suggests t h a t t h e profession s h o u l d enthusiastically e m b r a c e t h e pressure for c h a n g e a n d generally a d o p t alternativ e methods o f c h a r g i n g for services t o t i m e billing. M r Vilensky's article is a b o u t t h e benefits he has perceived t o his clients a n d his f i r m I can only c o n c l u d e this, m y first editorial, by r e p e a t i n g a call m a d e b y M r Bower previously. Society m e m b e r s , this is y o u r Society's p u b l i c a t i o n . Your suggestions, ideas, criticism a n d letters t o t h e Editor are always w e l c o m e . As always, Brief also w e l c o m e s t h e o p p o r t u n i t y t o consider for p u b l i c a t i o n y o u r articles a b o u t issues o f legal relevance t h a t are o n y o u r m i n d . A n d all hail t h e Family Provision Dependants Provision) Amendment Act Act 1972, as it is n o w called, (Family and 2011. Mr John Hockley g i v e n assent in O c t o b e r last year t o t h e Inheritance
e l c o m e t o a n e w year o f Brief. This year sees a c h a n g e w h i c h has n o t o c c u r r e d for n i n e years - a n e w Editor. I can o n l y a d d m y t h a n k s t o t h o s e w r i t t e n by President,
important
provides a c o m p r e h e n s i v e a n d i n t e r e s t i ng article o n t h e significant a n d w e l c o m e a m e n d m e n t s m a d e t o t h e Act. In a n o t h e r area w h i c h has a n d will affect a n u m b e r of p e o p l e , M r d e Villiers in his article o n strata t i t le h i g h l i g h t s s o m e o f t h e i n t e r e s t i n g challenges w h i c h lie a h e a d in this field t o ensure it remains sustainable, affordable, manageable and capable of a c c o m m o d a t i n g needs o f a c h a n g i n g society. the
Letter to the
Editor
Dear Editor, Big S h o e s To Fill T h a n k y o u t o Ronald Bower for his nine years in t h e role of e d i t o r of o u r e s t e e m e d m a g a z i n e . D u r i n g his e d i t o r s h i p , t h e m a g a z i n e has g o n e f r o m s t r e n g t h t o s t r e n g t h a n d , at t h e same t i m e , m a i n t a i n e d its r e p u t a t i o n for legal a u t h o r i t y a n d , m o s t i m p o r t a n t l y , i n f o r m a t i v e readability. All w h o have served o n t h e editoria l c o m m i t t e e greatly appreciate y o u r w h i m s i c a l sense o f h u m o u r w h i c h masks a resolute d e d i c a t i o n t o m a i n t a i n i n g a n d i m p r o v i n g t h e standar d of Brief. I a m sure t h a t y o u w i l l be c o m f o r t e d by t h e steady pair of hands t o w h i c h t h e e d i t o r s h i p is passing, b e l o n g i n g t o Rebecca Lee w h o , t o m y a n c i e n t m e m o r y , is t h e first f e m a l e e d i t o r o f Brief. Yours sincerely, Gregory Boyle
Brief | February 2 0 1 2
12 | FEATURE
The Benefits of
F o c u s e s o n h o u r s , not v a l u e - T i m e b i l l i n g rewards efforts, n o t results; q u a n t i t y , n o t q u a l i t y ; r e p e t i t i o n n o t creativit y a n d hours e x p e n d e d , n o t value t o t h e client. E n c o u r a g e s o v e r s e r v i c i n g - Four lawyers m i g h t a t t e n d a m e e t i n g w h e r e o n e w o u l d d o . Teams o f lawyers g o t o c o u r t , s o m e j u s t sitting and watching. P e n a l i s e s t e c h n o l o g i c a l a d v a n c e s - There is little i n c e n t i v e for law f i r m s t o e m b r a c e t e c h n o l o g i c a l d e v e l o p m e n t s because t h e i r utilisation reduces profits by r e d u c i n g t i m e s p e n t o n tasks. Prices b y t he s e r v i c e , not t h e c u s t o m e r - Unless h o u r l y rates are d i s c o u n t e d , t h e b i g g e s t c o r p o r a t i o n is c h a r g ed t h e same price as t h e smallest business. C r e a t e s r a n d o m cos t s u b s i d i s a t i o n a m o n g s t clients When
o f t h e landscape t h a t it barely m e r i t e d discussion. Expressing reservations a b o u t it w e r e r e g a r d e d , if n o t as heretical, t h e n certainly as futile . T i m e billin g was t h e w a y it had always b e e n . If
n e w legislation is i n t r o d u c e d , t h e first client r e q u i r i n g services w i l l pay for t h e firm's a c q u i s i t i o n o f k n o w l e d g e in t h a t area, w h i l e s u b s e q u e n t clients w i l l g e t t h e same b e n e f i t at n o cost. Discourages communication between lawyer a n d client -
There is a natural d i s i n c l i n a t i o n t o c o m m u n i c a t e w i t h y o u r lawyer w h e n clients are aware t h a t t h e cost increases every t i m e t h e y d o . E n c o u r a g e s t i m e s h e e t p a d d i n g - There is an incentive for lawyers t o p a d t i m e sheets. Short t e l e p h o n e calls may be r e c o r d e d as h a v i n g t a k e n six m i n u t e s . Clients m a y be c h a r g e d for t h e lawyer t h i n k i n g a b o u t t h e case w h i l e d r i v i n g t o w o r k o r w h i l e s h o w e r i n g or s h a v i n g .
D i s c o u r a g e s p r o f e s s i o n a l i s m - T i m e b i l l i n g discourages activities w h i c h are n o t billabl e t i m e , b u t w h i c h are i m p o r t a n t , such as c o n t i n u i n g professional d e v e l o p m e n t a n d e d u c a t i o n , c o m m u n i t y projects, professional organisation s a n d t h e active a n d d e t a i l e d s u p e r v i s i o n o f j u n i o r staff. E n c o u r a g e s t h e h o a r d i n g of h o u r s - High-level practitioner s
w i t h i n a f i r m , a m b i t i o u s t o fulfil t h e i r q u o t a of t a r g e t e d hours, can u n d e r t a k e low-level w o r k , w h i c h is inefficient a n d costly t o t h e client. R e d u c e s q u a l i t y of life - The emphasis on t h e p r o d u c t i o n o f billable hours creates a w o r k i n g e n v i r o n m e n t w h i c h discourages professionalism a n d reduces w o r k satisfaction t o u n a c c e p t a b l e levels. Clever y o u n g lawyers are leaving t h e profession in droves a n d h i g h levels o f depression a n d substance abuse have b e e n d e t e c t e d a m o n g lawyers.
FEATURE I 13
As it h a p p e n e d , t h e t i m i n g o f t h e Chief Justice's address c o u l d n ' t have b e e n m o r e prescient for m y colleagues a n d me. O n l y a f e w m o n t h s earlier I had b e e n i n t r o d u c e d t o t h e w o r k o f Ron Baker, a u t h o r o f The Firm of the Future a n d f o u n d e r o f t h e VeraSage Institute in t h e US. A credible and enthusiastic a d v o c a t e of value p r i c i n g , Baker w e n t w h e r e others hadn't g o n e before in o f f e r i n g a robust alternativ e t o t i m e billing . N o t only was t h e r e a p r e c e d e n t for t h e t r a n s i t i o n t o value p r i c i n g , he a r g u e d , a great many a c c o u n t i n g firms h a d already g o n e t h r o u g h exactly this process, a n d m o r e a n d m o r e law firms in t h e US w e r e m a k i n g t h e m o v e . The advantages o f d o i n g so w e r e also b e c o m i n g w e l l established. A d o p t i n g a value p r i c i n g m e t h o d w o u l d g o m u c h f u r t h e r t h a n simply r e m o v i n g t h e negatives associated w i t h t i m e b i l l i n g . It c o u l d also create fresh o p p o r t u n i t i e s t o make clients happier, colleagues' w o r k i n g lives m o r e fulfilling and one's f i r m profitable. Great in t h e o r y , b u t c o u l d w e pull it off? If BBV was t o take t h e d a u n t i n g step o f t h r o w i n g away t h e system w h i c h w e ' d f o l l o w e d our entire w o r k i n g lives, I n e e d e d t o be sure all m y colleagues w e r e o n b o a r d . To this e n d , I closed d o w n t h e f i r m for a w h o l e day a n d had every single person a t t e n d a presentatio n by Ron Baker, w h o m w e b r o u g h t o u t f r o m USA, specifically for this occasion. The entire f i r m a b s o r b e d a n d discussed n o t o n l y t h e principles of value p r i c i n g , b u t t h e v e r y m u c h m o r e practical ramifications o f h o w w e c o u l d i m p l e m e n t it. We also t o o k several clients i n t o our confidence. H o w w o u l d t h e y feel a b o u t a m o v e t o t h e fixed fee pricing w e w e r e c o n t e m p l a t i n g ? As it h a p p e n s , a fair n u m b e r o f our clients are law firms, w h o refer w o r k t o us in practice areas o u t s i d e their expertise, particularl y in t h e f a m i l y law a n d wills a n d estate p l a n n i n g areas. T h e response f r o m e v e r y o n e w e asked was t h e same - an o v e r w h e l m i n g yes! W h i c h was w h y , less t h a n t w o m o n t h s after t h e Chief Justice's speech, w e b e g a n t h e 2011 financial year w i t h s t r o n g resolve, some trepidation complete. Fast f o r w a r d t o t o d a y , a n d as w e head t o w a r d s o u r s e c o n d , full year o f fixed fee p r i c i n g , I can tell y o u t h a t t h e benefits t o b o t h clients a n d o u r o w n f i r m have b e e n significant a n d sustainable. W i t h t h e e x c e p t i o n o f a rare f e w cases w h e r e clients specifically ask for it, w e w o u l d never revert t o t i m e b i l l i n g as t h e basis o f charging. a n d an unfamiliar sense o f l i b e r a t i o n as each day passed a n d t h e r e was - h u r r a h ! - still n o t i m e sheet t o more
M o r e efficient
Fixed fee p r i c i n g
instantly eliminates
the
inefficiencies created by t i m e billin g such as overservicing, t i m e sheet p a d d i n g , r o u n d i n g u p t h e l e n g t h o f t e l e p h o n e calls a n d t h e h o a r d i n g of hours. W h i l e these are n o t usually visible t o clients, t h e y d o recognise, a n d c o m m e n t o n t h e fact t h a t instead of e x p a n d i n g , p r o l o n g i n g or d e l a y i n g a matter, o u r t e a m is incentivised t o c u t t o t h e chase a n d deliver t h e m o s t positive client o u t c o m e possible. Once t h e fee is agreed, w e w o r k closely w i t h o u r clients t o seek t h e i r desired o u t c o m e as efficientl y as possible. They can tell t h e difference. I m p r o v e d c o m m u n i c a t i o n s - Clients are n o t hesitant t o call w h e n t h e y k n o w t h e y w i l l n o t be c h a r g e d for every p o i n t of c o n t a c t . At first w e w e r e c o n c e r n e d t h a t this c h a n g e in b i l l i n g system m i g h t p r o v o k e m a n y needless client p h o n e calls a n d emails. While w e p u t in place internal processes t o m a n a g e this, as a general rule t h e increased c o m m u n i c a t i o n has had o n l y a beneficial i m p a c t o n o u r h a n d l i n g o f client m a t t e r s. Fairer fees - We have f o u n d t h a t m o s t clients fully a p p r e c i a t e t h a t c o m p l e x or u r g e n t matters a t t r a c t higher fees t h a n t h e i r m o r e r o u t i n e r e q u i r e m e n t s. There is a sense of fairness w h e n w e charge on this basis. A c c e s s to a w i d e r p o ol of t a l e n t - In t h e past, w h e n a m a t t e r was t a k e n o n , it very q u i c k l y b e c a m e t h e focus o f j u s t o n e or t w o lawyers, w h o w e r e responsible for seeing it t h r o u g h f r o m start t o finish. We f o u n d t h e decline in collegiality, n o t e d by t h e Chief Justice, d r a m a t i c a l ly reversed w h e n w e i n t r o d u c e d fixed fee p r i c i n g , p a r t o f t h e process o f w h i c h involves a w i d e g r o u p discussing each m a t t e r at a v e r y early stage. W h e n a m a t t e r is discussed b y a n u m b e r o f lawyers w i t h m a n y decades o f e x p e r i e n c e b e t w e e n t h e m , t h e result is a m u c h richer a n d m o r e i n f o r m e d strategy, t h e benefits o f w h i c h can b e considerable.
t h e a m o u n t o f t i m e s p e n t o n it, a f i r m has t h e choice o f f o c u s i n g o n t h o s e clients t o w h o m it can deliver h i g h - v a l u e o u t c o m e s . Fixed fee billing doesn't t r e a t all t h e clients as t h e same - w h i c h t h e y never have b e e n , in any case. Instead, t h e p r i o r i t y is t o deliver h i g h - v a l u e w o r k t o clients w h o can pay for it. This is a c o m m e r c i a l m o d e l w h i c h is p o t e n t i a l l y v e r y m u c h m o r e p r o f i t a b l e as it enables a f i r m t o p o s i t i o n itself w i t h i n a particular market. Even in o u r first year w i t h t h e fixed fee system , w e have f o u n d t h a t it is n o t o n l y far m o r e p o p u l a r w i t h clients, it is also p o t e n t i a l l y m o r e p r o f i t a b l e . S i g n i f i c a n t l y less s t r e s s f u l - It is a t r u i s m t h a t s o m e t i m e s w e o n l y k n o w h o w m u c h s o m e t h i n g means t o us w h e n w e no l o n g e r have it. This certainly reflects t h e insidious a n d pervasive stress i n h e r e n t in t h e t i m e b i l l i n g system. It was o n l y w h e n BBV f o r m a l l y February 2 0 1 2 | Brief
B E N E F I T S OF F I X E D F E E PRICING - FOR C L I E N T S
G r e a t e r c e r t a i n t y a n d p e a c e of m i n d - The fear o f t h e u n k n o w n and p o t e n t i a l l y escalating legal costs may n o t affect all clients, b u t it is certainly a source o f anxiety t o many. W h e n clients k n o w h o w m u c h t h e y w i l l be c h a r g e d for a particular matter, this provides peace of m i n d a n d t h e ability t o b u d g e t accordingly. Our clients love fixed fee b i l l i n g a n d w e c o n t i n u e t o be v e r y pleasantly surprised b o t h b y t h e scale a n d intensity of t h e positive f e e d b a c k w e receive f r o m t h e m . There has also been a n o t a b l e increase in t h e level o f client referrals over t h e past 18 m o n t h s - always a sure sign t h a t you're d o i n g s o m e t h i n g right.
14 | FEATURE
a b a n d o n e d t h e system t h a t w e e x p e r i e n c e d, f i r s t h a n d , t h e relief o f n o t h a v i n g every m i n u t e of t h e day d o m i n a t e d by t h e i m p e r a t i v e of billable hours. The b l i n d panic t h a t used t o set in w h e n t i m e sheets n e e d e d t o be r e p o r t e d , t a r g e t e d hours assessed a n d t h e t r a j e c t o r y of m a n y a legal career d e t e r m i n e d - all t h a t was h a p p i l y t h r o w n o u t t h e w i n d o w w h e n w e s w i t c h e d t o a fixed fee service. Legal w o r k is stressful e n o u g h w i t h o u t a d d i n g t o it b y using a c h a r g i n g m e t h o d w h i c h o n l y t i g h t e n s t h e screws still further. T h r o w i n g o f f t h e shackles of t i m e b i l l i n g has b e e n w e l c o m e d b y every single o n e of o u r lawyers. W h i l e e a r n i n g targets still apply, w h e n t h e obsession w i t h clock w a t c h i n g c a m e t o an e n d , a collective a n d heartfelt sigh o f relief was heard. Even 18 m o n t h s later, w e all s o m e t i m e s feel t h a t g l o w of satisfaction in n o t h a v i ng t o c o m p l e t e a n o t h e r t i m e sheet! P e r f o r m a n c e not m e a s u r e d s o l e l y by h o u r s w o r k e d To
o u r t e a m m e m b e r s m u c h m o r e w i l l i n g t o e n g a g e in all t h o s e activities t h e Chief Justice i d e n t i f i e d as e n h a n c i n g professional d e v e l o p m e n t . A g a i n , it was a m a t t e r of individuals p u r s u i n g t h o s e areas of particular interest t o t h e m . Several o f o u r lawyers have capabilities in t h e area o f m a r k e t i n g , w h i c h t h e y have p u r s u e d since w e m o v e d t o fixed fee b i l l i n g . Others have f o c u s e d o n e m e r g i n g areas of t h e law, f l y i n g t o i n t e r n a t i o n a l conferences overseas a n d p u b l i s h i n g papers in specialist m e d i a . The c o m b i n e d effect o f all this is a w o r k i n g e n v i r o n m e n t in w h i c h t h e i n d i v i d u a l s t r e n g t h s o f o u r t e a m m e m b e r s are m o r e fully expressed, c o n t r i b u t i n g t o a more stimulating, multidimensional and enjoyable experience. S t r o n g e r c o l l a b o r a t i o n b e t w e e n different practic e a r e a s - O n e o f t h e m o s t pleasing benefits o f fixed fee p r i c i n g has b e e n t h e w a y in w h i c h o u r t e a m m e m b e r s are i n t e r a c t i n g in ways w h i c h w o u l d have b e e n v e r y unlikely less t h a n t w o years ago. Back t h e n w e i n h a b i t e d t h e silo c u l t u r e t h a t characterises so m a n y professional services firms. Lawyers in differen t practice areas had l i m i t e d professional c o n t a c t , a n d even w i t h i n t h e same practice areas collegiality was o f t e n a c c o m p a n i e d b y an u n d e r t o w of working
e x t e n d t h e Chief Justice's s u b c o n t r a c t o r analogy, w o u l d n ' t it b e ridiculous if t h e electricians a n d p l u m b e r s w h o w o r k e d o n y o u r h o m e extensio n n o t o n l y d e m a n d e d p a y m e n t for t h e i r services a c c o r d i n g t o h o w l o n g it t o o k t h e m , b u t irrespective o f w h e t h e r or n o t t h e toilets f l u s h e d or lights s w i t c h e d on? When billable hours are no longer the sole yardstick of
competitiveness. Free o f t h e relentless q u e s t for billable hours, a curious t h i n g is h a p p e n i n g : p e o p l e are t a l k i n g t o each other! They are s h a r i n g ideas. Discussing client cases - a n d d i s c o v e r i ng o t h e r ways in w h i c h , as a f i r m , w e can deliver m o r e positive o u t c o m e s t o clients. I have f o u n d t h e m v e r y w i l l i n g t o tell clients a b o u t each o t h e r a n d clients, for t h e i r part, also seem m o r e w i l l i n g t o listen. H a p p i e r f i r m c u l t u r e - From all I've w r i t t e n , it s h o u l d b y n o w be a b u n d a n t l y clear t h a t t h e overall i m p a c t o f a d o p t i n g fixed fee p r i c i n g has b e e n a v e r y m u c h h a p p i e r f i r m culture. W h e n o u r focus is o n d e l i v e r i n g t h e o u t c o m e s t h a t o u r clients seek, rather t h a n t r y i n g t o f i n d ways t o create m a x i m u m billable hours o u t o f each matter, w e cast aside an invisible b u t v e r y real d e a d w e i g h t created by an ever-present c o n f l i c t o f interest. Life is still c h a l l e n g i n g , busy a n d , at times, very stressful. But d o i n g t h e ethically r i g h t t h i n g b y o u r clients, it t u r n s o u t , is also t h e commercially right t h i n g to do.
p e r f o r m a n c e , w e are able t o measure p e r f o r m a n c e against a n u m b e r of o t h e r criteria: does a lawyer d e l i g h t his clients? Is he or she a t t r a c t i n g a n d retaining n e w clients t o t h e firm ? To w h a t e x t e n t does he or she c o n t r i b u t e innovative solutions? Is he or she carving o u t a practice area a n d creating real intellectual p r o p e r t y o w n e r s h i p o f a particular legal services niche? These are t h e same criteria used t o evaluate p e r f o r m a n c e in o t h e r professional services firms a n d w e have f o u n d it provides a far m o r e r o u n d e d a n d b a l a n c e d basis o f p e r f o r m a n c e e v a l u a t i o n t h e i r i n d i v i d u a l strengths a n d passions. G r e a t e r flexibility in w o r k i n g a r r a n g e m e n t s - There are n o prizes f o r b e i n g t h e last o n e t o g o h o m e , or t h e first o n e in t h e office at BBV. T h e j a c k e t over t h e chair s y n d r o m e t o o k t i m e t o lose its grip, b u t it d i d go, replaced w i t h t h e r e c o g n i t i o n t h a t t h e r e is n o reason t o give u p o n t h e idea o f a w o r k - l i f e balance j u s t because you're a lawyer. Over t h e course o f t h e past 18 m o n t h s , we've f o u n d m o r e lawyers o p t i n g t o take t h e i r laptops away t o w o r k o n a r e p o r t f r o m h o m e , in a c o m f o r t a b l e e n v i r o n m e n t free f r o m t h e distractions o f t h e office. This flexibility reflects a significant shift in culture. O n e w h i c h focuses n o t o n process b u t o n w h a t really matters outcomes. M o re s u p p o r t i v e o f m o t h e r s / p a r e n t i n g - A s a d i r e c t c o n s e q u e n c e o f this greater flexibility, t h e prospect of m o t h e r h o o d is n o t q u i t e t h e career-breaker t h a t it has been in t h e past. Our staff m e m b e r s w h o are m o t h e r s have f o u n d fixed fee billing far m o r e c o n d u c i v e t o c h i l d - m i n d i n g t h a n t h e inflexibility of t i m e b i l l i n g . Others w h o plan t o b e c o m e m o t h e r s regard t h e p r o s p e c t o f r e t u r n i n g t o w o r k as s o m e w h a t m o r e m a n a g e a b l e , g i v e n t h e very real o p p o r t u n i t y t o w o r k f r o m h o m e , as well as t h e overall r e d u c t i o n in t h e systemic culture o f stress. one which enables our d i f f e r e n t t e a m m e m b e r s t o f l o u r i s h a n d t o express
A b a n d o n i n g t i m e b i l l i n g n o t o n l y removes an incalculable b u r d e n o f stress. It also liberates us t o be m o r e ourselves. To d e v e l o p our individual professional capabilities . To c o m m u n i c a t e and
d e v e l o p closer b o n d s w i t h o u r colleagues. In an u n e x p e c t e d a n d particularly r e w a r d i n g way, I t h i n k it's t r u e t h a t m o s t o f o u r p e o p l e n o w have a m u c h greater sense o f b e l o n g i n g t o a single t e a m . M y colleagues and I were delighte d w h e n LawAustralasia, t h e international in O c t o b e r 2011
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