In a series of blog posts under variants of the title "Hourly billing is bad for both lawyers and clients," I made the title's argument, and defended it and updated it in response to a spate of Comments on various LinkedIn forums that continues to this day.
Any lawyer who thought he or she had defended the impossibility of predicting legal cost would do well to read the May 1 edition of ABA Journal, which featured a provocative article, "How lawyers are mining the information mother lode for pricing, practice tips and predictions."
The article will dismay lawyers who cling to the outdated notion that, somehow, legal services are the only corporate purchase in the world so complex and variable that its cost cannot be predicted with any reliability.
Big data, loosely defined as the computer analysis of torrents of information to find hidden gems of insight, is slowly transforming the way law is practiced in the U.S.
After the benign lead, they get to the scary part:
The same big-data computers doing all that mining on behalf of law firms are also being tasked by corporations to quickly size up the legal services market so they can play hardball with law firms seeking legal business.
Your clients are already there
It looks like your clients already have the empirical means of assessing what you have argued cannot be known in advance. What will you do then? In the face of your client's data-backed knowledge, will you continue to argue that, unlike everything else in the world, legal service costs can't accurately be predicted?
Adds Christian R. Lueth, director of finance and accounting at Dykema Gossett in Detroit: “Over the last five years, it has become increasingly clear that the legal industry has changed and will likely never return to the pre-recession state.
The most successful firms will be the ones that understand that their clients are already using benchmarking data to evaluate law firms, and that they need to get ahead of the curve and successfully leverage external competitive data to provide their clients the efficiency and cost competitiveness that they are demanding.”
The key takeaway? Clients are already using benchmarking data to evaluate everything about legal matters, including cost norms.
Corporations can retrieve an unprecedented macro view into legal service costs. In some cases, law firm clients are using the service to strike tough deals through alternative fee arrangements.
BigData is becoming more accessible
You may argue, "This technology is beyond the reach of all but the largest companies and law firms." You're probably right, but for how long? Within a few years of any technology's introduction, as it gains market traction, prices drop and the technology simplifies to where it's commonly available. Think about what electronics consumers have seen in recent years.
How long do you think it will take for every client, and every competing lawyer, to get access to the cost insight available from BigData analysis?
The only question is whether you'll align with your clients and try to help them achieve greater cost certainty or, after they tire of your obstinacy as they try to drag you into the future with them, they simply leave you behind.
The legal service cost predictability train is pulling out of the station. It's not too late for every lawyer to take off the blinders and figure out how to get on this train before it leaves you behind.
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