Sunday, July 05, 2009

The Pareto Principle: The Bottom 20% (Ie: Cheap Bastards) Self Identify Every Time!

At Exemplar, we always talk about value pricing and generally about the inherent integrity in a pricing model is designed to arrive at a price that is fair to both sides. But no matter how equitable your model, you just can't beat the Pareto Principle -- the principle that your top 20 percent of customers drive 80% of your revenue and your bottom 20% produce 80% of your unprofitable deals, complaints, write offs, etc! We all know that they can sometimes go by the name: "CHEAP BASTARDS!" Fortunately for Exemplar, since we determine a fair price in advance together with our customers (unlike our billable hour counterparts in the profession)we get to identify and weed out these leaches in advance, but for many companies these customer can be the bane of their existence. Fortunately, now that you are know the Pareto Rule you can identify the customers who do not value what you do and send them to your competition (who will not likely see it coming!)

At Exemplar, we identify and eliminate these customers like the game "Duck Hunt" on the original Nintendo! So, the next time you are hunting for revenue and meet one of these customers, remember that the goal of being in business is to be profitable, not to have revenue or even another customer! If you price on value, it is important to make sure your customers value VALUE! For the billable hour folks who didn't find out in time to not let them hire you, get your pencils out because it's "Write Off" time!

Monday, March 16, 2009

Will the Legal Entrepreneurs Please Stand Up?

Who is growing now? It's payback time for traditional firms -- they played the game for decades of outplacing attorneys into in-house roles to get business and treating them like second class citizens while running up enormous bills as an ode to Karl Marx's Labor Theory of Value. Finally, the balance of power has shifted and the need to preserve shareholder value has caused in-house counsel demand respect and pressure their firms to stop over-lawyering everything! In turn, the AmLaw 100 firms are laying off thousands of young attorneys while Partners refuse to reduce their pay from $3Million per Partner to $2.8Million per partner in order to stay loyal to their people! Who is growing now? While most law firms are cutting back significantly, Exemplar has more than doubled. Nobody can afford to write their attorney a blank check and offering fixed, value-based pricing is not about being cheap, it is about being transparent with your customer. It is simply good business.

In this case, the market is speaking for itself. That being said, we are growing. . . and in spite of news reports with BigLaw managing partners crying "The Billable Hour Must Die" as a PR stunt with no signs of change in sight, Exemplar is dedicated to change, caring about its people and their growth, and a successful and truly meaningful career path for the legal entrepreneurs that serve within our walls and a a vision for the future of the profession! So, for the followers in the industry, please just keep watching. For the leaders who are ready to roll up their sleeves and build the firm of the new economy, I welcome you to check out what Exemplar is looking for in our ranks!

No Hourly Bull!

Innovative High-Touch Business Law Firm Seeking Legal Entrepreneurs in Growing Firm

About the Firm:
Exemplar Law was founded as the first corporate law firm in the nation to abandon hourly billing in favor of a fixed, value-based pricing model. Dynamic and growth oriented, Exemplar now serves clients in all areas of corporate/business law across the nation and we are poised for fast growth. Exemplar is seeking leaders who are motivated by being an active part of building a leading innovative national firm built on a new paradigm. Exemplar has a strong collaborative and team-based culture and a value system that is built to last. The Vision of the organization is to provide the most premiere and horizontally-integrated services in the professional services marketplace in the new paradigm of Value-Based Pricing and to be the most desired legal employer in the nation. While Exemplar serves mid-market clients nationally, Revolve, an Exemplar Family Company, serves companies exclusively from the start-up through exit phase of the business.

About the Right Candidate:
• The right candidate has a long-term time horizon and is primarily motivated by actively participating in the building of the premiere International Firm of the Future.
• Self Identifies as someone who will take risks for something they believe in / Is an Entrepreneur
• Has business experience, education, or extreme business savvy
• Is Socially Savvy and interested in business development, client development, and networking
• Has a well-rounded business law background/interest in diversified business law practice and core skills
• Has a fundamental understanding of the flaws of the billable hour model and passionately believes that value-based billing is the future of the professions
• Is of the highest character and integrity, and is willing to be held to the highest standards of the values of the firm
• Is a progressive thinker who is not bound by “the way it has always been done”
• Is open minded and interested in both personal and professional development, as well as constructive feedback from colleagues
• Will place the interest of Team FIRST and equates team success to personal success!
• Has a vision beyond mere daily practice of law
• Desires to create something larger than themselves and build equity in the future of the professions
• Is prepared to roll up their sleeves and build a firm!
• Will work hard for something they believe in.
• Is Confident, but willing to check their ego at the door.

-- NO POOPERS (Yes, even if you clean up after yourself! Go crap on someone else's yard!)

Seeking Leaders in the Following Markets for Exemplar’s Integration Program
Boston, MA
New York, NY
Washington DC/Baltimore
Los Angeles, CA

Application Procedure: (Strict Adherence Required)
All interested leaders shall submit a resume AND, in lieu of a cover letter, please write a statement about your reasoning for applying and what you believe you will contribute the building a progressive and premiere national law firm. Please be as specific as possible and address your contribution in the areas of: New client development, innovative business practices, marketing, practice management, firm culture, as well as your legal savvy. At Exemplar, we care about your unique qualities and are not looking for cookie cutter attorneys. We promise to take the time to carefully read and consider each and every application. Please take the time to carefully craft your letter. (applicants with traditional or non-customized cover letters will be summarily rejected and not considered)


Do your homework. It is obvious who does it and who doesn’t. We are on the web at: AND
Differentiate: We are not your average firm and we are not looking for average people.
If you have passion or a unique angle, let it come through. Use a style that works for you.

Saturday, August 23, 2008

Billing By The Hour Causes Cancer: Direct Links Discovered By (Jurist) Doctor Marston in Boston Laboratory!

In Recent News, it was discovered that billing by the hour causes cancer in professionals who adopt these billing practices. The problem is said to start with cancerous "time-billing" cells in the brains of consulting and law firm partners. Since these cells infect the brain, causing irrational behavior in the partners thereby causing them to lose all common sense (to healthy hosts). For instance:

Common Sense:
- The more effective I can be for the client, the more value this will have to the client.

Thinking of Cancer-Infected Partners:
- The more I drag this out and the more hours I can bill, the more this must be worth to the client. Yahoo! Let's burn the midnight oil!

The problem discovered by J. Doctor Marston was that organizationally, the cancer is infectious from the top down. Therefore, once the brain cancer infects the host partners, it quickly spreads to the other partners and junior staff in the firm. Interestingly, the cancer operates differently in those infected at lower organizational levels. Dr. Marston's research discovered that the brains of associates are highly resistant to the cancer of the partnership initially. Unlike the partners, who actually believe they are operating under a economically sound billing model (although it is well documented that Karl Marx's Labor Theory of Value has long been refuted!), associates and laterals do not immediately experience a chemical change in the brain causing them to believe that clients actually want to buy TIME! Studies show that the cancer first infects the associates in other body parts effecting motor skills and the nervous system. For example:

-- Big firm associates who become infected experience a "treadmill effect," constantly worrying about not meeting their billable hour quotas. They think about time they spend with their loved ones as an opportunity cost . . . feeling like they "could be billing for that time instead." They hate feeling that way, but cannot help it.
-- The cancer in associates also causes lethargy in partners and associates alike. Consequently, outside counsel and clients are left having to manage their consultants and attorneys by giving them deadlines to avoid over-consulting, over-lawyering, drag-outs, unnecessary 50-page memos, briefs, etc.

After years of billing by the hour, infected consultants, attorneys, and lateral partners eventually get "billable brain cancer" and begin to believe that the only way to run a firm is bill by the hour. It is an unfortunate fate for those who experience it. Fortunately, some associates manage to escape the hamster wheel in time to get cured (most by leaving the profession and some by escaping to in-house legal departments where they watch from afar as their former colleagues become further entrenched by the nasty billable hour cancer at large firms!

Fortunately, Exemplar ( has created cancer-free professional services and law firms where the partners operate under economically sound principles, think of working effectively and adding value (not acting as fungible commodities billing time increments). Increments are Excrements! Adding value is what drives our attorneys to leverage their unique skills, rise to new heights, and please clients time and time again. A healthy lifestyle option has arrived in the legal profession. Exemplar Companies has found the cure to billable hour cancer!

Thursday, August 07, 2008

Power and Accountability: Take Two of These and Call Me In The Morning!

Is your firm suffering from a lack of innovation? Is your firm slow to change? Do you labor over the simplest decisions in your partnership meetings and sometimes feel you are dealing more with politics and personalities than important matters that drive your business forward? If so, then your firm clearly lacks a PA system! What the hell is a PA system? No, not a speaker system, a Power and Accountability System. Without BOTH of these in place at the same time, you will have problems innovating, enjoying what you do, and impacting positive change in your organization. Power . . . . Accountability. Take Two of these and call me in the morning. Here is why you need BOTH:

No Power, No Accountability:
This is a typical partnership: Nobody (not one person) has authority (and likewise, nobody really has ultimate accountability) You operate by consensus, and when you make crappy decisions you can all throw your hands up in the air and say "hey, I just voted like everyone else. It wasn't my decision" Most of the time that you are in firm meetings you are dealing with challenging personalities, everyone thinks they are an expert on everything, you take the lowest common denominator of risk and innovation because the majority vote want to retire within 5 years and you cannot innovate at their expense. You are in a room full of mostly old white guys all of that talk like a have a dozen testicles and act like they have none! Why can't you innovate? Because NOBODY has the power to change and NOBODY is accountable to making the right decisions in your firm. Two words: Stale mate!

Power without Accountability:
This is a problem without a doubt and you have seen it before. This is the asshole that works down the hall from you. He treats everyone like shit, many people have left the firm because of the way they were treated by him, few would admit it, and the people who reported the problem to other Partners will tell you that everyone looked the other way because he is a large producer of business -- he can do whatever he wants, right? After all, what business do you have to tell him how to act when you can't originate $4Mil in business/year? What is more likely to be happening is that you are scared to death that if you tried to confront or change the "asshole" that his $4mil book, which you benefit from, will walk out the door with him when he leaves at night. There are people with power and no accountability at all. . . these people are a cancer to your organization, a disease. They will keep you down, ruin your culture, and prevent you from becoming the firm that your people wish it could be. You are cheating the next generation of lawyers by keeping these people.

Accountability without Power:
This is a curious situation to be in as well, and more common that you may think. Your non-lawyer executives, like your Chief Operating Officer or Chief Marketing Officer. Sometime it is even your Managing Partner. You are a growing firm and know you need structure and more help, but you all have huge egos and became Partner so you do not have to report to ANYONE! BUT, because you know you need help you Hire a COO, CMO or elect a Managing Partner and expect RESULTS! You brought them in to increase revenue growth or efficiency, or deal with problems, you are setting goals and expectations of them in their roles and their compensation may even be tied to them. What's worst, your firm does not give them the Power (authority) to be effective in their own roles! Your Managing Partner may be expected to change the culture, but is no empowered to fire the asshole partner or to manage other partners, right? Your COO is expected to increase productivity and efficiency, but he does not have the Power or Authority to tell your partners how to use their administrative staff in a less wasteful way! Your CMO has a great budget and can make great promises to the world about what you can do, but does not have the POWER to reprimand lawyers who do not live up to the brand promise! Anyone who is in this category, I feel sorry for you. Do yourself a favor and get the hell out of there! Apply to Exemplar where you can get both!

You see: The only way to innovate and change with the times is to get the right people on the bus, identify their strengths, empower the hell out of them, give them the tools to succeed, and THEN hold them accountable! It takes TRUST which is not in the vocabulary of most lawyers, yet is built into the very fabric of the Exemplar organization. With a good PA (Power and Accountability) System, you can go a long way, but they are travel buddies. So, if you do not have them in you firm, or one is missing, please take two of these and call me in the morning. Once you realize how successful you can be, you'll wonder why you didn't do this 10 years ago!

Wednesday, July 16, 2008

The Numbers that Really Matter: Leading Versus Lagging Indicators

As someone who knows finance, I cannot tell you how widespread it is for businesses to look at the wrong data to determine how to make critical business decisions. For instance, if you look at the efficient market hypothesis you can see that past results are not indicative of future performance. After all, if that were true we would all be rich because we would bet on the future based on the past. I think we all understand this concept intuitively, but so few law firms actually put this into practice.

What professional service firms really need to understand is the difference between Leading and Lagging Indicators. So unless you want to drive your car by looking in the rear view mirror {I certainly won't be a passenger in your vehicle}, then I suggest you listen up!

Here is an example of Lagging Indicators: (Dumb Data)

Profit - This is lagging indicator of how you managed the cost of your revenues last year

Revenues -- This is a lagging indicator of what customers did last year and says nothing about the future.

Billable Hours -- This is a lagging indicator of what people did with their time last year. It is not predictive, and since you have to consider write-offs, learning curves, loss leadership, mentoring, etc, it is not even a useful tool to truly understand the past!

Write Offs -- This is a lagging indicator of customer dissatisfaction in the past year (Note: It is NOT a sign of satisfaction. . . by the time they are crossing out your line items, they are already pissed off!}

Attrition Rates - This is a lagging indicator of how happy/miserable your people were last year.

Here is an example of Leading Indicators: (Smart Data)

Employee Happiness Index: This is a leading indicator of this coming year's productivity, attrition rates, and customer satisfaction (because happy people make happy clients!)

Hand Written Card Index: This is the number of hand-written thank-you cards your firm got from clients this year. This is a leading indicator of revenue growth through referrals, increased wallet-share per client, and customer loyalty.

Accounts in Pursuit: This is the total sum value of clients that the firm considers to be leads or prospects. This is a leading indicator of gross revenues in 30-90 days.

These are just some examples and there are hundreds of each. There will be only a handful of Key Predictive Indicators that will matter the most to your business. Now, there is a strong tendency to discount or fail to value Leading Indicators at all. There is an easy explanation for the phenomenon: Leading Indicators are far more challenging to quantify that lagging indicators. Most organizations fail to even try because they believe that if they wait and just let the future become history then they can reduce the acquisition cost of the data and make decisions based on the Lagging Indicator data. That practice is not only laze, but a highly costly mistake. The ability to know the future is a power that can be leveraged to far exceed the cost of acquiring the data, not to mention the fact that with a little creativity getting "golden data" does not have to cost much at all!

An Exemplary Example: At Exemplar we have studied the best business models in the world and their best practices to get a sense of how we can do better. Southwest Airlines, for instance, understands that the Employee Happiness factor is key in their business. The CEO said "I only hire happy people" and to date it has paid off. They know (as we do) that happy employees make happy customers and happy customers make higher revenue and thus higher profit due to the increased productivity. You see, this one factor has a ripple effect through both the inside and outside of the organization. How, you ask, do you figure out your Employee Happiness Index? Well, it can be different for every organization. We have adopted a practice that I learned about by reading Ron Baker's book "The Firm of the Future". We are instituting the "HSD Button" program, called the "High Satisfaction Day Button". We wanted to know, on average, how happy our people were on an ongoing basis. The cost of doing surveys is too high and hard to normalize and quantify, so we needed something fast, simple, and effective. So, we are putting a small button on the computer screen desktop called "HSD", and at the end of every day before people sign off they are asked to think about whether they had a satisfying day, and if so they would press the button. You can see that everyone would use their own subjective standard to evaluate this and that is OK. The absolute number and standard is less important than data trends, spikes, and changes over time. Now, we have our heads around a Key Predictive Indicator for the business that will help you avoid problems before they become a part of your "history" and helps us to make profitable decisions because we know where we are headed. At Exemplar, we lead by looking forward to the future. Don't drive your car by looking out the rear view mirror. If your people found out that you were running your organization that way, they might jump ship! I certainly would!

Tuesday, January 22, 2008

Ready. Fire. Aim! Ooops, I Missed. . . There Must Be Something Wrong with the Gun!!

Happy New Year everyone. In this New Year I am making a wish for you: I wish our profession would be more careful when handling weapons! When I thinking about professionals who have tried to "dabble" in fixed pricing I am reminded of the chant from the movie The Christmas Story "You'll shoot your eye out, You'll shoot your eye out" when I hear some of the stories from professionals who simply don't get it but try it anyways. It is almost humorous to watch because they are essentially taking a "Ready. Fire. Aim." approach, missing, and then literally claiming that there must be something wrong with the gun! I suppose it is good that the gun could not speak because it allows their psychologically protectionist approach to keep them from admitting that they don't have a clue what they are doing. One commenter put it well when he wrote: Fixed-Pricing is like teenage sex. There are more people talking about it than doing it, and those that are doing it don't know what the hell they are doing!"

Professionals who are considering adopting a fixed-priced approach need to understand that it is not a pricing strategy, it is a business model. In order to be profitable, you have to re-engineer your operations, IT, HR, Compensation structure, hiring practices, mentoring program, and resources, among many other things. Remember that under a value pricing model Project management and Scoping is key to successful implementation and many professionals who try to do a couple of projects on a fixed price do so without properly scoping out the work or examining resource utilization to determine how to maximize profitability on the project. So, while I am aware that fixed pricing can change your life, create a winning situation for your clients, and be more profitable for the professional all at once, I warn you that this gun called "value pricing" says conspicuously on its box: "WARNING: Please read instructions before using. failure to operate properly could result in a misfire and you may lose a limb." So, the next time you read something about a professional who took a "Ready. Fire. Aim." approach, blew a limb off, and without fail that the gun was the problem, THINK TWICE! There are very few professionals in this country who have truly become proficient in the business model and it should be "handled with care". That being said, the rewards for professionals with the courage to take a shot at it are both high and sustaining with patience and dedication. Law firms who refuse to change will find, over time, that they are still hunting foul with a bow and arrow while the rest of us are feasting on the benefits of using the tools of the modern economy!

Wednesday, December 12, 2007

Our Profession Has Stopped Thinking: How Else Could We Have Departed from Sound Economic Principles?

Have you ever wondered how the legal profession, which is trained to ask questions and be skeptical, has not asked why they bill by the hour let alone why we continue to do so? Have you ever wondered how most senior attorneys could have practiced law a lifetime and not realize that the practice of billing by the hour was a recent accident and product of the 1950's and cost accounting methods. Have you ever wondered why old lawyers bicker and banter about how fixed-pricing would not work when in fact it not only works in the legal industry in most other countries, but it also has worked for centuries before the 1950's when WE were a fixed-price profession? Have you ever wondered why professional satisfaction is at historic lows, attrition rates and depression rates at all-time highs, and that this trend STARTED in the 1960's and the problems have become worse every year. Have you ever wondered why law firms used to be an honorable profession, or why lawyers in my grandfather's time were "Primary Care" attorneys who had strong relationships with their clients. . .and why we are now a profession of only Emergency Room Medicine? Have you ever wondered why law firms are run more like an assembly line, with highly and narrowly skilled people with no transferable skill sets, just doing more and more of the same thing every day for the rest of their life? Do you ever feel like the prize for the pie earing contest is. . . well. . . MORE PIE? Have you ever heard of Karl Marx's Labor Theory of Value? Have you ever wondered what economic theory hourly billing is based on? Have you ever wondered if your business model is based on a theory that was refuted one hundred years ago and has PROVEN to have caused the same problems our profession is facing today? Have you ever wondered that? Have you ever thought of it? Ever? Do you EVEN THINK? Who are you? Please be at your office at 4pm . . . I'm coming over to to collect you law degrees and return them to the University that let them sneak out one day when they left the doors open, because the one thing I do know about the profession of law is that we are supposed to be a THINKING profession. We are supposed to ask the TOUGH questions. Our laws are based on centuries of wisdom and theory and it takes THINKING people to make this profession one of honor and integrity and to keep alive its founding principles. He who does the right thing but knows not what he does is not a wise man, for any follower can do what he is told. This profession did not start with thoughless minds and it should not end with them. Law firms who operate under an economic theory that is proven to produce miserable people, high attrition, depression, unhappy clients, and a life destined to be counted in 6-minute increments stands for something that is far too lowly of a true professional. Did you ever wonder why you wake up ever day and carry that flag? Do you ever wonder why you stand for your wallet over your people? Can you possibly stand for honor and integrity and dishonor your workforce every day? Can you possibly continue to operate under this model, never ask why, and then turn around and try to convince clients you are smart? Can you wake up every day and look your children in the eye knowing that they could one day be the victim of a model YOU perpetuate? Could you really put on your website that you believe in diversity and quality of life when it is abundantly clear to the world that you run a sweat shop and have only token diversity? (because of your business model} Can a Nazi waive the Jewish flag and be genuine? Can you look in the mirror every day knowing what you do to people by adopting the billable hour model? IS THAT WHY YOU REALLY DON'T WANT TO KNOW? Malcolm X put it best when he wrote: "If you are not part of the Solution, then you are part of the problem" Where do you stand?