Legal Commentary

Do lawyers need to earn a profit on every matter?

By Patrick J. Lamb

One of the things I learned as a college debater at Northwestern was that if you searched hard enough, you could always find somebody who had said or written something to support your argument, no matter how lame or stupid it really was.  You learn that anecdotes do not necessarily make for the truth.  They may illustrate a point, but just like you can't determine direction from a single point of reference, a simple anecdote does not necessarily warrant a conclusion.

Why do I bring this up?  The February 21, 2011 edition of Crain's Chicago Business includes a series of stories in a section called The Dark Side Of Alternative Fees, and the stories suffer from anecdote-itis.  Oh, and none talk about the issues from the client's perspective.  The first article, When flat fees fall flat,  refers to a problem a firm had when it encountered problems filing a client's trademark application.  It wanted the client to pay more money, and the client resisted.  The problem stems from the fact that lawyers believe they need to make a profit on every hour, every matter.  If you have an average price, you will have some matters that are above average and some that are lower.  But just like every hole drilled does not yield oil, not every matter will earn a profit.  Business people know this.  Lawyers have not yet learned the lesson, and the Crain's story is a perfect illustration. 

Profit is not determined on an hour by hour or matter by matter basis.  Public companies report quarterly and annually.  Why should law firms be different?

Full post as published by In Search of Perfect Client Service on March 07, 2011 (boomark / email).