Legal Commentary

Survey Results Confirm Vitality Of The 10% Solution

By Patrick J. Lamb

I recently posted on the 10% game that clients and their law firms play.  The client representative wants to feel like he or she has achieved a real discount with the law firm.  So the representative insists on a "10% discount."  Lawyers, being the smart people they are, can do the 10% math, so they raise their base rates so that after giving the 10% discount, the firm gets its regular rate.  The game is truly perverse.  No one cares about actual cost.

Here is a story I recently heard.  Well-regarded midwest firm is meeting with a large client.  Large client tells firm that its rates are dramatically lower than the New York firms with which the midwest firm shares the workload.  Hundreds of dollars per hour less.  Client is utterly uninterested in moving work to the midwest firm so it can save hundreds of dollars per hour.  Client simply asks midwest firm to give it a 10% discount.

Here's the latest on the 10% game.  From the American Lawyer survey of the AmLaw 200:

Aric Press, the Managing Editor of The American Lawyer and one of the most informed and astute observers of the profession, commented on these results in The AmLaw Daily.  In his typical pithy manner, Press says:

And yet, they tarry. One reason seems to be that clients still see these plans not as a way to agree on a price, but another way to wrest a discount off the billable rate card.

He is equally critical of law firms when it comes to the move to alternative fees.  Be sure to catch the entire post.

Suffice it to say here, clients need to realize they cannot wait for law firms to lead them to the promised land.  Aric Press' post quotes one managing partner as warning him to "stop writing that story [on alternative fees].  It's not going to happen."  Clients need to realize also that the move to alternative fees is not all or nothing.  Clients that need a change for nothing other than reasons of economic survival should think about an experiment.  Move some portion of your workload to alternative fees so you can develop a basis for making an informed judgment.  Valorem, as an example, has bet its future on the fact that you will save money and enjoy budget certainty by making this move.  There are many firms like ours--you simply need to plug in to the underground.

Full post as published by In Search of Perfect Client Service on December 01, 2008 (boomark / email).