Gruntled Employees

Five Steps to Killing the Billable Hour

The American Bar Association's ABA Journal once again adds to the conversation about the battle against the billable hour. The always-excellent David Gialanella examines "The Skinny on Flat Fees" in the July issue of the magazine. David identifies five steps for law firms looking to drop hourly billing in favor of value pricing:

1. Do your homework.
2. Find a new measure for performance.
3. Stick to your guns.
4. Be a business geek.
5. Don't secretly keep track of time.

He also uncovers the secret of abandoning hourly billing: "The move from billables to flat fees is not just a practical change; it’s a different way of thinking." That's certainly true. It's not about the accounting — it's about delivering value to the client.

While he was researching the issue, Dave and I discussed whether value pricing would be just another also-ran to hourly billing:

The term alternative billing might seem innocent enough, but those two words make Jay Shepherd’s skin crawl. As CEO of Shepherd Law Group in Boston, the enterprising attorney thinks his firm’s flat-fee business model is not simply an alternative to the billable-hour standard: It eventually will become the commonplace way to run a law practice.

He's right: alternative billing is not my term of choice. A year-and-a-half ago in "No-alternative billing," talking about law firms' resistance to offering value pricing, I admitted:

I hate the term "alternative billing." It has that sneering, look-down-your-nose quality to it, like "alternative lifestyle."

And many law firms still think of it that way.

BTW, Dave had another nice piece in the February issue of the ABA Journal: "Taming the Billable Beast."

Retaliation: now without pesky filing deadlines!

Imagine getting sued by an employee who was fired nearly four years ago. Following a recent Supreme Court decision, lawsuits from forgotten former employees will now become much more common. And more expensive.

In CBOCS West, Inc. v. Humphries, the Supreme Court ruled 7–2 in favor of an assistant manager at a Cracker Barrel restaurant. The employee sued claiming that he was fired because he was black and because he had complained about the dismissal of another black employee. What’s unusual about this case is that he sued under a Reconstruction-era statute, 42 U.S.C. § 1981. Unlike the more-common Title VII, Section 1981 does not address retaliation in its text. But the Supreme Court decided that the employee could sue for retaliation under that law nonetheless.

The implications for employers are substantial. With the Supreme Court “discovering” a retaliation claim in Section 1981, employees have a better option than the traditional Title VII claim. To bring a claim under Title VII, employees must first file with the EEOC — and they must do so within 180 days of the alleged retaliation (or 300 days if filing with a state agency). They must also file in court within 90 days of the EEOC’s issuing a right-to-sue letter. None of these restrictions applies to Section 1981, and an employee has four years to bring a claim. Also, Title VII caps the amount of damages an employee can win. Section 1981 has no cap.

In the Court’s opinion, Justice Breyer wrote that even though the statute lacked retaliation language, Congress must have intended that the right to “make and enforce contracts” free from discrimination included protection against retaliatory discrimination. The Court cited legislative reports that suggested Congressional intent to have § 1981 apply to retaliation claims. Justice Thomas wrote a scathing dissent (which Justice Scalia joined), arguing that if Congress intended to include retaliation in the statute, it would have written the law that way.

With no agency-filing requirements, no damages caps, and a much-longer limitations period, Section 1981 provides disgruntled employees claiming retaliation with a more-powerful weapon. Even employees who have already missed their Title VII deadlines can now file in federal court under Section 1981. Employers who thought they were safe after 180 days now have another three-and-a-half years to worry about new lawsuits.

What employers can do

• Don’t penalize employees for complaining about discrimination
• Train all supervisors to properly handle discrimination claims
• Read the Supreme Court’s opinion here (PDF, 228K)

This film contains depictions of legalese

I'm watching Game 3 of the NBA Finals — which didn't start until 9 p.m. EDT and won't end until before everyone on the East Coast goes to sleep — and since I'm watching it live and thus without TiVo protection, I'm forced to watch ads. For the most part, I ignore them. So it wasn't until the seventy-seventh (or so) ad for The Incredible Hulk — not to be confused with the incredible Hulk or The Incredible Hulk — that I noticed something strange. After 30 seconds of Edward Norton's Bruce Banner getting angry and ripping up cars and tanks, the credits card flashes on the screen for a microsecond. The usual list of actors, producers, best boys, gaffers, plus a tiny Motion Picture Association of America warning that the movie is rated PG-13 for "for sequences of intense action violence, some frightening sci-fi images, and brief suggestive content."

OK. Whatever. But what really struck me was the larger, boxed, all-capped warning above it — one I'd never seen before:

THIS FILM CONTAINS DEPICTIONS OF TOBACCO CONSUMPTION

Say what now?

Now I'm not the only one who noticed this. Jared Bridges on TruePravda suggested that "The Hulk must be an incredible smoker." Wally Conger in Out of Step notes the warning, as does Jason Apuzzo on Libertas. And scholars like Jonathan R. Polansky, Kori Titus, and Stanton A. Glantz have opined in a scholarly way about the effects of recent MPAA tobacco warnings on audiences (little, if any). I'm not going to wade into the debate about tobacco warnings and their efficacy or whether smoking should be shown in movies. My problem is with the lawyer who wrote this abomination. (The warning, not the movie. I haven't seen the movie and thus can't comment on its abominability.) Or more probably, committee of lawyers. Or worse, committee of lawyer wannabes.

This is the type of lawyerly (in a bad way) bureaucraspeak that infects law firms, HR departments, corporate-communications offices, and — apparently — film-ratings boards. It is similar to the kind of jargon that police officers, lawyers, and doctors use to sound more impressive or important. (See "Abandoning jargon 'at a high rate of speed.'") It is highfalutin gobbledygook that people use thinking that it strengthens what they're saying when it fact it weakens it. And that makes me angry. (You wouldn't like me when I'm angry.)

The word choices are ridiculous. All films contain "depictions," which are lifelike images of something. To call The Incredible Hulk a "film" is joke. "Films" are generally in black and white with subtitles and no third act; this is a "movie" by any definition. (I prefer movies.) And how many "no tobacco consumption" signs have you ever seen? Do you think that someone would be confused if you used the word "smoking" and wonder whether it showed footage of burning toast? Probably not.

Say what you mean as plainly as you can and then shut up: "This movie shows smoking."

'Nuff said.

Managing change

I hate change.

No, not that kind of change. I really like "change" change. I want to be a change agent. My favorite song is Bowie's "Changes." Favorite movie: A Change of Seasons. And I'm all about Barack Obama's "Change you can believe in" slogan. (OK, none of those last three is remotely true. Just making a point here.)

No, the change I loathe is the money kind. Coins. Specie. Bullion.

You could say I'm an antinumismatist (although it's hard to). It's possible that I'm a chrometophobe, although that seems a stretch.

I hate how change wears a hole in my pants pocket, and how it jangles like a cowbell when I'm trying to sneak up on my associates to catch them playing Solitaire on their computers. (Hey, we don't bill by the hour, so how am I supposed to know if they're working?) (OK, another complete falsehood: our office is all Mac. Playing Solitaire is a strictly Windows activity.)

Change is also a leading indicator of personality. You can tell a lot about a cashier just by giving him or her five ones for an extra-large coffee and a blueberry muffin costing $4.01, as I did this morning at Dunkin' Donuts. You see, there are two types of cashiers in the world. The good kind, like the one this morning, count the bills, smile at you, and hand you the fifth dollar back. Your $4.01 breakfast just cost you $4.00. In some ways, this is the karmic payoff for all those times you receive a few grubby pennies back in change, which you then leave on the counter for a future unknown someone who's short a few cents.

The bad kind of cashier takes your five singles, then proceeds to count out 99 cents worth of copper-plated zinc and cupronickel alloy, which tears at your pocket linings while making you sound like an extra reindeer in your grade-school Christmas pageant.

This taxonomy of change-handlers isn't limited to cashiers. In fact, there are two types of people in the world: the "don't worry about the pennies" people and the "here's your change" people. The "don't worry about the pennies" people get what's important in life: giving you your caffeinated and sugar-infused sustenance, and getting more or less the right amount of cash in return (in this case, to within 99.75% accuracy). The "here's your change" people are so fixated on the bureaucratic administrivia that they can't understand that they're ruining the entire coffee-and-muffin ritual.

The bottom line: Only hire "don't worry about the pennies" people as managers and HR professionals. Give candidates a single-question entrance exam with the above coffee scenario. If you end up with a pocketful of bullion, take your money and run ... away from that candidate.

Massachusetts: closed for business

States spend skitillions of dollars (a skitillion is one followed by a wad of zeroes, or ten to the wad) on catchy slogans and jingles to lure gullible businesses to open plants and offices there. If you're from Massachusetts and of a certain age (that is, you now enjoy your federal age-discrimination rights), you probably still suffer from that dreaded 1970s earworm, "Makin' It in Massachusetts." Oh, those clever double entendres!

Anyway, the Commonwealth can stop spending tax dollars on musical lures for businesses because they're leaving and they ain't coming back. Why?

Treble damages. (Not to be confused with "treble entendres.") ("Treble" is a slightly fancy way for lawyers to say "triple." As in, "Jacoby Ellsbury just trebled to the triangle at Fenway. He's wicked good.") (Hey, it's a Massachusetts-themed post, OK?)

Here's the 411: The Massachusetts legislature passed Senate Bill No. 1059 into law on April 14, making treble damages mandatory for an employer’s violation of the Commonwealth’s wage-and-hour laws. Employees bringing claims over the payment of wages, minimum wage, or overtime could win three times the actual damages they suffered — even when the violation is inadvertent. The law, which passed when Governor Deval Patrick declined to veto it, overturns a 2005 decision of the Supreme Judicial Court that limited treble damages to cases involving an employer’s “willful misconduct.”

Previously, the statute left it up to the judge to determine whether an employer had maliciously violated the wage law before awarding treble damages. This allowed the court to distinguish between employers who intentionally deprived workers of their earned wages and employers who stumbled over the confusing technicalities of the wage laws. In Wiedmann v. The Bradford Group, the Massachusetts high court confirmed that the law gave judges the discretion to award treble damages to willful offenders. It was this case that the legislature overturned with the amended statute.

The new legislation becomes effective on July 13, 2008, and will govern all cases filed thereafter. What is uncertain is whether the law will have retroactive effect over earlier cases. Language in the legislation says that it was intended to “clarify the existing law and to reiterate the original intention of the general court that triple damages are mandatory.” (Ironically, the old statute’s legislative history makes clear that this was not the “original intention.") This language will encourage plaintiffs’ attorneys to argue that the law should be applied retroactively. If this argument prevails, all pending wage claims — and perhaps even those that have not yet been filed — would be subject to mandatory treble damages. We expect there will be hard-fought litigation over this issue.

With the passage of this new law, Massachusetts becomes the first state in the nation to make treble damages mandatory in wage-and-hour cases. With wage claims and class-action lawsuits already on the rise, Massachusetts now becomes the jurisdiction of choice for plaintiffs. (At least someone will be makin' it in Massachusetts.) Employers must be more careful than ever to ensure that they are complying with the Commonwealth’s wage laws.

What employers can do

• Pay your employees on time — especially when they depart.
• Make sure they’re properly classified as exempt or nonexempt.
• Have your employment counsel audit your pay practices.

In the meantime, Go Sox!

[Shout out to Steve Reed for his spot-on legal analysis.]

Of sticker shock and empathy

I'll never forget the stickers from the night before my wedding. On the other hand, my brother Bill probably can't remember them.

Because of the fumes.

Let me explain:

Just before the wedding, my bride-to-be had everything under control. The flowers were set, the caterer was prepared, the ceremony site was ready. She was as calm as a bride can be. But then a friend of my parents asked what should have been an innocuous question:

"What are you doing for wedding favors?"

Wedding favors? Now to me, "wedding favors" was as foreign a concept as "centerpieces" and, well, "marriage." Turns out "wedding favors" are defined (by Wikipedia) as "small gifts given as a gesture of appreciation or gratitude to guests from the bride and groom during a wedding ceremony or a wedding reception." Who knew?

Alarm bells replaced wedding bells! This was a crisis of the first degree! Fortunately, the inquiring family friend was quick to provide a suggestion: small silver picture frames in which we could place cards telling each guest where they'd sit at the reception. Then they could take their frames home and toss the seat cards and replace them with pictures of their cats, or whatever. (This was 12 years ago, before there were blogs.) Brilliant!

My fiancée sped to the local Christmas Tree Shops, a New England bargain store that specializes in little knickknacks. Amazingly, Heidi found a bunch of little frames similar to the one in the cheesy picture above. She immediately bought 150 of them and brought them back to me. My job was to do the desktop publishing: make nice calligraphic seat cards with each guest's name and table number. That job was hard enough. My brother's job was much worse.

He had to do the stickers.

You see, every single one of these little silver frames had a silver UPC sticker on it. Not so much on the frame, though. On the glass! And the glue on these stickers must have been that kind of glue they use for keeping those tiles from falling off the Space Shuttle. The stickers themselves fell apart if you tried to scrape or pick them off.

Since he was best man, Bill's job was to remove the stickers. The only hope was to use some high-powered chemical solvent and a razor blade, which is what Bill did for hours in the underventilated living room of my apartment. Twelve years later, he's still not the same. (Actually, he's fine, though he lives in Oklahoma, which is odd.) (His living there; not the state itself.)

Anyway, this brings me to my point: the frame-maker forgot about empathy. Someone at Cheapo Frames Unlimited or whatever made a decision to put bar-code stickers on the glass part of the frame. Maybe he or she did it because the store would need to scan the stickers at the cash register. Maybe it helped with inventory control. But I guarantee you that the sticker decision-maker lacked the critical character trait of empathy — namely, empathy with the customer who was going to be using the cheapo frame. He or she never stopped to think how the customer would feel when confronted with the unremovable sticker. He or she never wondered how the customer would be able to see the wedding guest's table number (or how the guest would later see the cat picture) through the permanent label that obscured the frame's transparent glass face. The frame-company decision maker had no empathy for the customer.

And neither did his or her supervisors. Neither did the owner of Cheapo Frames Unlimited. Neither did the buyer at Christmas Tree Shops.

Having empathy for the customer — or the end user of a product or service — is an undervalued, underpromoted, and undertrained quality in today's business world. Here are some examples where empathy for the customer or end user is missing:

• The people who package children's toys. In their quest to thwart the one or two percent of toy-store customers who would steal accessories out of a Dora the Explorer package, or whatever, they tie everything down with wire, then tape it to the inside of the box. It takes twenty minutes to free your kid's toy from its package. The manufacturer didn't think about how unhappy that delay would make the child, or her dad.
• Customer support lines that play recorded advertisements for the product you're having trouble with while you wait 31 minutes for a live human being. My particular favorite is when you call your internet provider because you can't connect, and the recording tells you that you can get answers to your questions at www.whatever.com. Uh, no I can't ... The company never thought about how that would sound to a frustrated customer.
• Billboards that have the same tiny little text at the bottom that a print ad has. I'm driving 60 miles an hour past your billboard; how am I supposed to read the little text? Obviously, the art designer didn't think about the driver's ability to actually read it (or didn't care if it was read).
• Lawyers who fill their letters, contracts, and briefs with pompous and stuffy legalese. Don't they want the reader to actually be able to read it?
• For that matter, lawyers who bill by the hour. Don't they wonder how the client is going to feel when she gets a bill showing that it cost her more money because it took longer for her to get what she wanted?

Managers need to make sure that everyone in the workplace thinks about what the customer is going to do with the product or service, and how the customer is going to feel about it. That's empathy, and it's critical to a company's success.

Seth Godin has written about this before in his excellent blog. See his post from three years ago called, simply, "Care." And Becky Carroll at Customers Rock! blog has a nice post on empathy called "Empathy Matters."

As for the wedding favors, they were a hit at the reception, Heidi and I are still married 12 years later, and Bill's only a little woozy from the solvent fumes.

Hourly billing across the pond

The war on hourly billing is being waged worldwide. Last week we talked about the battle in this country ("The billable beast of burden" and "The fool or the fool who follows him") and in Canada ("No hourly billing, eh?"). Yesterday, London's Financial Times had an article by legal correspondent Michael Peel saying that hourly billing may be on the outs in the UK as well. The article, with the promising title "UK law firms to reform hourly fee system," says that top London law firms are facing increased pressure from clients unhappy with large bills. Peel writes:

Top firms told the Financial Times that they were increasingly offering alternatives to hourly rates and making more use of cost-cutting business practices, such as putting services offshore. Tim Jones, head of the London office of Freshfields Bruckhaus Deringer, said that, although hourly billing still had a “fairly central role in most people’s thinking”, firms were increasingly offering clients deals such as fixed fees or rates tied to the success of transactions.

He said: “I think the big firms are very conscious that the efficiency of working practices is going to be absolutely fundamental in the coming years. We will have to look very carefully at how our terms are structured.”

The "efficiency of working practices," as Freshfields's Jones puts it, is the key point. Hourly billing, as we've said many times, discourages efficiency by rewarding inefficiency.

Peel reports that at Linklaters, another "Magic Circle" firm, a "significant amount" of the work is no longer billed by the hour. Peel does note that British firms have been somewhat slower than their American cousins in considering alternatives to the billable hour. But it's comforting to know that the opponents of hourly billing have allies overseas.

Taking a dip in the talent pool

Human Resources is a term that no one likes. The best you can say about it is that it's a mild improvement over the sterile Personnel. In 1989, the the American Society for Personnel Administration changed its name to the Society for Human Resource Management "to reflect its broadened scope and influence in business and political worlds internationally." (Uh, okay.)

But many of us feel that Human Resources still has an artificial, impersonal feel to it that belittles the importance of the role. Last May, Karen Dempsey wrote a fine article on the topic in Personnel Today aptly called "What's in a name: 'HR' or 'personnel'? Does it really matter?" Karen asks:

But why this obsession with titles in HR? Other departments such as finance and operations don't waste their time wringing their hands and wondering what title will get them more credibility in the business. At the end of the day, does it really matter what outfit the HR profession is dressed in?

Back in November, British management consultant Scott McArthur covered the issue in his excellent blog McArthur's Rant, in a post called "It’s all in a name? – HR practitioners speak out":

There is no consensus (so far) apart from the feeling that it is up to the individual to prove their value to their respective organisation irrespective of their job title.

One of our first Gruntled posts ("How to save HR — Step 1 — Moving HR to "C" level") took a page from top business guru Tom Peters's book Re-imagine! Business Excellence in a Disruptive Age — page 256 in fact. There (at least in the hardcover edition), Tom advocates for changing the name of HR to "Talent Department." (Or even the slightly more exuberant "Seriously Cool People who Recruit & Develop Seriously Cool People.") As I wrote back then:

You could do worse than to read Tom's chapter on Talent and implement half of his ideas for building HR into a strategic arm of the company, with a Chief Talent Officer reporting directly to the CEO.

Now another top business guru, Seth Godin, has brought back the topic with a great post on his eponymous blog. His post, "Marketing HR," gets to the root of the problem:

Understand that in days of yore, factories consisted of people and machines. The goal was to use more machines, fewer people, and to design processes so that the people were interchangeable, low cost and easily replaced. The more leverage the factory-owner had, the better. Hence Personnel or the even more cruel term: HR. It views people as a natural resource, like lumber.

Like it or not, in most organizations HR has grown up with a forms/clerical/factory focus. Which was fine, I guess, unless your goal was to do something amazing, something that had nothing to do with a factory, something that required amazing programmers, remarkable marketers or insanely talented strategy people.

Seth, author of Purple Cow: Transform Your Business by Being Remarkable and The Dip: A Little Book That Teaches You When to Quit (and When to Stick), has this for a solution: "Change the department name to Talent." Seth concedes that this might make people uncomfortable because it sounds like "spin." And he's right.

But if we're going to insist that the function of "human resources" is as important as we say it is, then we should be prepared to defend a more highfalutin name. Many leading companies have already done this; Apple, Citigroup, Deloitte & Touche, and even a law firm, Sheppard Mullin (no relation), all have Chief Talent Officers.

Your company — whether it's a hospital, a software company, a bank, a paperboard mill, or a law firm — does not work without the talent that makes it work. Put someone in charge of finding and keeping that talent, and then recognize that person's job with the proper title: Chief Talent Officer.

Watch your wiki

Managers and HR professionals have to pay attention to their employees. It's right there in the job description. Monitoring work, evaluating performance, tracking compliance. Sometimes, for various reasons, they have to pay attention to other things: an employee's computer files, email or internet usage, or MySpace page.

Well, now there's something else to monitor.

As you probably know, Wikipedia is "the free encyclopedia that anyone can edit." It is the world's largest wiki, which is a website that people can collaboratively draft and revise. (I often try to throw handy, helpful Wikipedia links into posts.) It's a great resource for quickly learning about basically anything. As Steve Carell's character Michael Scott said on "The Office":

Wikipedia is the best thing ever. Anyone in the world can write anything they want about any subject. So you know you are getting the best possible information.

Mind you, this came in the same episode where Michael said this:

It was a crime of passion, Jan. Not a disgruntled employee. Everyone here is extremely gruntled.

(Remind me to get my lawyers after NBC.) (Or as NBC calls them, "law stylists.")

Anyway, since anyone can edit a Wikipedia entry, nearly anyone does. Many Wikipedia contributors and editors log in to a free Wikipedia account, and make their contributions and edits "in the clear." But many others make their points anonymously, which can lead to abuse. Imagine a disgruntled employee firing up Wikipedia (anonymously, or perhaps pseudonymously), then amending her company's Wikipedia entry to include the intraoffice illicit affairs going on in the Sales Department. Or the secret cross-dressing in Accounting. Or whatever.

People can also embellish their company's Wikipedia entry. Dave Hoffman over at Concurring Opinions had a piece last summer about Wikipedia users at major law firms changing entries to "burnish their reputations and trash their competitors." See "A Slow Day at the Office: Lawyers Editing on Wikipedia." Robert Ambrogi had a similar collection at his LawSites blog.

But there's hope for HR pros and managers looking to see what their wiki-wielding workers (OK, I promise I won't do that again) are doing to their corporate entries. Last year, Cal Tech grad student and hacker extraordinaire Virgil Griffith created WikiScanner, a tool that links Wikipedia edits to the companies and organizations owning the computers that made the edits. In other words, say you're sitting at your desk at Dow Chemical, and you want to anonymously remove references on the Dow Wikipedia entry to Bhopal or breast implants. You make your changes and lurk off into the night. But WikiScanner will rat you out, by cross-referencing the IP address of your Dow computer to the IP addresses known to be assigned to Dow. While WikiScanner can't identify your particular machine, it's likely that the company's IT geek squad can narrow it down to your station.

Wired magazine wrote an article last year announcing WikiScanner and including a list of the most salacious edits, including the Dow example I cited, plus edits from Diebold, Exxon, and the Church of Scientology. (No word on whether Tom Cruise's IP address has shown up yet.) An employee at Wal-Mart, everyone's favorite employer, edited the entry to say that workers there were underpaid (here).

To be sure, searches on WikiScanner will probably show you that most employees are editing entries on "buttock cleavage" (found on the computers at the US House of Representatives here) or "Hispanic porn stars" (ditto) or "chest hair" (ditto). (Not to be outdone, the US Senate — here — appears interested in "cow tipping," "fast casual dining restaurants," and whether Han shot first in the cantina.) (He did.)

But if your company is big enough to merit its own Wikipedia entry (and by "merit," I mean that you or one of your coworkers wrote one), then you may want to check in with WikiScanner and see if your employees are trashing your company or its customers.

Or maybe they're just sharing "canker-sore stories" (yep, the Senate again).

[Big shout out to Christopher Mirabile, long-time Gruntled reader and idea-generator, for pointing out the WikiScanner phenomenon.]

No hourly billing, eh?

The Great Billable Hour Debate of '08 is playing out north of the border, too. Maclean's magazine is the Canadian equivalent of TIME or Newsweek, with nearly three million readers every week. In the current issue, writer John Intini has a terrific article called "Time to stop the clock? A backlash against the billable hour has some firms charging flat fees." John covers the entire issue from the reasoning behind hourly billing to the problems it causes for clients and lawyers. His reporting also uncovered some great lines: When asked how fast law firms are shifting away from hourly billing, Vancouver consultant Richard Stock quips, "Global warming is faster."

I talked to John at length about the subject and whether we'd soon see a tipping point away from hourly billing. John writes:

Experts anticipate that the current economic downturn will lead to further belt-tightening and could force more companies to reassess deals with their lawyers. “The days of just writing cheques are coming to an end,” says Jay Shepherd, whose Boston firm, Shepherd Law Group, banned billable hours last year and doubled its 2006 revenue. “There is no other business that we don’t know the price of something before we buy it. Imagine getting on an airplane and being told they’re going to charge you by the minute. It’s crazy. Nobody would do it.”

Shepherd, who describes the billable hour as “anti-client,” says the savings his six-lawyer outfit provide is the result of team efficiencies, not cut rates. In addition to flat-fee pricing, his firm offers unlimited advice plans: for a fixed price a client can call the office as often as needed without worrying about a big surprise at month’s end. “It’s almost as if we’re in-house lawyers for them,” he says.

[Since I was speaking to a reporter for a Canadian magazine, I said "cheques" instead of "checks." Good of John to notice that over the phone.]

Our discussion turned to the question of timesheets — the same topic we were debating in yesterday's post ("The fool or the fool who follows him?"). To recap, Tom Kane over at Legal Marketing Blog.com called us "foolhardy" in his post "Has Your Firm Tamed That Damn Billable Hour Yet?" because we don't internally track lawyers' hours. Here's that topic covered in the Maclean's article:

Shepherd — who predicts the billable hour will last another decade — doesn’t even track his staff’s hours for internal purposes. This has prompted many competitors to ask how he knows if associates are doing their work? “I manage them,” he says. “That’s my job.” And late nights or weekends holed up at the office don’t impress him. “The firm,” he says, “doesn’t get anything more if it takes longer and the client wants the work done as fast as possible.”

Intini notes — correctly — that it's easier to change the firm culture at a boutique firm than it is at a megafirm. He again quotes Richard Stock, who says that at larger firms, "the business model is entrenched across hundreds, if not thousands of people in the corporation. It’s not an especially nimble ship.”

That's true, but you have to start somewhere. Great article, John!

As for the Tom Kane post, value-billing guru Ron Baker had this response on his VeraSage Institute site. And Columbus lawyer Mike Grodhaus's terrific new blawg, The Alternative Fee Lawyer, wades into the fray in his post, "Timesheets & Alternative Fees." After nicely summarizing the discussions, Mike gives his own take:

What's fascinating to me about this debate is that is not an "apples to apples" comparison. Tom Kane and Jay Shepherd aren't even really talking about the same thing. What Jay Shepherd is talking about is a complete paradigm shift in how lawyers (or any professionals, for that matter) should think about pricing their services.

Not that I'm discounting Tom Kane's mindset. To me, a law firm (like mine) that uses alternative fee arrangements but still uses timesheets internally is still much better than a law firm that bills all its clients by the hour. Indeed, if we ever move the profession to that brave new world without the billable hour, doing it this way will probably be the transitional phase to Shepherd's wholly value-driven approach. But it certainly makes you want to learn more about Shepherd's way of pricing his law firm's services.

Make sure you check out Mike's blog, which now adorns our Blogroll over on the right of your screen. While I still bristle at the term "alternative billing" (which smacks of the seamy, like "alternative lifestyle"; see last year's post, "No-alternative billing"), Mike brings a broad, balanced approach to the conversation. Welcome, Mike!

The fool or the fool who follows him?

In our last episode, "The billable beast of burden," I talked about the recent ABA Journal article that described Shepherd Law Group's successes in banishing the billable hour ("Taming the Billable Beast," February 2008). I also mentioned that there were naysayers about.

Tom Kane is one. He writes Legal Marketing Blog.com, a fine site with a surprisingly generic name for a marketing site. Perhaps "Raising Kane" was taken. (Actually, it turns out it was — see here — by a self-described "recovering lawyer." Huh.) Tom covers the ABA Journal article in his post "Has Your Firm Tamed That Damn Billable Hour Yet?" and commends us and the other two firms for addressing the billable hour problem. (Thanks, Tom.)

But he also takes a shot at something I said in the article, and I feel the need to respond. Here's Tom:

One troubling point mentioned in the article relating to the Shepherd firm. And that is the statement involving CEO Jay Shepherd that “he denies secretly keeping track of hours spent on each case.” If the firm doesn’t do so, IMHO, it is being foolhardy based on the following simple reasoning:

• You can’t make a profit on fixed fees unless you know what your costs are;
• You can’t know what your costs are unless you know how much time (and other dollars) are consumed by the matter; and
• There is no way to know how much time is being spent on matters if you don’t keep track of hours!

Duh!

So, either they are guessing which means they don’t have a clue what their profit margin is either, or the firm has some other means of determining costs that I am unaware of.

"Duh," indeed! Wow. We're being foolhardy to the point of being duhed. (New word; pronounce it "dud." Think of me when you use it. "Hey, Mom! In school today my teacher duhed me.") So I was all set to roll up my sleeves and explain how Tom's "simple reasoning" (IHHO — in his humble opinion) was flawed, when I learned that the Godfather of Value Pricing had already done so.

Ron Baker is the founder of VeraSage Institute, a think tank dedicated to helping professional-service firms rid themselves of archaic billing practices. He is the author of Professional's Guide to Value Pricing, which is the ultimate hornbook on the subject. Having Ron publicly defend your billing practices is like having Martha Stewart compliment your table setting (only without the whole jail thing). Here's Ron in his post "He Who Says 'A' Must Say 'B,'" responding to Tom's "duh":

No, not Duh. There are over 500+ firms worldwide, across all professional knowledge firm sectors, from advertising to CPA firms and law to IT consulting firms, that don’t do timesheets.

This doesn’t mean they don’t know their costs, it’s a question of WHEN do they know their costs. With timesheets, you only know them in arrears. With our methods, you know them BEFORE you do the work.

What good is it to know your costs if the client doesn’t like your price? This is known as price-led costing; Toyota has been using since it was founded in the 1880s, and Toyota does not have a standard cost accounting system (nor do they do timesheets).

In the real world, value drives price, not costs. Price actually drives costs, so it makes sense to know value and price before you spend a nickel on any costs....

I just wanted to set the record straight. If the Shepherd Law Group is smart — and they are  — they will trash timesheets. [Thanks, Ron. Already have. — JS] They are the cancer in the professions; it is just a matter time before they will be buried.

Ron also says that timesheets "keep professionals mired in the mentality they sell time." In another place, Ron has written one of the best arguments against timesheets ever:

So what good is measuring hours logged on a timesheet? Do you think you can measure the value of a Picasso, the deliciousness of a meal prepared by a five-star chef, the splendor of a building designed by an architect, or the acting ability of an actress, by looking at the hours they work? As they say, it’s easier to count the bottles than describe the wine. You remain mired in counting and costing the bottles, while we are interested in the quality, taste and subjective value of the wine.

Knowledge workers aren’t inspired to track every six minutes of their day. No one entered this profession with the objective of logging the most hours. Not only is it the wrong theory of value, it’s also demeaning, demonstrating a lack of trust, treating them like children.

Oh, snap! I really couldn't have said it better myself.

No, we don't track hours spent at Shepherd Law Group, secretly or overtly. Other lawyers often shake their heads knowingly and then ask me how I know whether my associates are working. "Uh," I reply, "with this crazy new thing called management." (They usually shake their heads some more and wander off, muttering.) Our associates work hard because they want to help our clients and they want to do a good job. That's why we call them professionals. Professionals don't need an annual billables goal to make them work hard.

Now I don't want to dis Tom too much; he's written some good things against hourly billing. And he went to my dad's alma mater, the Cross, so he can't be all bad. Still, he may think I'm foolhardy for trashing timesheets, but there will soon be many other "fools" following our lead.

The billable beast of burden

Finally! The writers' strike is over and we can all get back to work. Thank goodness I can now live off my DVD residuals, or whatever. Ahh, the power of the Union. Nothing like sticking it to The Man ... and the makeup person, and the costume person, and the hair stylist, and the gaffer (whatever that is) and the best boy (just what makes him so good?). Shutting down an entire industry for a hundred days and billions of dollars is a small price to pay for a tiny-but-respectable percentage of the revenue generated by webisodes. Because everyone watches webisodes ... right? Ka-ching!

[End of management-biased sarcasm. Actually, I'm just a little cheesed off that "24" has been pushed back to January 2009 because of the writers' strike. For a Gruntled take on "24" from last year, please see "What would Jack Bauer do? Use plain English."]

Since we last spoke, the hourly billing debate has been going full throttle. The current issue of Crain's Chicago Business reports that "only 16% of in-house lawyers say hourly billing is their preferred arrangement." Yet hourly billing remains the dominant way that lawyers bill their corporate clients. Samantha Stainbaum's article, "The end of hourly fees?" quotes Northwestern Law dean David Van Zandt, who offers a possible explanation: "It's difficult for companies to evaluate what they're getting, so they fall back to hourly billing."

That's possible. Still, if five out of six in-house counsel would prefer something other than hourly billing, don't we outside counsel have an obligation to provide it? The February issue of the ABA Journal has a story by David Gialanella called "Taming the Billable Beast." In it, he talks about three law firms who he says are "changing the billable equation last year in hopes of reducing associate and client dissatisfaction."

Two of the firms focused on first-year associates' billing requirements: Dallas's Strasburger & Price, who cut first-year billing requirements from 1,920 hours a year to 1,600; and Atlanta-based Ford & Harrison, who got rid of first-year requirements altogether.

The third firm went even further. (This may sound familiar.) David writes:

Shepherd Law Group in Boston has thrown out the billable hour altogether in favor of flat fees and fixed prices, and it could not have asked for a better result.

In 2007, says CEO Jay Shepherd, the firm “billed exactly 0.0 hours [yet] more than doubled our revenue for all of 2006.” He adds, “It sounds too good to be true. It’s not.”

Now there’s no looking back for Shepherd, whose firm handles labor and employment law. He recently added a sixth attorney, and he denies secretly keeping track of the hours spent on each case.

In their new billing model, Shepherd and the other partners can get together to brainstorm strategies—something that would have required billing for several different attorneys. Most clients would never stand for those sessions if charged by the hour.

It’s easier for a boutique firm to institute a change, but Shepherd cannot argue with results: Research becomes more focused; soon, efficiency improves. For the Shepherd Law Group, at least, eye-popping numbers are to follow.

(Thanks, David.) The point here isn't to trumpet our firm's successes (at least that's not the main point). The point is that clients want a better system, one that puts their interests in line with their lawyers' interests — rather than in conflict with them. And it can be done successfully.

But there are plenty of naysayers.

Next post: The naysayers say "nay." Stay tuned ... (unless there's another writers' strike).

Dear [insert name]: You're fired

Our very first post was about RadioShack's submoronic firing of 400 employees last year by email (see "Radio Shack Deletes 400 Workers, Common Sense"). Now, the blogosphere is abuzz with CompUsa's decision to close its remaining stores (see CNNMoney article) and its soulless form letter notifying its employees. The excellent tech blog Engadget included what it describes as a copy of the form letter sent to employees in a biting post, "CompUSA sends out layoff letters: bad service extends to employees, too." Here is the letter, taken from the Engadget post (the store number and location were previously redacted, which is lawyerspeak for blotted out):

Now I can't personally vouch for the authenticity of the letter, and Engadget describes its source as an anonymous CompUSA employee. Nor could I confirm the identity of CompUSA's HR director, although there is an HR person with that name in the DFW metropolitan area. It certainly looks like an authentic WARN Act letter, which the government requires.

But what a letter. I appreciate that CompUSA had a lot of employees to fire, but couldn't they have bothered to insert the unlucky recipient's name in each letter? (You know, guys, they have computers that can do that now.) Did they need to keep reminding the fired worker that CompUSA is incorporated (at least for now) — four times in a three-paragraph letter? Couldn't they get a human being to actually sign the letter? Repeating the name in boldfaced italics doesn't count.

You're firing people. Have the decency to act like it means something to you. It certainly means something to the employees. A personalized letter — or even a seemingly personalized mail-merged special — with a real human being's signature makes a difference. It might not seem like a lot — it might even seem like a waste of time — but people notice these things.

Getting fired sucks. But getting fired suckily (by email, by form letter, during the holidays) sucks even more. Worse, it makes the fired employees more disgruntled, and thus more likely to sue. You've already messed up the big things (running your company into the ground); at least try not to mess up the little things.

Bonus irony note: Check out CompUSA's tagline:

Obviously they didn't get it. They didn't get it at all.

Here are some other voices on the topic:

• Tampa Bay's Channel 10 News has a story on the company's remarkable retention-bonus scheme: if you work the next two months until the store closes, you get — wait for it — a whole week's pay! (Woo.) The station has posted a PDF of the "Separation Bonus Plan"; the story is here: "Employees cry foul over CompUSA closings"
• The incomparable New York Times technology columnist David Pogue had this explanation for the company's failure back when they began their store closings last March: "The Gutting of CompUSA."
• The always excellent HR Capitalist has this great post on how another stumbling company, Circuit City, tried to lure back some of their previously fired, higher-paid workers at a lower wage: "Circuit City - We Fired You, Please Present This Coupon to Get Your Old Job Back for Less Pay..."
• That particular move garnered Circuit City a spot on the Fortune "Top 101 Dumbest Moments in Business 2007."

*******

[Updated 20 December 2007 to clarify the Circuit City references, and to add more on what CompUSA could have done right. Big shout out to Martin Ebel, the top Commonwealth of Massachusetts civil-rights lawyer and frequent Gruntled commenter (which is different from a commentator). Another big shout out to Christopher Mirabile, world-class general counsel, for pointing out the Engadget post.]

Email and the environment

I, like you, get too much email. Just a few weeks ago, I got to the extreme of having 10,000 (an actual number, not an example of hyperbole) emails in my in box. Which is not useful. What is more, as the newer emails fell off the bottom of my mail-app window, it was as if they no longer really existed (I still had them, I just couldn't see them, and therefore probably wouldn't do anything about them). I can see why noted Stanford Law professor Lawrence Lessig declared "email bankruptcy" awhile back.

(In fact, I found a better solution at 43 Folders, the blog of lifehacker extraordinaire Merlin Mann. It's called the Inbox Zero method, and it totally rocks. Everything you need to know is here. The video of Merlin's lecture at Google alone is worth the price of admission. OK, admission is free, but you get my drift.)

Anyway, speaking of email, I'm starting to notice that more people are including in their email footer the following message:

Please consider the environment before printing this email.

(It's not usually in green like that. I just did it that way for ironic effect.) The thinking being that the pithy admonition will, as it spreads across the world like a virus, eventually spare a forest or two from being unnecessarily felled. The message has spawned many reactions in the blogosphere. Many are quaint — "My friend, who is soooo green, has this great little email signature ..." Like the guy cured polio or something. Some reactions are less admiring, and often more amusing; see Trying My Patience, for example. Freakonomics coauthor Stephen J. Dubner poked fun at the tagline when it was used in an email that was selling private-jet travel. Because that will help lessen your carbon footprint.

But I have to admit that when I first saw the tagline, I misunderstood its point. The email that carried the tag related to an employment-discrimination case I was working on, so I thought the author was saying, "Consider the office environment if you print it out because someone might read it." I was thinking litigation, not conservation. And while the environmentally sensitive message is a valid one (and we should all stop reflexively printing out emails that we're going to save on our hard drives), the litigationally sensitive message that I inferred is equally valid.

And really, the bigger message should be: "Please consider the office environment before you even send this email." Because 13 years of litigating employment cases have shown me that emails lose lawsuits. All the time. People write the stupidest things in their emails because they think they're having an informal electronic conversation with their buddies. But unlike a face-to-face colloquy, where the words evaporate after they're spoken, emails live forever. And lawyers can find them later. And lawyers will find them. And they will beat you with them.

Make sure you train your employees and managers about the dangers of email. Tell them not to say anything in an email that anyone will find offensive. Because you can't control what happens to your words after you hit "Send." Save the potentially offensive things for private, face-to-face conversations. Or, you know, maybe avoid the whole offensive bit in the first place.

Oh, and please consider the environment before printing this post.

Shaking the trees

First a note: It's a standard trick in the blogosphere that you can cover up your inexcusable failure to post for ... well ... a while (what do you mean I missed November?) by doing a handy site redesign. Thus the new site design. In truth, the standard TypePad theme that this blog wore for more than a year was getting a little threadbare. It was time for something a little cleaner and more ... gruntled. (OK, no more ellipses.) That said, you can expect some tweaking over the next few weeks. As always, I appreciate your feedback. And if you're reading this by email or RSS reader, click here to see the new design.

Now the real post:

We're hiring another lawyer at Shepherd Law Group right now, so we've been conducting interviews and meeting a lot of potential new associates. Which means shaking a lot of hands. Some shake well, and some shake less well. Turns out there's a skill to it. Maybe even a science.

As reported in BusinessWeek recently, a firm handshake is a sign of "social dominance." Psychologist Gordon Gallup found that men with firm handshakes were more likely to behave aggressively. They were also more likely to have broad shoulders and narrow hips, and they were 10% more promiscuous. (Unclear whether that was because of the shoulder-hip thing, the aggressiveness thing, or the handshake thing.)

Gallup's study found no correlation between women's handshakes and either their "behavioral competitiveness" or body type.

Gallup hails from the State University of New York at Albany, which you probably call "SUNY Albany" but which apparently prefers "UAlbany" as its "officially designated informal name," because nobody told them that you can't officially designate an informal anything. In the money quote from the university's press release, Gallup makes a connection between handshakes and our evolution from tree-climbing monkeys:

Unique to the evolutionary history of humans and all primates were complex adaptations to life in the trees. As a result, handgrip strength was featured prominently in patterns of brachiating, or moving through the canopy, as well as in minimizing the chances of falling.

Uh, okay. The press release is here, and the full report (which only uses the word "brachiation" once) is here. (It's a form of arboreal locomotion, in case you were wondering.)

Coincidentally, and more relevantly to the workplace, The Boston Globe recently reviewed a new book by Tonya Reiman called The Power of Body Language. Apparently, the book has a lot say about handshakes. I haven't read it yet, but see this from Vivianne Rodrigues's review:

The handshake is one of the most critical opportunities to establish rapport and might be as crucial for job applicants as a strong résumé, Reiman said.

Her book lists no less than 12 "wrong" ways to shake hands including the submissive handshake, the overly affectionate, the sweaty, the forward lean, but none as dreaded and as dreadful as the limp handshake.

"The limp handshake feels like you're holding a lump of room-temperature chicken," she said.

The way that will work with any person in any situation, according to Reiman, is to go toward the person, lean slightly forward, look them in the eye, extend the right hand, and simultaneously introduce yourself. The whole handshake should not last more than two to three seconds.

Sounds about right. So my question for you HR pros and managers: are your employees shaking hands properly, or they falling out of the trees (so to speak)?

In-house counsel's biggest headache

We spend a fair amount of time whaling on other law firms for things like hourly billing. But when a firm turns out a product that's valuable and useful, we want to make sure the firm gets its due. Ginormous (which should be a word) international law firm Fulbright & Jaworski released its Fourth Annual Litigation Trends Survey Findings last week, containing 52 pages of illuminating and actionable information generated by in-house counsel. Fulbright had an independent research firm survey 253 US corporate counsel and 50 UK in-house lawyers on everything from litigation costs and billing trends to regulatory matters and class actions. And what did in-house counsel report to be their leading legal headache?

(Wait for it ...)

Labor and employment cases.

Surprised? We're not. O