{"id":3738,"date":"2005-04-06T13:26:44","date_gmt":"2005-04-06T17:26:44","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/formerlyknownas\/2005\/04\/06\/lexthink-about-higher-fees-er"},"modified":"2011-08-05T14:57:49","modified_gmt":"2011-08-05T18:57:49","slug":"lexthink-about-higher-fees-er-value-billing","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/2005\/04\/06\/lexthink-about-higher-fees-er-value-billing\/","title":{"rendered":"LexThink about higher fees (er, value billing)"},"content":{"rendered":"

<\/a><\/p>\n

\n
Reading through <\/span>facilitator Sherry Fowler’s list<\/span><\/a> of suggested resolutions from<\/span><\/div>\n
LexThink<\/span><\/em><\/a> participants, I noticed that quite a few of them mention the concept<\/span><\/div>\n
of “value billing.”\u00a0(via <\/span>MyShingle<\/em><\/span><\/a>)\u00a0 For example, one says to “teach lawyers <\/span><\/div>\n
difference between value, price, and cost” and another says “read Ron Baker’s <\/span><\/div>\n
writings on value billing ” <\/span><\/div>\n
<\/span><\/div>\n
I am all for modernizing the law firm and the lawyer-client relationship — so long\u00a0 \"complaint<\/span><\/div>\n
as it is a tool\u00a0for better serving\u00a0the client’s interests, rather than one that merely uses <\/span><\/div>\n
modern selling techniques and technology to articificially increase lawyer fees and <\/span><\/div>\n
profits and to stave off the democratizing effects in the legal services marketplace <\/span><\/div>\n
of the digital revolution.<\/span><\/div>\n

\n<\/span><\/div>\n
I continue to believe that the “value billing” mantra and the constant drum beat<\/span><\/div>\n
against hourly billing can be contrary to client intersts, if they are not accompanied<\/span><\/div>\n
by a renewed commitment by each lawyer to the fiduciary and professional obligations <\/span><\/div>\n
owed to each client.\u00a0 See <\/span>Value Billing or Venal Bilking?<\/span><\/a> and <\/span><\/span>chronomentrophobia<\/span><\/a>.<\/span><\/div>\n
<\/span><\/div>\n
\"Shark LexThink<\/em> participants might want to consider the following discussion from my <\/span><\/span><\/div>\n
piece <\/span>on value billing<\/span><\/a>, before becoming advocates of Ron Baker’s theory of <\/span><\/span>value pricing <\/span><\/div>\n
by professionals: <\/span><\/div>\n
\n
Update: (<\/em>April 11, 2004):\u00a0 Soon (I hope), <\/span><\/span>Matt Homann<\/span><\/a> will give us his explanation <\/span><\/div>\n
of value billing, to help assuage my concern over the use of branding and value <\/span><\/div>\n
pricing to achieve “premium pricing” of lawyer fees.\u00a0 Matt suggested last month <\/span><\/div>\n
that I read <\/span>The Firm of the Future: A Guide for Accountants, Lawyers, and Other Professional Services<\/span><\/span><\/span><\/span><\/a> <\/span> by Paul Dunn\u00a0& Ronald J. Baker.\u00a0 Matt said that the book “sets out their vision of value pricing and serves as much of the model for my new firm.”\u00a0\u00a0 I couldn’t find the <\/span><\/div>\n
book at my local Library (and won’t pay $40+ to buy one).\u00a0 However, I did use the <\/span><\/div>\n
Amazon.com “Search in the Book” feature to check out “value pricing” or “value billing” <\/span><\/div>\n
and ethics.\u00a0 The results were not the least bit calming for me on whether value billing <\/span><\/div>\n
will result in reasonable fees or merely produce “premium fees”. <\/span><\/div>\n
    \n
  1. For example (at p. 217) The book asserts there is no ethical contradiction from <\/span>using value billing.\u00a0\u00a0But, it quotes\u00a0from\u00a0an\u00a0NYSBA report, which says\u00a0an agreed<\/span> upon price is fair “subject to<\/em> market realities and the attorney’s professional obligations”.\u00a0 Of course, the whole issue is what the lawyer’s obligations are<\/span> when reaching the fee agreement [disclosure of relevant facts, offering a fee that is reasonable, taking into account the client’s sophistication, etc.].<\/span><\/li>\n
  2. The book also says value pricing is ethically okay because businesses do it <\/span>\n
    \n
    all the time — using airlines charging different fliers different prices for the <\/span><\/div>\n
    same seat, movie theatres’ price for popcorn, and premium ice cream makers, <\/span><\/div>\n
    as examples.\u00a0 My reaction:\u00a0 None of those sellers have fiducial duties; none <\/span><\/div>\n
    promises to put the customers’ interests first (except when that will incease profits);<\/span> none sell a product whose qualities the buyer is unable to judge.\u00a0 As I wrote back<\/span> to Matt, “If movie theater popcorn is the\u00a0touchstone for the ethics of value<\/strong><\/span><\/span> billing, I rest my case<\/strong>.”<\/span><\/span><\/div>\n<\/div>\n<\/li>\n<\/ol>\n<\/blockquote>\n
    Note<\/em>:\u00a0 On April 23, 2004, Matt Homann had a post titled “<\/span>Primer on Value Billing<\/span><\/a>,” in <\/span><\/span><\/div>\n
    which he calls <\/span>Ron Baker “an absolutely amazing visionary.”\u00a0 [Reminds me of the name <\/span><\/span><\/div>\n
    partner <\/span>at my first law firm, who advised me that the word “amazing” could be used in <\/span><\/span><\/div>\n
    place of any expletive.]\u00a0 In the post, Matt points to a 2001 Baker piece, and says “I guarantee <\/span><\/div>\n
    that you it will give you incredible insights into pricing your services.”\u00a0 In the piece, <\/span><\/div>\n
    “<\/span>Burying the <\/span><\/a><\/span>Billable Hour<\/span><\/a>,” Baker highlights the following pricing strategy from Harry<\/span><\/span><\/div>\n
    Beckwith as central to his theory of value billing:<\/span><\/div>\n
    \n
    \n
    “Like money, price talks. It changes perceptions. <\/span><\/div>\n
    Price changes the actual experience of using the <\/span>service: <\/span><\/span><\/div>\n
    A high price actually improves the experience. <\/span>Watch <\/span><\/em><\/span><\/div>\n
    what your price says. Push\u00a0price higher. Higher <\/span><\/em>prices <\/em><\/span><\/span><\/div>\n
    don’t just talk, they tempt<\/em>.”<\/span><\/span><\/div>\n<\/blockquote>\n<\/blockquote>\n
    Let’s think long and hard before that principle becomes the core of lawyer pricing <\/span><\/div>\n
    in the new millennium.<\/span><\/span><\/span><\/div>\n
    <\/div>\n
    afterthoughts:<\/strong><\/em> <\/span><\/span><\/span>See , e.g.<\/em>, \u201cValue Billing and Lawyer Ethics<\/a>\u201c(Jan. 28, 2004); \u201cbroadening the billable hours debate<\/a>\u201d (Aug. 18, 2007)<\/div>\n

    <\/span><\/span> <\/span><\/p>\n

    \n
    \n
    \n
    \n
    \n
    \n
    \n
    \n
    \n
    the bill collector
    \nwith shoes on steps inside
    \nto the hearth<\/span><\/div>\n

    \n<\/span><\/div>\n
    stillness–
    \nin the depths of the lake
    \nbillowing clouds<\/span><\/div>\n

    \n<\/span><\/div>\n
    \n
    Kobayashi ISSA<\/strong><\/span><\/a>, <\/span><\/div>\n
    translated by <\/span>David G. Lanoue<\/strong><\/span><\/a><\/div>\n<\/div>\n<\/blockquote>\n<\/blockquote>\n<\/blockquote>\n<\/blockquote>\n<\/blockquote>\n<\/blockquote>\n<\/blockquote>\n<\/blockquote>\n<\/blockquote>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

    Reading through facilitator Sherry Fowler’s list of suggested resolutions from LexThink participants, I noticed that quite a few of them mention the concept of “value billing.”\u00a0(via MyShingle)\u00a0 For example, one says to “teach lawyers difference between value, price, and cost” and another says “read Ron Baker’s writings on value billing ” I am all for […]<\/p>\n","protected":false},"author":94,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[3513],"tags":[],"class_list":["post-3738","post","type-post","status-publish","format-standard","hentry","category-lawyer-news-or-ethics"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p6kP1R-Yi","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/3738","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/users\/94"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/comments?post=3738"}],"version-history":[{"count":5,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/3738\/revisions"}],"predecessor-version":[{"id":13279,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/3738\/revisions\/13279"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/media?parent=3738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/categories?post=3738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/tags?post=3738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}