The Law Office Experience

Innovation.net points to a best practices study by  The Product Development & Management Association (PDMA) comparing performance and practices of over 400 companies and industries.  According to the study (as reported by Innovation.net)

Not surprisingly from the 2004 study,"the best" performers generate 49% of their profits from new products -- more than twice as much as "the rest". Top performers recognize the incremental value that successful new products provide to customers and therefore to the bottom line.

How many new "products" have most professional service providers come up with in the last year?  The last decade?

The Creativity Conundrum

Why aren't lawyers more creative?  Not creative about solving client problems, but creative about being lawyers.  Here is an exercise:  Walk down any aisle of any new grocery store and notice how many products are there that didn't even exist ten years ago.  Heck, just look around at the store itself and see how different the shopping experience has become in just the last decade.  Now, look at the legal profession.  Any new products?  Do our offices look different?  Have we changed in any meaningful way how we provide our services or interact with clients (apart from e-mail) in the last ten years?  Name another industry or business that has so systematically avoided innovation and shown such a disdain for new ideas.

I had a meeting on Saturday morning with another attorney and we were talking about our respective practices.  He does nothing but personal injury and I've sent him quite a few cases.  I shared with him some of the things I was implementing in my practice and he remarked how "creative" I was.  I responded that every lawyer I know is pretty creative when solving client problems, but that creativity  (or ability to think differently) doesn't translate into high-level thinking about changing the way they approach the business of law.

The discussion reminded me about an article from Psychology Today titled "The Art of Creativity."  There is a lot of great stuff on creativity in the article,  but the part that caught my eye was the list of ways to discourage creativity in children:

Surveillance: hovering over kids, making them feel that they're constantly being watched while they're working.

Evaluation: making kids worry about how others judge what they are doing. Kids should be concerned primarily with how satisfied they-and not others-are with their accomplishments.

Competition: putting kids in a win/lose situation, where only one person can come out on top. A child should be allowed to progress at his own rate.

Overcontrol: telling kids exactly how to do things. This leaves children feeling that any exploration is a waste of time.

Pressure: establishing grandiose expectations for a child's performance. Training regimes can easily backfire and end up instilling an aversion for the subject being taught.

The article also fingers a bit more subtle culprit:  time.

Children more naturally than adults enter that ultimate state of creativity called flow. In flow, time does not matter; there is only the timeless moment at hand. It is a state that is more comfortable for children than adults, who are more conscious of the passage of time.

"One ingredient of creativity is open-ended time," says Ann Lewan, a director of the Capital Children's Museum in Washington, D.C. "Children have the capacity to get lost in whatever they're doing in a way that is much harder for an adult. They need the opportunity to follow their natural inclinations, their own particular talents, to go wherever their proclivities lead them."

Now, how many of these "creativity killers" are applicable to lawyers?  Can you name any law firm associate that doesn't experience all of them nearly every day?  Is the answer to the question that started this post that our prevalent business model wrings all the creativity out of our lawyers in their first few years of practice?  If so, what can we do to stop it?

I've got some ideas, and I'm going to be posting a lot more on the legal creativity conundrum in the next few weeks. 

Highland, Illinois Real Estate

Warning, rant ahead.

I've been blackballed by the Highland, Illinois realtors! I've been doing the deeds for a local title company. It was a nice bit of business for my firm, and the title company enjoyed working with us because we provided the deeds and other work to them much more quickly then the attorney who used to do the work -- resulting in fewer cancelled closings and happier customers.

However, once the local realtors found out I was doing the deeds, they went to the title company and said (allegedly), "If Matt Homann continues to do the deeds, we'll use a different title company." The reason? Because I've told people that, if they have a willing buyer, I can do their real estate sales documents and advise them through the closing for far less than the 6% commission our local realtors charge. Apparently not happy with their commission on 99% of the real estate transactions in a growing real estate market that happen here without any lawyers at all, the realtors are threatened by me helping my home-selling clients (who already have a buyer!) with their transaction.

The funny thing is that the realtors could build so much more good will by encouraging sellers with willing buyers to bypass the real estate system and see an attorney! If a realtor told me how to save thousands of dollars on my transaction, I'd recommend that realtor to everyone I knew. And if a realtor referred clients to me, I'd reciprocate, and send a lot of business their way.

I've not decided how to respond, if at all, to the realtors. Some friends and collegues have urged me to sue, but I don't think I'm up for that. However, I do know this, when I sell my house soon, don't look for a realtor's sign in the front yard.

Value Pricing: Real World Example 1

Anyone who reads the blog knows how little I think about the billable hour.  Until now, I haven't given very many examples about how we are using "service pricing" in our business.  Here is one way abandoning the billable hour has created "win-win" for us and one client (and yes, I've gotten permission from them to post this example on my blog).

First, the basics.  A client has a development zoned for multi-family housing and is currently building about twenty duplexes (forty units) with sixty more ready to go.  Originally, the developer believed that the market existed for selling each duplex to one owner -- who would then rent out one side and live in the other, or rent out both sides.  However, economic conditions have made it more profitable to sell each side to different owners -- something currently prohibited by local zoning ordinances.

The obvious choice is to turn the development into condominiums.  This allows individual ownership of each duplex side without violating local regulations.  However, because all of the units aren't yet built, to "condominiumize" all of the duplexes into one large development, the developer will have to do so in phases (as many as twenty).  Each time a new phase is ready, the declaration of condominium (a legal document setting out ownership interests and voting rights among the duplex owners) and the plat will have to be amended.  So far, so good.  However, the developers want the maintenance of each unit to be shared only between the owners of each duplex, and not collectively among all of the units as often happens in a traditional condominum setting.

Normally, we would do the work and bill by the hour.  Since this is a novel kind of project for us, we could easily spend between twenty and fifty hours drafting the first declaration of condominium.  Gaining approval from local and county governments could easily double that investiment of time.  Amending the declarations and plat each time a new phase is ready would likely add five to ten hours again. 

When we laid out the time and cost to our clients, they balked.  Asking them to pay us thousands of dollars for work to prepare the condominium documents was not an option to them, so we proposed a different arrangement.  For $X00.00 per unit (two per duplex), we will do all of the documents necessary to condominiumize the entire development.  We will be paid each time a unit sells (and not before), and do as many phases as are necessary until construction is complete.  The developer bears all the filing and recording fees, but is not out of pocket a single dime for the legal work, and will likely pass the unit fee on to the purchaser of the condominium. 

Now for the best part:  The developer loves the idea.  By eliminating the up-front cost, the developers are able to plow previously-budgeted legal costs into subdivision improvements.  We will make two to three times the amount we would make if billed on an hourly basis, but only if all of the units sell.  And while it may take some time for the development to close, we've secured an income stream for the firm for at least two years.  And, we will likely be retained to represent the condominium owner's association once the requisite number of units have sold.  We've been representing other owners associations for a set monthly fee of $X.00 per lot per month.

We love it, the developers love it, and the home buyers will realize significant benefits as well.

Tips for Law Students

My friend Evan at Notes from the (Legal) Underground asked me to be his guest today. I wrote this post, titled Five Indispensible Tips for Law Students and New Lawyers, that Evan posted today. Check it out.

Insignificant bits of frustration.

Tom Asaker had a rant that got me thinking about my law practice. First, Tom's rant:

I know this may sound a little persnickety (to the unenlightened branding guy or gal anyway), but here goes: How come I pay well over $20 for a hair cut and I always leave with little hairs all over my neck and ears. Sure, the service and quality are decent, but come on! The salon should really consider my experience before, during AND after my visit. Right? I guess you should probably wonder as well, what insignificant bits of frustration are you leaving with your customers? Heed Mother Theresa's wisdom: "Be faithful in small things because it is in them that your strength lies."

As a lawyer, I do my best to focus on solving my client's problems, but now I wonder if dealing with the problem is just the "haircut." What can I do to improve the customer/client experience after they visit me? I've been thinking about a few ideas, including sending a follow up thank you note (mailed separately from the invoice) that includes a quick survey -- and perhaps a coupon for a discount on future services like estate planning or something similar. Maybe even start a "birthday club" that gives them a quick 30 minute consultation on their birthday as my "gift" to them. Like I said, I'm just brainstorming here. Anybody out there have better ideas?

At least you know what your getting into.

Harvard 3L to be, Jeremy Blachman, reflects on his summer clerkship at a large New York City law firm:

It is very clear to me, after 13 weeks at a law firm, that partners and associates work too many hours and need to expend too much mental and emotional energy into their jobs for this to be a truly fulfilling career unless you are passionate about what you are doing. Or at least very, very interested in it. If the work does not excite you, there seems to be -- at least at a big New York firm -- no way to be really happy doing it. Unless you're lying to yourself, or really into the money. More than one associate this summer has said that the law firm life leaves you room for one other thing -- a social life, a family, a hobby -- but not more than one of those. More than one associate has talked about having to consistently cancel plans with friends, because the hours are not only sometimes long, but relatively unpredictable. There are slow weeks when they get out at 7:00 every night. And there are weeks when they don't. And what type of week it is can change very quickly. More than one associate has talked about how a lot of the work is pretty mindless, especially for the first couple of years.

Writing an Ethical Will.

Arnie Herz, who writes the Legal Sanity weblog has some great advice for writing an "ethical will." He discusses an article about how people are using their wills to hand down advice and blessings to their heirs (along with their money). There are some key questions Arnie pulls from the article. Worth a look.

How to design a memo.

Greg Storey's Airbag has this post demonstrating how he would have redesigned the memo to George W. Bush about the Bin Laden threat. I don't write about politics, but the redesigned memo is quite striking and makes me want to rethink my client correspondence design. Greg writes:

I seriously doubt the White House cares about such things (Condi if you are, lets talk) but it would seem to me that if USA Today made it easier for a nation to monitor the weather through good design, why not give design a crack at making it easier to stop terrorism?