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The above-titled article appeared in the January 15 edition of the Capital Business section of the Post website, citing the trend toward alternative fee arrangements and profiling a firm of BigLaw ex-pats who’ve abandoned hourly billing entirely.  In the Comments, though, appears the old canard, “This model may work for transactional situations. But litigation is the big cash sink hole, and a big fight can’t be billed flat rate.”

In a word, “Bunk.”

I’ve been the sales coach to BigLaw lawyers for 20 years, and have listened to this “litigation is different” argument for all of those years. We developed a collaborative approach to litigation pricing in which outside counsel and the client both contribute their specialized knowledge and expertise. The lawyer’s expertise is well known.

However, since most business litigation occurs between parties with an ongoing business relationship, the client has expertise critical to the integrity of any price estimate. They know the industry norms, the opponent’s culture, stakeholders’ personalities and proclivities, etc. Too often, outside counsel is asked to prepare an estimate alone, which suffers from not having the client’s critical knowledge about how things might unfold based on observed behavior, industry-insider knowledge, etc.

When you combine these two realms, it’s not hard to arrive at a co-owned, shared-risk estimate that allows the lawyer to manage the budget by exception.

“Ms. Client, based on your observations about the executives, we estimated a half-day for each deposition. Unfortunately, we’re seeing a lot of intransigence and obfuscation, opposing counsel is objecting to every question we ask, each deponent has selective amnesia. The first two depositions took a full day each. We have 8 more execs to depose. Given that, to what degree do you think we should adjust the deposition budget?”

The client recognizes that observed behavior differs materially from the behavior projection to which they contributed, and that they endorsed, so the fee estimate must change by some corresponding factor.

The law firm must aggregate this type of experience info over time, so that the next time a client says, “I’ll think they’ll behave this way,” counsel can caution them appropriately, e.g., “I hear you, but let me share what happened recently in what seems a similar situation. It’s only one data point, so I don’t want to over-project it, but here it is.” It may or may not cause the client to reconsider the behavioral projection. Over time, though, if it’s happened 35 times, the caution carries far more weight.

This is not theory. Hundreds of litigators I’ve coached have applied this approach successfully to yield far more reliable initial estimates, plus a management-by-exception process that avoids large surprises for the client and the resulting client/counsel friction.

Mike O'Horo

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