Rather than follow the popular Top 10 format, I thought I’d streamline. Face it, in any Top 10 list, numbers 7-9 tend to flag a bit.
So I’ve done the Wired GC Big 3 for 2010. Here is #1, the other two will be rolled out in the first full week of 2010.
A vital premise I operate under: the focus on value has very little to do with the current economic downturn. It just happened to coincide and it made things move faster. But it was not the cause, and so an uptick in GNP will not solve the issue for law firms or make clients less demanding. (If you don’t agree with this, you can probably stop reading now).
The problem with looking at value as a standalone concept is that it makes it sound like a communication problem, not a cost issue. If only law firms show clients more clearly how much service X is worth, they can keep charging those historical effective rates with associated profit margins. The marching orders to key client partners and legal marketers become: sell better!
That would work in a time when (a) general counsel weren’t under ongoing cost pressure, (b) they really didn’t know what firms Y and Z would charge for X, and (c) there wasn’t new service providers beyond large corporate law firms for many legal matters.
Once GCs show progress in reducing legal costs, it isn’t the end. CEOs, boards and CFOs say something like “great, how about another 10-20% next year.”
The focus on value has been essential to reframe the debate and get clients and law firms talking. I think where GCs were at the end of 2008, most managing partners have arrived as we close out 2009.
My History of the Billable Hour 101 becomes: what was the cost-plus model is now moving through value-minus on the way to something else (I covered phases I and II in February 2009 at the 1:30 min point of the video).
While value is a starting point, I am about done fleshing out a more robust way of looking at legal costs. I’ll save that for the second week of 2010, as this is (hopefully) a week of some reflection, resetting, and renewal. (And college football.)
I want to end the year on a lighter note, and will offer up tomorrow one phrase I would like to ban in 2010.