Category: News Feeds

Value-based pricing (“VBP”) is beginning to revolutionize the legal services industry by transitioning legal engagements from the traditional hourly fees model to a new value-based approach. VBP, when structured correctly, significantly reduces total legal spend, increases budget predictability, promotes law firm risk-sharing and improves the productivity of corporate legal departments. VBP is not simply an alternative type of fee arrangement, but is actually a completely different methodology for the pricing of legal services.    On the law firm side, it drives better efficiency through matter management and can provide significant economic upside for successful outcomes, often a win-win scenario. Although VBP has been around for over 50 years, it is fairly new to the legal industry. In fact, most other large professional services industries moved to VBP decades ago (e.g. management consulting and accounting).

With the traditional hourly model, the client has minimal fee predictability and carries all of the risk of a bad outcome and the cost of the matter.  In VBP, the goal is to pay less for the effort and more for the results, and to encourage the law firm to share in the risk of the matter. This requires a fee structure such as VBP that aligns the goals and incentives between the law firm and the client.

As most would agree, the hourly billing process incentivizes law firms to be inefficient.  Value-based fee arrangements require law firms to become more efficient. As a result, firms pay more attention to matter management, process mapping and making sure that work is performed at the correct value-price point.  This increase in law firm efficiency translates to cost savings for the client, typically in the range of 20% – 40%. For corporations with a large outside legal spend, this savings can be significant.

VBP also increases in-house productivity.  In most legal departments, in-house attorneys are required to review every outside counsel invoice for which they are responsible. These are lengthy documents that itemize fees and expenses down to the tenth of an hour.  For some companies, the process of in-house attorneys reviewing these bills can often take 10–20% of their time. However, when a legal department moves to value-based fee arrangements, that invoice review (and accrual) process is eliminated, providing an increase in productivity (and essentially a virtual increase in attorney headcount).

VBP is applicable to all practice areas. It works just as well for corporate, M&A, IP, privacy and employment as it does for litigation and investigations.

How do you determine the value-based fee?

Actual pricing under the VBP model is derived from five components: matter type, matter value, jurisdiction, type of firm and risk-sharing.  

Firm and Matter Type – A definition of matter type and firm type begins with an understanding of value-price points (“VPP”). This can be thought of on a relative scale as there are types of matters and certain types of tasks that have a lower VPP than others.  These VPP (or market) differentials can be due to many factors including complexity of the work, commonality of the work, the number of skilled practitioners available and the “perceived” value of the work. An understanding of VPPs for different matter types and tasks is helpful in setting pricing and assigning the proper resources to do the work (partner, associate, paralegal, etc.).  

This concept of VPP also applies to firm types.  Different firms have different VPP’s based on size, brand, reputation, matter breadth, client list, geography, overhead structure, etc.  It is important to match the VPP of the matter with the VPP of the firm that will do the work.

Matter Value – One of the key components to creating a value-based price is to perform a matter value estimation (“MVE”).  There are three types of value: economic, perceived and strategic. An MVE begins with an economic value estimation.  This is typically the actual economic value of the matter.

Perceived value is the economic value of the matter adjusted to the perceived value of the client.  Typically, in litigation it is significantly less than the economic value. For a transaction, it may or may not be same as the economic value.  

The final step in an MVE is the determination of the strategic value.  In litigation, this is the financial impact on the corporation of losing the case together with the financial impact of potential future litigation.  For a transaction, this includes the financial impact to the corporation if the deal does not go through.

Jurisdiction – This factor takes into account the court and the geography in which the matter is adjudicated.

Risk-Sharing – Pricing structures can incentivize risk-sharing by law firms and drive toward the goal of the client paying more for results and less for effort.  This alignment of incentives between the client and firm provides not only better value for the client, but also allows a law firm to earn a premium for outstanding results.

What types of fee structures and price metrics are used in VBP?

In the application of value-based fee arrangements, there are numerous structures and metrics used to create the actual fees.  Below are a few basic structures. More complex arrangements are hybrids of multiple structures.

Task-based ─ This structure is usually a fixed fee for a specific task and is often seen in patent prosecution or immigration law.  An example is a fixed fee for completing and filing a utility patent or H1B visa.

Tier or category-based ─ Some legal work can be divided into value tiers and often a fixed fee is assigned to each tier or category.

Scope-based – For legal work that is project based with specific deliverables or has a defined scope of work delivered consistently over a period of time, a fixed fee would be defined.  

Unit-price metrics – Different price metrics should be considered in each engagement.  Under the traditional hourly rate model, the unit-price metric is dollars per hour.  Since hours worked is not synonymous with value delivered, consider other value centric metrics such as dollars per document, dollars per deposition, or dollars per motion. There are an unlimited number of ways to modify the metric based on different types of matters, goals and outcomes.

Since there is so much variability in litigation, how does VBP work?  

Litigation is handled using a fixed fee by phase approach.  Each phase is based on a specific set of assumptions and in specific phases, a success fee is sometimes considered.  This methodology allows for significant flexibility to the changing dynamics of a litigation matter while providing budget predictability and requiring law firms to be more efficient and use better matter management techniques.  

Summary – Benefits of Value-based pricing

Many corporate legal departments are beginning to realize that the current hourly billing model is not sustainable.  With billing rates for some firms topping $2000 per hour, the question becomes “Where does this end”? In-house attorneys want to move off of the billable hour model but don’t know how to accomplish it or how to evaluate if an alternative fee is right for them.  VBP is fast becoming the new standard for clients to focus on the value received in legal services, and not on the effort expended. Fortunately, this methodology is applicable across all types of legal matters and practice areas. It gives legal departments the budget predictability they need while significantly reducing total legal spend and increasing in-house productivity.  It can also be used to build new partnerships between firms and clients that are based on value delivered and client success.

Just like the other top-tier professional services industries that converted to this methodology over 20 years ago, VBP is the future of legal services.  The change will most likely not come from the law firms, but from the clients that are beginning to demand results-based compensation models.

---

Ken Callander is Managing Principal of Value Strategies LLC, a consulting firm that specifically works with corporate legal departments helping them get more value and predictability from their outside counsel relationships.  His specialty is helping clients transition their engagements with law firms from the hourly fee pricing model to value-based fee arrangements.  For corporations this process not only provides better legal budget predictability while eliminating legal invoice review, but it also reduces total legal spend by an average of 20% – 40%.  His current clients include the largest companies in ride-sharing, money transfer, social media and internet search along with multi-national conglomerates and the largest university system in the United States.

As the founder of Value Strategies LLC, Ken was Head of Legal Operations and Chief of Staff to the General Counsel at Uber Technologies.  Prior to Uber, Ken was the Chief Marketing Officer and Director of Business Development at Davis Wright Tremaine LLP, a 500-attorney international law firm and before that was an executive at Hewlett Packard in operations and marketing where he was considered an expert in the pricing of professional services.  Ken graduated with a degree in Physics/Physical Sciences from Stanford University, is a Certified Pricing Professional (CPP) and lives in San Francisco.

Just a reminder to white students, lawyers, judges, and professors:  You should not use the N-word.  Ever.  There may be exceptions when someone who is not black can use the N-word, but they are small exceptions that will never apply to you.

I posted a tweet that suggested that as a rule it is never okay for a white person to use the N-word.  That included a 16-year-old who, as it turns out, does not get to go to Harvard because of his use of such a word.  Others have faced wrath for the use of the word.  A judge.  A juror.  A law professor.  But apparently it is still a thing for white people to desperately search for an exception that allows them to use it.

So, Twitter came alive with the sound of privilege.  What kind of privilege?  The privilege that insists that white people can say whatever they want, whenever they want, and to whomever they want.  You know, the kind of privilege no one else has.

Let’s try this again…

Me on Twitter:

Q: When should a white person use the N-word?
A: Never. FAQS: What if…. Singing along to hip hop? No. Quoting from a text? No. Posting on social media when you’re 16 and wanting to get into an Ivy League School? Still no.

Q:  Can I use it while reading Mark Twain?  Can I use it if I’m acting in a movie or play and I’m portraying a racist?
A:  There’s a plethora of people reading Mark Twain aloud and/or acting in a movie portraying a racist?  News to me.  Wait, are we doing “Green Eggs and Ham?”  Not in a house, not with a mouse, not in a boat, not in a moat……

Q:  What if I have a pass from someone who is black?
A:  Still no.  Most people claiming to have such a pass lie about it, and others try to use it around people who did not give them “a pass.”

Q:  Can I say it if my girlfriend is black and asks me to say it during sex?
A:  Wow, we’re stretching the hypotheticals, aren’t we?

Q: Can I say the word “niggardly”?
A:  No, because you know you’re doing it to provoke when you could use a word like stingy instead.  You know you have a thesaurus.  Also, do a search for the word on Twitter and see how many times it comes up APART FROM PEOPLE COMPLAINING ABOUT HOW THEY AREN’T SUPPOSED TO SAY THE N-WORD!

Q:  Can I use it when I sing along to the music of hip-hop?
A:  No.  Here’s a helpful video about it from nearly two decades ago.

Q:  How come Eminem gets to use it?
A:  Without consequences?  Hardly.  Oh, by the way, so that we’re clear: you aren’t Eminem.

Q:  What about Django Unchained?  White people had to say the N-word then.
A: Yes, for historical accuracy.  Not to aggrandize slavery or do anything but highlight the horrors of it.

Q:  You are oppressing my free speech rights, you fascist pinko!
A:  That’s not a question.  Also, I said you shouldn’t say it.  But you clearly have a deep pressing need to say it for some reason.  I wonder why.

Q:  Why can black people say it and I can’t?
A:   Because it wasn’t a tool of oppression against you, white guy.

Q:  Well, forbidding us from using the N-word won’t get rid of racism!
A:  Don’t I know it!  If white people refuse to avoid saying a single word, imagine how difficult it is to eliminate other institutionalized racism.

Q:  You suggesting segregation of speech?  This is black privilege!  You’re the word police!
A:  Why are you so freaking upset about not saying a terrible word?

Q:  What if I desperately need to quote the Boondocks?
A:  Sigh.

Q:  What if my 3-year-old misspeaks when talking about the country Niger?
A:  Correct the child, and explain to the kid how they should never use the word again. Explain the history of the word.  Use resources, because if you’re asking questions like this I think it means you might need the help yourself.

Q:  I know a professor who likes to use the N-word just because.
A:  Never take a class from that professor ever.

Q:  Kids will be kids.  Why punish a 16-year-old for saying the N-word?
A:  I’m sure you say the same thing when a 16-year-old minority kid does or says something, right?  Like walk in their own damn neighborhoods?  Or is this really about white privilege again?

Q:  But I really just want to say it!!!  It’s killing me not to!
A:  Some words don’t belong to everyone.  Watch this.

Q: Why are you so uptight about this?
A:  I’m horrified that you WANT to use a word that is so destructive, so harmful, so hyper-contextualized and intertwined with oppression and enslavement.  Why are you trying so hard to say it?  My concern is that you want to say it to feel superior.  That’s the very thinking that the word’s history teaches us is very dangerous.

---

LawProfBlawg is an anonymous professor at a top 100 law school. You can see more of his musings here. He is way funnier on social media, he claims. Please follow him on Twitter (@lawprofblawg) or Facebook. Email him at lawprofblawg@gmail.com.

No matter how large or small your law firm is, managing thousands of clients, cases, and deadlines can be tricky, and the need to collaborate across offices is a whole new ballgame. When your firm’s reputation is on the line, you need the best technology available to run things more smoothly, stay competitive, and provide excellent client service.

There are hundreds of software solutions out there, but which product would be the best for your law firm? With a 99.9 percent uptime guarantee, the approval of over 66 bar associations, and the industry’s leading security protocols and infrastructure, Clio seems to be the answer.

Locks Law, a midsize firm with locations in Pennsylvania, New Jersey, and New York, recently integrated Clio into its practice across all offices, and thanks to a recent case study, you can see just how easy it was for the firm to elevate itself to new heights.

Sign up below to discover how Locks Law used cloud technology to increase data security (better than ever before), stay organized, save on operational costs, and more.

The association said it is in contact with the Reserve Bank of Zimbabwe, to unlock wheat consignments that are in Beira and Harare.

“We are also constantly updating our key stakeholders who include bakers on the obtaining situation,” said Garikai Chaunza, media and public relations manager for the association. “We are also jointly working with the bakers in engaging the authorities on a number of issues that would improve bread supplies.”

Scarcity in foreign currency and insufficient imports to meet demand has many firms relying on the central bank to provide foreign currency, New Zimbabwe reported. This has negatively impacted manufacturing since many firms rely on imports for production.

The Standard reported that a leading bakery has suspended operations. Bread prices have gone up more than three times this year.

The government has blamed the situation on cartels, which it said have monopolies in the industry. Government officials have said the shortages are artificial.

Zimbabweans queue outside a bank in Harare, Zimbabwe, February 26 2019. Picture: REUTERS/PHILIMON BULAWAYO

Addressing Zimbabweans directly, Mnangagwa said that “the process of reform is not an easy one, it involves sacrifices from all of us. But I promise you it is worth it. Yes, today is tough, but tomorrow is looking brighter. We are opening Zimbabwe up for investment, building a new and mutually beneficial relationship with nations and businesses around the world. We cannot be left behind”.

Throughout the 80-minute programme on Capitalk FM, Mnangagwa discussed a wide array of issues, from agriculture, mining and infrastructure development, to fuel increases and a new Zimbabwean currency, which would require pre-conditions. “Production must be there, corruption must be eliminated, the mind-set of our people must change so they believe in themselves again. When all those things are in place, we can then introduce our currency.”

Nearing the end of the first year as elected president, Mnangagwa stressed the challenges he has faced following the 37-year tenure of Robert Mugabe. “It was not only our economy that collapsed, but also our courage”, Mnangagwa said. “And to rise from our collapsed economy, certain things must be done for us to get back on our feet: reforming our economy, reforming our institutions, reforming our legislations, reforming our mind-set as people.”

Mnangagwa pointed out some of the progress made so far, including modernizing the Public Order and Security Act (POSA), the controversial emergency law dating back to the Mugabe regime, as well as media and access to information reform legislations that would meet international media freedom standards – key demands by the U.S. to remove the Mugabe-era sanctions against Zimbabwe.

Critically, President Mnangagwa has also invited the leader of the opposition MDC Alliance, Nelson Chamisa, to join the ongoing political discussion between the majority of political parties in Zimbabwe. The Political Actors Dialogue (POLAD) is an effort to improve the country’s difficult economic situation and to encourage its confrontational politicians to cooperate in the national interest.

But Chamisa has so far refused any multilateral or bilateral dialogue. “I cannot get a bulldozer or tractor to pull him out of his house for talks,” President Mnangagwa said. “Why doesn’t he come to the table where everyone is? To all those who want to offer their views, their advice on any issue, the door is open.”

Post published in: Featured

“The government of Zimbabwe has been clear that significant political economic reforms are necessary for the benefit of its people,” Olkkonen said, adding that the “EU is there to Support Zimbabwe move ahead with its reform agenda. In this we want to be a constructive, Credible and transparent partner.”

The first formal dialogue in 17 years focussed on issues ranging from investment and the rule of law to democracy and good governance. This long-overdue discussion is an important first step that may eventually lead to the resumption of financial aid for Zimbabwe’s ailing economy.

Relations between Zimbabwe and the EU were frosty throughout most of Robert Mugabe’s 37-year reign, which was marred by corruption, economic mismanagement and human rights abuses.

President Emmerson Mnangagwa has vowed to transform the country, implement reforms and open the country for business, in order to woo foreign – and increasingly, western – investors. It is a noble undertaking, but western leaders are keen to see concrete results quickly, a difficult task following nearly four decades of Mugabe misrule, which ruined the country.

Nevertheless, progress is beginning to show. Olkkonen noted that “we have seen positive steps” and “that there is a staff-monitored programme by the IMF that attempts to reform the economy.” Under the terms of the monitoring programme by the International Monetary Fund, the government has committed to political and economic reforms.

A key challenge is the reduction of government expenditure – effectively, stop printing money – to underpin the new RTGS currency and boost the economy. Fiscal discipline would lead to debt forgiveness and future financing. With government finances in shambles in the wake of Mugabe’s mismanagement, Zimbabwe’s Finance Minister Mthuli Ncube managed to achieve a budget surplus in just six months. The latest report of public accounts shows a surplus of nearly half a billion RTGS dollars in the first quarter of this year. The IMF appeared pleased, stating recently that “significant economic reforms were underway” in Zimbabwe.

Among other reforms is the Freedom of Information bill, a new legislation that will meet international free media standards. The Minister for Information, Publicity and Broadcasting Services, Monica Mutsvangwa, said the government is committed to opening up the airwaves and promoting the freedom of expression and dissemination of diverse views in Zimbabwe.

The government is also revising the Public Order and Security Act, a controversial emergency law that dates back to the Mugabe era, and it has initiated the process of compensating white commercial farmers who lost their land during Mugabe’s Land Reform Programme. All these reforms take time, but they are necessary for the EU and U.S. to lift long-standing sanctions.

To push through these reforms, the Mnangagwa government has taken significant steps towards unity and reconciliation, reaching out not only to the opposition with the so-called Political Actors Dialogue initiative, but also to labour and businesses with the Tripartite Negotiating Forum, aimed at shaping policy and binding legal agreements on social issues that affect production and labour.

Mnangagwa also directly addressed the opposition leader of the MDC Alliance, Nelson Chamisa, tweeting post-election that his “door is open”. However, Chamisa has refused any collaboration so far and instead called for continued protests. The EU, meanwhile, supports the dialogue platform, maintaining it must be made on equal footing and discussions must be frank through a free exchange of views.

“Different positions must be permissible within our country,” Mnangagwa said. “However,these must never divide us or result in conflict. Violence must never be used as a tool to gain temporary advantage at the expense of the people we must serve and protect.”

Slowly but surely, Mnangagwa’s actions are bearing fruit. Leaders across Africa have called for the removal of sanctions, which would dramatically ease Zimbabwe’s economic burden. And even U.S. ambassador Brian Nichols sounded positive in a recent radio interview, talking about “a solid plan moving forward, no doubt about it” while acknowledging the challenges: “It’s going to be difficult to move through this year, I cannot sugar-coat that,” he said. “But what I will say is that this is a government that’s dealing with two decades of failed policies and you can’t fix that overnight. People have to keep that in perspective.”

Post published in: Featured

Speaking during a live radio interview, Mnangagwa said he was part of a committee that approached the SARB, with the intention of adopting the rand as “our domestic currency of Zimbabwe”– before Zimbabwe adopted the multi-currency system.

“But when we approached the SARB, they gave us a check list with certain conditions for us to use the rand.”

“It also needed South Africa to give us money (notes) that is commiserate with our GDP,” he said adding that some of the conditions were not acceptable.

He stated that the government led by Robert Mugabe then decided to use a basket of currencies without formally adopting them.

In 2016, the country tried to tackle the chronic shortage of US banknotes by introducing a parallel token currency called “bond notes”, which was meant to be worth the same as a US dollar. But the bond notes were in reality worth less than the green back.

Zimbabwe recently introduced a new currency the RTGS dollar, but is still allowing other currencies to be used for transactions. Plans are however in progress to ban the use of other currencies.

“Zimbabwe must reach a stage were it has its own currency which is the Zimbabwe currency. This will be announced at an appropriate time, when implementation is ready,” said Mnangagwa.

The country abandoned its currency, the Zimbabwean Dollar, after it spiralled out of control between 2008 and 2009 during Mugabe’s rule.

Post published in: Business