Law Firm of the Future

Ron Baker, a recently acquired columnist for the non-billable hour blog, writes about the law firm of the future. (Side note: Congratulations Matt on getting Ron to write for you; his contributions are outstanding!)

Some of his thoughts in a recent article (The Firm of the Future) are worth thinking about, perhaps because I concur with Ron. For example, he says that “… professional firms don’t sell hours. They create and sell — and their customers buy – Intellectual Capital …A firm’s IC consists of three components: Human Captial (its people); Structural Capital (its systems, proprietary software, checklists, resources, etc. that enable it to perform its work); and Social Capital (customers, vendors, suppliers, referral sources, alumni, and alliances). … You can’t leverage an hour; time is simply time …”

Ron continues to argue that selling time, billing by the hour, is inappropriate. He says, “… Firms of the Future recognize they are a business just like the airlines, hotels, rental car companies, etc. Businesses have prices, not hourly rates. You’d never fly an airline that tried to charge you $4 per minute…

“To retort a firm can’t do that (determine pricing in advance of doing work) because it doesn’t know exactly how long it is going to take is specious. The customer doesn’t care how long it takes, they only care about the price relative to the value, and they want to make that comparison before they buy, not after. Do you care how long it took Toyota to build your car?”

And, equally important, Ron says further, “… from the firm’s perspective, it is much better to know the customer doesnt’ agree with the price before you do the work, which helps you prevent committing precious firm capacity to customers who don’t value the work.

Amen, and well said!


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