Polishing the handle on the big front door
Anyone familiar with the Gilbert & Sullivan comic opera, HMS Pinafore will remember the Rt Hon, Sir Joseph Porter KCB, the First Lord of the Admiralty. When he was a lad, he served a term as an office boy at an attorney's firm. One of the tasks set for young Joseph was to polish up the handle of the big front door. Sir Joseph sings:
“I polished up the handle so carefully,
that now I am the ruler of the King's Navy.”
Although I haven’t ascended to any lofty heights in the admiralty, Sir Joseph and I have a bit in common. We both started out in an attorney's firm. Of me it might be said:
“He recorded time so faithfully
That the partners voted him as first MP”.
I have been in the role of Managing Principal (MP) at Moores for almost 12 years. In that role, I don't have any fee budget and I am not expected to do any work on client files. However, I was such a diligent time recorder that for the first four years, I recorded my time. I did this for two reasons:
· I thought that, by measuring which practice groups and principals I spent the most time with, I could prove who were the biggest basket cases.
· As my job was to make lawyers accountable for recording at least 5.5 hours of chargeable time and 2 hours of non-chargeable time per day, I considered that to make them accountable, I needed to demonstrate that I was still recording all my time.
In four years as MP, all my efforts to lift average chargeable hours per day from 4.35 to 5.5 were in vain.
In August 2010 a consultant who is now a co-director with me at Innovim, facilitated the Moores Principals’ Retreat and challenged us about the wisdom of attempting to be a “full service” Law Firm. Amongst other things, he introduced us to a new concept called “Value Pricing”. Over the following 12 months, a couple of brave lawyers experimented on fixed price agreements with clients. Pleasingly, they had some success.
At the August 2011 Principals’ Retreat, we resolved to have a serious crack at value pricing. The target was to have 50% of new matters opened by 30 June 2012 conducted on the basis of value pricing.
With a little bit of help from Ron Baker in March 2012 and a lot of help from John Chisholm, we exceeded our target and we were still in business. This emboldened the Principals.
Without any authority from me, many of our lawyers had already stopped recording time. I worried about how we could assess profitability on each file but others did not worry as much as me. The resolution was to stop recording time by 31 December 2012. In 2013, we turned off access to time recording on the practice management system. Surprisingly, business did not grind to a halt.
Where is Moores now?
1. It has changed from a practice that was chronically distressed in relation to its ability to record, bill and recover time to a practice that is focussed on creating value for clients.
2. It parted company with some members of the team who did not believe in value pricing. Between April 2012 and April 2013, the team reduced in size from 120 to 90.
3. With encouragement from another consultant, Tim Williams, it got serious about its positioning. It dropped several practice areas where it lacked genuine expertise and closed down the practice group which had been the most profitable for 15 years. That took a lot of courage
4. Gradually, with the right people on the bus and sitting in the right seats, confidence and trust grew. Collaboration increased and cross-referring improved.
5. As it narrowed focus, it became more comfortable about saying “no” to clients who were not the right fit, perhaps because they bought on price rather than on value or relationship
6. For the first time, the practice developed a vision. The vision based on Who(m), What, How and Why was launched to the team in September 2013.
7. Although Moores had always been blessed with capable professionals (technicians who care), they had not always understood the value that they created for clients. For some lawyers, that realisation took a couple of years to become entrenched. They needed to learn that the value they created for clients was seldom linked to the volume of their activity but almost always to the application of their knowledge, accumulated over years or decades, which enables clients to get from A to B with as little discomfort and as quickly as possible. We call that “being effective”
8. Nowadays, litigators at Moores have a reputation for early intervention and keeping clients out of court. Granted, the practice does not generate the same fees from commercial dispute resolution as 10 years ago however, it has a new following of loyal clients who trust that Moores isn’t going to lead them down a path unless there is confidence that it can significantly improve the client’s position.
9. Value Pricing (also called “Aligned Pricing” at Innovim) is still a key differentiator for Moores although it will not always be. It is not an end in itself; merely a very important tool to enable Moores to develop life-time relationships with clients who are the right fit.
10. The risk that Moores took in changing its business model (ditching time sheets and moving to value pricing is not a simple pricing model change) has transformed it into a practice that is more open to taking risk. Today, it is as much a firm of strategists and business consultants as a firm of lawyers.
11. Perhaps the biggest transformation is the composition of the team. Principals are very focussed on recruiting team members who are adept at comprehending value, then creating it and communicating that value to clients in a convincing way. Not all lawyers have that ability although some can learn those skills.
12. At Moores, value pricing has been the catalyst for transformation of the practice. It is not the only way to transform a practice but it is certainly an effective one if the team is disciplined enough to stay the course.