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    January 17, 2008  
 
 

BILLING REVOLUTION!


We goofed:  In our issue yesterday, we inadvertently replaced a paragraph about ACC President Fred Krebs with one from our last issue (about former Solicitor General Seth Waxman).  But we're gratified to see how closely so many of you read us-thanks for all your notes!? Here's a link to the corrected version: http://www.bisnow.com/archives/legal/0108/legal_0116.htm


 

Corporate clients have been wringing their hands about law firm bills for a few eons, but now the Association of Corporate Counsel is looking to do something about it.? They've created what they call their "Law Firm Value Challenge," hoping to change the way firms do business with their meal tickets largest clients.

 

The ACC represents over 23,000 in-house counsel, including lawyers for all of the Fortune 100.? Susan Hackett, the ACC's SVP and General Counsel, is a University of Michigan law grad who joined Patton Boggs for two years and admits she was a "miserable failure" at law firm life. ?Susan, who praises her erstwhile colleagues at Patton, has found a successful home for almost 20 years at the ACC, and wants to reassure the profession that ACC's Law Firm Value Challenge is not her elaborate ploy for law firm revenge.?

 

In the first quarter of '08, the ACC will be engaging a yet-unnamed specialist in business modeling with no ties to the legal industry-sorry, legal consultants-to rethink the way firms charge for services by looking at the issue as a matter of "raw economics."? The goal is to create structures that eliminate the perverse incentives of today's billable-hour system (ie, creating more work = more revenue), and to tie the cost of legal services (and amounts billed) to value delivered.? The ACC isn't looking for a one-size-fits-all solution.? Susan expects that the Challenge will identify a different proposed model for leveraged firms than, for example, boutiques.

 

Susan says that attorneys charging $1,000 per hour may ?well be worth it.? On the other hand, "you don't necessarily need a $400 an hour associate doing document review."

 

When the models are complete, the ACC will vet them with a blue ribbon panel of 25-50 in-house counsel, and "sanity-check" the results with various law firm leaders, associates, judges, and-yes-consultants.? Susan hopes the models will be a prime tool for corporate clients to use when considering which firms to use and how to assess the value their services provide.? The ACC is also discussing plans to multiply the impact by issuing a Good Housekeeping-like seal of approval that ACC members can attach to firms that adopt the proposed models, and by creating an online network for in-house counsel to share scuttlebutt about the models and firms using them.? The ACC is aiming to launch the entire program at the group's October annual meeting in Seattle.

 

Susan has spirited debates about the business of law with her husband Richard Hagerty, a litigator at Troutman Sanders in Tysons.? The two of them like to cook dinner with friends at their Bethesda home, where Susan-self-proclaimed "queen of martinis"-does the bartending.

 

The idea for the Law Firm Value Challenge got off the ground last year, when the ACC took note of the "anger and disgust" among in-house attorneys at the latest round of stratospheric associate raises.? Corporate clients took exception to the fact that while they would be footing the bill for the raises (designed, Susan half-jokes, to appease "the small number of recent law school grads who would otherwise go to investment banks"), firms seemed "mind-bogglingly" unconcerned about passing increased associate salaries on to clients.? While the ACC and others have talked for years about alternative billing systems, they decided the time was ripe to make a splash with a program that might actually change the landscape for good.

 
 
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