Last fall I spoke at West LegalEdcenter’s Law Leaders Midwest Forum. I shared the dais with Christine Johnson, Quarles & Brady; Keith Maziarek, DLA Piper; and Bart Kessel, Tucker Ellis. Brett Baccus, Huron Legal, served as moderator. We were asked to discuss “Pricing, Valuation and Driving Efficiency.”
During our discusion on budgeting, I proffered the following theory:
Those of us who own property with grass have a rather unfulfilling task: mowing the lawn. From Spring through Fall, the grass grows and vanity compels us to manicure it. How important is it, really? Certainly local governments penalize those who don’t mow. However, those laws probably don’t require mowing more than once per month. Yet most homeowners are manicuring their lawns at least weekly. My point is that it’s not a highly important task. That said, if you have a lawn, do you know how long it takes you to mow it? For most, the answer is “of course.”
How many lawyers rank their lawns ahead of their clients? Presumably very few. Yet, how many know how long it takes to complete a certain matter and, more importantly, how many know the general cost to client? Why is one routine (mowing) easier to predict than another (legal matter)?
- Is it the level of complexity?
This suggests law firms do not have the intellectual ability, which I doubt. - Is it too many cooks in the kitchen?
This suggest law firms cannot organize large data, which I doubt. - Is no one paying attention to past matters?
This suggests law firms know what to look for, which I doubt.
With any new subject, people face a learning curve. I think law firms’ struggle with understanding Price stems from ignorance…the good kind. In the 1970s, Noel Burch devised the Four Stages of Competence to help describe how humans learn:
- Unconscious Incompetence
An individual does not recognize the deficit of not knowing a skill. - Conscious Incompetence
An individual recognizes the need to learn a skill. - Conscious Competence
An individual has learned a skill, but execution requires effort. - Unconscious Competence
A learned skill becomes ‘second nature.’
The legal industry is slowly waking to Stage 2: it knows it has a deficit of knowledge, but is uncertain how to proceed forward. For the AmLaw 100, the answer has been to hire full-time professionals (SEE ROLL CALL). For the rest of us, we need to devote time and energy to learning this new skill. Fortunately, we are not at a loss for education: scores of articles (LINK), events (LINK), presentations (LINK), and publications (LINK) have been available in recent years. The more education, the sooner an individual progresses from Incompetence to Competence.
Just as every lawn mowing effort will yield a slightly different outcome in pattern (e.g., front-to-back, side-to-side, diagonal) and time, so will every legal matter yield a slightly different workload and invoice. However, knowing this, lawyers can and should use their focus on the blades of grass (i.e., historical data) to determine a range of cost for the lawn (i.e., matter).
Until then, lawyers will be more competent at lawn mowing than pricing. Is that the right priority?
P.S. Many clients already know the general cost of their lawns thanks to several e-billing companies, so you might as well make the effort.
Spot on Patrick, the current discomfort with pricing is largely a lack of experience and practice. I’m amazed how many partners are intensely uncomfortable with asking clients about their budget or fee expectations. Pricing is in this sense where BD was 10 years ago.
But I also wonder whether there’s a deeper issue at play, particularly around knowing costs and then estimating them. The legal mind sees being wrong as failure. I often hear partners worry about getting the estimate “wrong” – meaning that the actual time written is different from the estimate. On this standard, of course, they’re almost always going to be wrong, even when they make a good margin.