Alternative Fee Agreements and Engagement

Volume 38 Number 6

By

About the Author

Wendy L. Werner, principal of Werner Associates LLC, is a career and executive coach and law practice management consultant. She is also a member of the ABA LPM Section’s Law Practice Today Webzine Board. 

A Law Practice Magazine | November/December 2012 | The Client Service Issuechallenge facing the legal profession is keeping young lawyers engaged in the practice of law. While the Baby Boomers are clearly still in charge, and due to economic conditions lingering longer than Generation X anticipated or probably wanted, they will eventually retire. A smaller cohort follows them; Generation X will likely remain a somewhat more traditional group than the Millennials and have fewer years than the previous generation to run their firms.

Baby Boom lawyers continue to express concerns about the newest generation of attorneys. These often involve the amount of time that associates are in the office, their apparent interest (or lack thereof) in putting in hours, and the perception that they lack the same overall engagement in legal practice as their senior supervisors. Comments regarding young associates’ time spent in the office may not necessarily reflect an accurate picture of their availability or desire to work but rather differences in how they work and when. One major issue that Baby Boomers may forget is that the number of billable hours expected now is literally hundreds of hours greater than what was expected when the Boomers first started to practice. What the Baby Boomers further need to acknowledge is this fact: These are the junior attorneys that you have. Wanting them to “be like you” will not make it so. If you want to retain lawyers and clients for the long run, you must engage associates in new ways. Fortunately, this need for continued engagement dovetails nicely with some growing trends in the profession and, more importantly, the needs and demands of clients. Of course, one of the interesting things about Boomers and Millennials is that many Boomers have Millennial children and yet find the characteristics of those children to be annoying at work.

GENERATIONAL DIFFERENCES MAY REQUIRE CHANGE

Any list of characteristics of a generation is stereotypical, and individuals of course vary greatly. But there should be at least some recognition of generational differences if you are hoping to retain lawyers who are both costly to hire and train but altogether essential for the longevity of a firm. Some differences relate to workplace demographics. The Boomers are the last generation in the workplace likely to have a stay-at-home spouse and a full-time caretaker for their children. Most Millennials are, or assume that they will be part of, a dual-career marriage, and that fact will likely, at some point, require flexibility in work activities. If Baby Boomers grew up running free in their neighborhoods, their children had scheduled play dates and professionally coached soccer leagues. They are used to getting feedback and professional assistance. Millennials are committed to social responsibility, grew up and expect to be in a more diverse culture, were raised with technology, and expect work/life balance. They are not afraid to leave something they do not find rewarding. They do not necessarily understand or value “paying dues” or “we’ve always done it that way” as reasonable or governable explanations for policies and procedures. Millennials have a more fluid way of looking at their day than Boomers. And just because you do not see them in the office does not mean that they are not working, or won’t be, long into the evening.

HOURLY BILLING PROBLEMS

Under the current system of hourly billing, lawyers are essentially highly paid factory workers, punching in and out in six-minute increments and unable to bill appropriately for their intellectual property. Having created, for example, an employee handbook, lawyers can only charge for new content in further iterations. However, project billing would allow the attorney to charge for the product or service itself.

Raised on the idea of being faster and smarter, young lawyers are loathe to understand why they would be paid more for being slow and inefficient. If you are looking for speed and efficiencies, you are much more likely to get it from a Millennial than a Boomer. And if there are more built-in rewards for these efficiencies in terms of what these young lawyers value most, including time away from work and flexibility, you are likely to get even better results.

ADJUSTING TOGETHER

One of the advantages for Millennials of a likely shift in billing practices is that they may, and let me emphasize may, have more input into the system in which they are working. If technology, “working smarter,” and success fees are part of how lawyers will make money in the future, it would be wise to tap into an up-and-coming cohort that is interested in the idea of working hard and smart, and creating some kind of balance between work and outside-of-work activities.

Under an hourly billing system, young lawyers often fail to see the whole of a case, or are not involved in “big picture” meetings that would enable them to make the connection between the mind-numbing document review that is taking up most of their time and the ultimate needs of the client. While this same document review process would of course continue to be part of any alternative fee process, there are ways to include younger lawyers in the structured decision-making process of how these fee arrangements might work. This is one area where many long-time practicing lawyers may not have substantially more experience than their junior counterparts. Leveling the playing field on how to structure such an arrangement could offer junior lawyers greater input—and therefore greater buy-in into the process.

Baby Boomers are just dipping their toes into the waters of alternative billing practices, and many are afraid that this process will cause a drop in their incomes. But Millennials, most of whom find billing to be the most loathsome aspect of their legal careers, are much more committed to and interested in finding new ways to work with clients. Harnessing that motivation, which plays into the Millennial commitment to work/life balance, technology, and innovation, could be a key to the success of alternative fee agreements—if, and only if, Boomers are willing to cede some of the power of their roles as the sole decision makers in their firms. While lawyers are not inured to having meetings, Millennials are used to collaborating and working in teams. If you think about implementing alternative billing practices to be a mentoring and associate development laboratory, you may find this kind of investment reaping rewards, not just for your young associates, but also for partners and the firm’s bottom line.

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