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!
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4 comments:
Chris,
I agree with your position here and find it increasingly true in the business/professional world. The major issue here is accountability or should I say the lack of accountability. It is much easier for people and firms to make a weak attempt at a new idea or procedure and say that the new idea does not work than it is for the same firm to sit back and say “What could we have done better to make this idea a success?” Most people do not want to admit that the personnel may be the reason for the failure and not that the new idea is flawed. Eventually new age firms, like your own, will force other companies who are entrenched in their ways to bring about change within their companies or fall by the wayside. Firms need to look past the immediate reward of the billable hour and start looking to what will be best for firm development in the future.
Christopher,
I read your blog consistently and I've finally decided to let you know. I consistently agree with your perspective on the practice. I have also decided to create my own blawg in the very near future. I would love to exchange thoughts and ideas in the future. I hope to change the way law is practiced here in Michigan. Cheers.
Thanks Eddie. I am actually from Michigan and travel there every once in awhile. Congrats on you new blog and indeed, we are changing the way law is practiced. I appreciate the other pioneers in our industry. We are doing the right thing for our people, our clients, and the profession at large.
I agree there is a lack of accountability.
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