I recently posted about the clients of professional firms that play the Billable Hour Scratch and Lose game.
Like most addictions, gambling is hard to beat, and despite clients rarely winning it seems that game is still pretty popular-at least in the legal profession. The timekeeper aficionados’ delight in posting surveys to show that still something like 75% of all law firm fees are based around time. (I personally believe it might be more than 75% as I suspect some portion-maybe most-of the remaining 25% is classified under that meaningless term “Alternative Fee Arrangements” (“AFA’s”) which, dependant upon what survey you read, usually includes capped fees, quotes based on time, blended rates, etc all which still use time to calculate a fee.)
No real surprises there and as I have said many times before, while firms cling to the Oldlaw business model of leveraging people x time x hourly rate it is going to be very difficult, take a very long time or be impossible for many firms to really offer up fee models based on anything other than time estimated in arrears or time estimated in advance.
Funny thing about time though. Theoretically, conceptually and scientifically time is a constant for all of us. My time is no different to your time and last time I looked the world over there were always 60 seconds in 1 minute, 60 minutes in 1 hour, 24 hours in one day, and 7 days in one week (exception might be North Korea as I am unsure what their Supreme Leader might have decreed about time this week).
Time doesn’t “stand still”. I can’t go back in time and I can’t go forward in time (yet). Despite the claims made by practice manager vendor spruikers no one can actually “capture” time. And being human beings we never accurately record our time spent on anything.
But if all time is the same why is it then that we use phrases like “where did the time go?”, “time flies”, “time is dragging”, “I wish I had more time” etc.
Actual time of course doesn’t vary but our experience of time does. Our perception of time is always, always inextricably linked to what we do with our time:
- Is it enjoyable time?
- Is it dangerous time?
- Is it sleep time?
- Is it creative time?
- Is it boring time?
- Is it valueless time?
- Is it meaningless time?
- Is it time that made a difference to someone or something?
- Is it valuable time?
- Is it meaningful time?
If all time is perceived as being different dependant on what we are doing with our time, it must follow that our customers too have different and very individual experiences of the time they spend with us and particularly the time that they pay for.
How then as professional practices do we monetize the experience of time our customers get from us?
For starters it makes no sense at all for professionals to have a single hourly rate to try and monetize our clients experiences of our time. As Matt Homann author of the 10 Rules About Hourly Billing says:
“When you bill by the hour, your once-in-a-lifetime flash of brilliant insight that saves your client millions of dollars has the same contribution to your bottom line as the six minutes you just spent opening the mail.”
“There are 1440 minutes each day. How many did you make matter? How many did you bill for? Were they the same minutes? Didn’t think so.”
One possible way of getting around the “all time is the same” mentality of course is to charge different hourly rates depending on what you are actually doing for your client. For instance for your flash of brilliance in the shower you would charge out a higher rate than when you are correcting your grammar in a letter. Of course this might make your finance manager’s annual budgeting fairytale more of a nightmare and would further add to the administration time of entering different default rates but, hey, as law firms spend something like 10-15% of their gross feeding the time machine at the moment anyway what is a little more effort in an endeavour to more properly monetise the value you are providing to your clients?
It’s not that Oldlaw firms are not used to having all sorts of different hourly rates on their system. Some have default rates dependant upon what particular clients insist on and all have different hourly rates dependant solely on the seniority of the lawyer (in the somewhat time honoured mistaken belief that if I am a senior I am automatically worth more-even for my grammar corrections).
Or you could just drop the time charade completely and do what most of the business world does. Agree your scope of work and your price(s) up front.Make your clients experience focus on the results and outcomes you have helped them achieve-not on your time spent or to be spent.
As human beings we use time to measure many things-especially physical activities.(swimming races, foot races, horse races, public transport timetables, etc).
But there are plenty of things time cannot measure (heat, height, weight, smell, joy, love, for example).
Other things time cannot measure include quality, satisfaction, rapport, likeability, feelings, convenience, success, experience, intellectual capital, and solutions. Strangely enough these are all things your customers measure about about you.
So what does your firm measure? Thought so.
When are the professions going to stop measuring & selling something our customers do not measure and buy? While Karl Marx might be resting soundly the late Peter Drucker would be turning in his grave wondering why Knowledge Workers measure themselves, and the value they provide, by time.
For the time being unfortunately for Oldlaw and many other professional firms, “it’s just time”-and therein lies the problem.
*since starting this post I have become aware of a book by Alan Burdick titled “Why Time Flies” which examines the concept and perceptions of time-which I have not had time to read yet!
@ChisConsult Influencing motivated professionals to make a difference.