Priceline Meets the Practice
By Ross H. Fishman
Web-based reverse auctions for legal services are inevitable. Law firm clients increasingly will post their legal needs online and have qualified lawyers compete for their business. There are a handful of these auction sites today, with more continuing to spring up.
Eventually, after more aggressive marketing and client education, one of the online reverse auction models will truly succeed. He most effective model will let the efficiencies of the Internet automate now cumbersome first-level screenings, yet still acknowledge that clients want the final selection process to include personal chemistry.
Let’s acknowledge the facts: Complex bet-the-company litigation is fodder for John Grisham novels; most of the nation’s legal work is the standard bread-and-butter work that most law firms handle easily. Most business clients understand this but do not have the leverage to negotiate the price of their legal services. Price shopping is futile because firms charge relatively similar rates within regions, and lawyers are reluctant to agree to discounts unless commanded to by a powerful client.
The Web-based auction model puts clients in charge of their legal relationships, enabling them to pay the lowest fair-market price for the blend of work, skills and service they truly need or can afford. Existing lawyer-client relationships are still important, but this model helps clients form relationships with the most efficient lawyers for certain types of work.
The best model meets clients’ and lawyers’ needs. In a truly effective online auction for legal services, the competition will not be based on the lowest price. Good clients do not want the cheapest lawyer—they just want one who provides value, as each client defines it. Competing lawyers will have incentive to increase their efficiency, and clients will be able to learn about the lawyers’ skills, relevant experience, academic credentials, personality, client service and references as well.
Here’s how the process works. The clients use standard forms to post their legal needs on the auction site. Interested lawyers then respond, bidding the price down to the lowest possible level, while detailing their specific capabilities. The data in the auction forms lets clients compare lawyers based on objective criteria, without undergoing an intrusive and labor-intensive request-for-proposal process. Armed with this information, the clients then select a short list of the most talented and cost-effective lawyers, so they can clear possible conflicts and arrange in-person meetings to clinch a deal. The auction-hosting Web site company receives a transaction fee, perhaps scaled to the size of the matter.
This type of process helps clients define value—the right mix of skills, service and price for their specific needs. For complex matters, in fact, the most expensive and experienced lawyer might win the work—if the value proposition makes the most sense to the client. This auction model is designed to educate clients and offer them more options—not just lower prices. It puts powerful market information in their reach.
Participating law firms benefit as well. When work is slow, certain practice areas or lawyers can anonymously use auctions to fill excess capacity. Cost-effective, midlevel "worker bee" partners who do not have clients can elevate their status from "grinder" to "finder." Lawyers who use aggressive case management tools and technology can gain new business at increased margins. And firms with lower overhead and lower rates can finally use those factors as a competitive advantage.
Most cases don’t call for brain surgery. This reverse auction structure is as relevant to small business owners as to Fortune 500 general counsel. It benefits the vast majority of business clients nationwide who seek appropriate value in their lawyers. General counsel can use the process for routine, high-volume work. Insurance companies can shop easily for bargains in any jurisdiction. And small and middle-market companies can use the power of the Internet to obtain the negotiating leverage of the largest corporations.
This model probably will not work well for the most sophisticated bet-the-company legal work or other matters that require high-level expertise. However, many lawyers quietly admit that brain-surgery-level work forms just a small part of their firms’ annual billings.
Ross H. Fishman (email@example.com) is a lawyer and Chief Exceleration Officer of Ross Fishman Marketing, Inc., in Highland Park, IL.