Happy New Year to everyone. I open the year with a blog that has you asking "What the hell is a JibJab?" A JibJab is a tool that I am using in this blog to illustrate my point. . . the point that you cannot fix a problem with a JibJab unless you know how a JibJab works. I am making this point in an effort to explain the dearth of intelligent conversation that most attorneys are able to have about the merits of fixed-pricing over the billable hour model. There is no question that every lawyer has an opinion on the topic, but no real headway can be made in a debate where one side is simply in the dark as to how their own business operates. You see, their JibJab is the billable hour model. The billable hour is the heart of their business but so many lawyers do not understand how it impacts their business. They do not keep metrics on customer satisfaction rates, uncollectables, new vs. current customers as a percentage of total revenue, etc, etc. Those larger firms that do keep this data put non-lawyer administrators in charge of managing it and reporting it, rather than using it as a tool to better understand their business.
Let's assume for the sake of this blog that I were taking questions on the merits of fixed-pricing from the brightest minds at the big firms and that they some were educated on how their JibJab worked. My proposition is that these partners would find it perfectly logical and irrefutable that fixed-pricing is a more sound economic model and ultimately more profitable in the long-run for law firms, not to mention that the pricing model solves many problems that firms have been struggling with for decades, such as diversity, work-life balance, and many more. In fact, my fellow Fellows at the VeraSage Institute have done just that . . . they have consulted to some of the largest firms in the world and, while firms are able to see multiple ways that it can improve their business, they are unable to take it from an intellectual exercise to execution. Where I am going with this? The point is this: Progress in our industry breaks not at the point of logic or even proof that fixed pricing is better, progress breaks at the point of execution. I therefore propose that we talk more about the tough issue of execution in order to make progress and perpetuate the change back (Billable Hours started in 1950s) to a fixed-price model. There is enough empirical evidence out there to show that billing by the hour is a dying practice. For those who embrace the future, let's work together in 2007 to create a better vision for the future of the profession.