Wow, I expected more from someone who claims to be professional. You use insults to hide your ignorance, and have far less expertise in pricing and economic theory than those you “argue” with, my fried. first, an attorney your father’s age would know that for CENTURIES our industry has been using fixed and VALUE-based fees (it was only in the late 5O’s that billing by the hour started}. If you were not so ignorant you would realize that many practice areas of our profession STILL use value-based fees, such as criminal law and some estate planning. If you you were not so ignorant, you would listen, not talk over, those who have more experience than you in alternative pricing models so that your readers can make educated decisions instead of hearing you insult dissenters from your pedestal. If you had a clue that an entire law practice is already operating profitably under a value-pricing model with HAPPY clients that WILL pay more for MORE VALUE (rather than more time}, then you might think before you speak. To those of you professionals who read this blog, it is Mr. David Giacalone’s degrading treatment of myself and the other commenters and thus the readers of this blog that causes the next generation of professionals to leave the profession or start something new. EVERYONE deserves respect, Mr. Giacalone. EVERYONE!

If you want educated readers and educated discussion, don’t be an ASSHOLE to the professionals like Ron and I who dedicated hours each week of our professional time (free} to educate, share, learn, and explore with bloggers like you. Your responses to our comments speak volumes about your character and integrity. Clearly, you want a political platform more than forum for intelligent dialog. David. . . you will die long before I will, and I guarantee you that the profession will look a lot more like the one we are describing than you can imagine in your limited universe. I truly feel sad for you sir. . . and I will not waste my intellectual capital contributing to the page of a blogger who treats people like shit.

Regretfully,

Christopher Marston, Esq.

[Belated Editor's Note (July 8, 2008): I just re-read this nasty little comment from you and then re-read my responses to yourself and Ron Baker, and it seems that you and Ron are doing all the significant insulting (especially you). Of course, if pointing out where you seem to be wrong or misleading, making points that you have no good faith response to, and caring more for the interests of the client than the lawyer, is insulting, then I guess I plead guilty. Meanwhile, I suggest that readers take a look at your humble little bio at Versage Institute.]

You seem to think the lawyer is some kind of partner with the client in a business venture, supplying intellectual capital (with, of course, no risk of sharing in any of the enterprise’s losses), and somehow capable of measuring the value-added to the client’s enterprise. Thus, the lawyer deserves a share of the profits attributable to his input, under your theory, in exchange for legal services. I wonder if the computer or telephonic technician (or plumber) who solves a problem that could have shut down an office or business for a day or week should get a share of the profits saved by quickly solving the problem, rather than being paid a handsome hourly fee for applying his skills and expertise to avert or reverse a disaster. [The telephone technician and plumber owe no fiduciary or professional duties to the client, as the lawyer does, so I wonder why he doesn't simply refuse to fix the problem until the customer capitulates under the leverage created by the disaster?]

I would like every client who would like alternatives to hourly billing AND also wants to pay higher fees to please raise his or her or its hand. Would those faced with an “unexpected” need for a Change Order, who would gladly pay the lawyer two, three or ten times a reasonable hourly fee for the extra services (depending on how much “leverage” the lawyer has in the situation) also raise their hands.

Lawyer Marston, you seem to ignore the extensive criteria I put on what constitutes a fair and ethical use of an hourly fee, while ignoring ethical limits on the reasonableness of a “value-based” fee. Take off the blinders and maybe we can have a useful conversation.

p.s. When you say “complete financial transparency”, do you include telling the client how much resources (in man hours) you believe a project will take or has taken?

I am disappointed to see these types on comments on a blog by the Blogger. . . it was designed to elicit a healthy debate. David, It is SHOCKING that you really think it is somehow BAD for lawyers to make more on alternative billing than they might otherwise make billing by the hour, which is a direct quote and also self-defeating statement. You cannot say you encourage alternative billing and then say that you believe that ethically lawyers should ONLY make LESS money doing it! You actually believe that it is somehow unethical to bill a clint $5k for a $5Ok idea that took me 3O minutes to come up with? You may have a beef with Ron on the theoretical level, but we are practicing what he is preaching and I can tell you that not a SINGLE CLIENT has invoked the Satisfaction Guarantee and none of our clients would ever go to a billable hour now that a firm like ours has showed them what transparency and integrity and pricing means! Nothing personal David, but as someone who has truly done my homework on this issue and actually walked the walk, I can tell you that value pricing is MORE fair to the client NO MATTER HOW sophisticated or unsophisticated the matter. It is interesting that your platform is to be “protective” of clients by defending the “bend-over-and-get-screwed” by the hour model above a model that has proven to hurt nobody! Thousands of clients get screwed by hourly billing and it is simply amazing that anyone can come to a credible defense of it on an ethics basis relative to complete financial transparency!

Mr. Baker is a very smart man who has completely distorted my position on value billing and hourly billing, so I don’t know just how hard he’s trying to understand it.

Yes, I do think that clients need to be wary whenever they deal with fees and lawyers (or any other professional or service provider; don’t forget, I am a consumer and competition advocate, not a cheerleader for the legal profession). Far too many lawyers seem to believe that what the market will bear is what they will charge and the profession engages in far too little price competition, despite our being blessed with an excess of lawyers. Moreover, bar counsel basically only go after felonious or fraudulent fees, setting no useful precedent to measure excessiveness.

Of course, there are plenty of honest lawyers, but most clients do not really have enough interaction with lawyers to gain the experience needed for firsthand confidence and trust.

That brings up a major difference in focus perspective that I may have from you. From the beginning, this weblog has primarly focused on or worried about the average consumer of legal services — the man or woman who basically uses lawyers for house closings, divorce issues, auto accidents, and wills; or maybe the legal problems of a tiny business. They often do not have a lawyer or firm that they use regularly, or they merely go to the one their sibling, parents or friends have used. They use the Main Street lawyer — solo and small firms that constitute the vast majority of law practices in America.

A large proportion of these clients find it extremely hard to afford legal services and they are very unlikely to buy a book about pricing professional services. Definitely, not at $40 a book. And, neither they — nor those with more disposable income — should have to do so in order to get treated fairly in entering into a fee arrangement with a lawyer.

Again, I am not say “don’t use value billing.” [I used flat fees as part of my solo practice from the start -- but did so when I knew my very low hourly rate would probably be too high for the particular task.] Instead, I say “there are things you need to keep in mind to assure that value billing does not turn into venal bilking.”

>>You make me smile, David. Are you saying that the lawyer has more information and experience in the exchange of money for services or goods?

I’m not trying to keep anyone from considering or entering alternative fee arrangements. I merely want to make sure they are armed with sufficient information to protect themselves.

>>Which is exactly what the expert Ron is doing. Clients can read his books if they don’t trust their lawyers. Have you read his books? Which one? I plan to read at least one so I have a more thorough understanding. From what I do know, value pricing seems like a much better solution for both client and lawyer. The client maintains control and I support the client being on as equal a footing as possible with the lawyer. The billable hour puts the client at a disadvantage.

When clients are told “try this, it is really better for you,” and “this” is likely to cost them more than the hourly-based high fees they are already complaining about, I believe they deserve to have enough information to make smart choices.

>>Where are you coming from with this suspicion that lawyers are out to cheat or dupe clients? Why would a client stay with a lawyer who was cheaing him? Who do you think should give them the information to make smart choices? How do you know it will cost more?

It’s possible that you only live in a world of highly sophisticated clients, but let me assure you that some very smart, able people — not to mention some that are far less capable — do not know enough about legal issues and services to make choices about fee arrangements without more information. In addition, there are many situations where I would be among those prospective clients who could use advice from an expert. And, I surely would not be insulted if an expert looking out for the client’s rights offered to give me some pointers. What would insult me is to have lawyers and consultants try to hoodwink me into equating receiving higher value with paying higher fees.
People can surely decide whether they agree with Ron or not, but I believe they have the right to hear my side also. They surely also have the right to buy his books — but my point is that Ron pitches the books to sellers of professional services by promising them golden treasures (at the expense of clients).

>>Look at some of your implled assumptions. People need to be protected from each other. Lawyers are out to take the clients. Before you voice your side, don’t you think it would be nice to have a good grasp of the other side? Ron seems to be trying to understand what you are saying. He is a very bright and knpwledgeable man who cares about both clients and lawyers.

It’s a good thing I’m not allergic to hay, because you and Ron have sent out an army of Strawmen against me, without even pointing to one thing that I have said in this post that is untrue or misleading.

>>I was talking about what you seem to imply about clients needing to be protected—and from their own lawyers or prospective lawyers. That does not fit with my view of the world.

I am not going to answer here anymore because the font is so little that I have to scrunch over to see and type in this little box. Thanks for the discussion. Always thought-provoking.

I’m not trying to keep anyone from considering or entering alternative fee arrangements. I merely want to make sure they are armed with sufficient information to protect themselves.

When clients are told “try this, it is really better for you,” and “this” is likely to cost them more than the hourly-based high fees they are already complaining about, I believe they deserve to have enough information to make smart choices.

It’s possible that you only live in a world of highly sophisticated clients, but let me assure you that some very smart, able people — not to mention some that are far less capable — do not know enough about legal issues and services to make choices about fee arrangements without more information. In addition, there are many situations where I would be among those prospective clients who could use advice from an expert. And, I surely would not be insulted if an expert looking out for the client’s rights offered to give me some pointers. What would insult me is to have lawyers and consultants try to hoodwink me into equating receiving higher value with paying higher fees.

People can surely decide whether they agree with Ron or not, but I believe they have the right to hear my side also. They surely also have the right to buy his books — but my point is that Ron pitches the books to sellers of professional services by promising them golden treasures (at the expense of clients).

It’s a good thing I’m not allergic to hay, because you and Ron have sent out an army of Strawmen against me, without even pointing to one thing that I have said in this post that is untrue or misleading.

Your airline argument raises so many Straw Men, it’s a wonder it doesn’t burst into flames. Your analogy to insurers — who have virtually unlimited amounts of experience data and openly spread risks among thousands or millions of customers — is so silly, I’d think you’d be ashamed to use it in public. It doesn’t pass the old Blush Test we learned in law school.

I am not against alternative billing options — only against attempting to use them to extract even more money out of clients than happens under hourly billing (or with a standard contingency fee).

You have consistently tried to sell “value billing” to service providers as a way to greatly increase fees (and even allow them to work less). That’s how you convince otherwise intelligent people to buy your books, and attract paying audience members for seminars and webinars. I’m trying to make sure that the buyers of services are not lulled into a false sense of safety by lawyers using the alternative billing mantra.

If what you have to say is so persuasive, you should be pleased that I’m pointing to your body of work and giving you so much publicity. But, I understand why having your greed-filled quotations repeated to the wrong audience irks you.

Money-back guarantees only work if clients have enough experience, information, and confidence, to analyze their situation and assert their rights. I’d love to hear how the guarantee jibes with your goal of extracting double and triple the hourly rate from clients.

As I have said often before, I believe most lawyers charge too much for their services. Of course, hourly billing has built-in disincentives for efficiency, but so does every other pricing mechanism. There is, however, nothing inherently unethical about hourly billing, as long as the lawyer in good faith sets the hourly rate by using the traditional factors(such as experience, complexity, skill required, etc.), works efficiently and competently, and keeps the client well-informed. And, the ethical lawyer knows that “actual hours X rate” is the maximum that will be charged the client — with hours reduced for time used inefficiently or getting up to speed in a new field.

This “kiddie” is not fooled by your posturing. “VeraSage” needs to work a bit on both the truth and the wisdom angles of its pitch. Prospective buyers need to know where you and your followers are coming from, before they buy into your “value” game.

I continue to be amazed how you distort my work by selectively quoting passages, without reporting my entire approach to Value Pricing.

We advocate up-front pricing, change orders, and a 100% money-back guarantee. Clients love it not because Ron Baker says they do, but because this is how all human beings buy things–they know the price BEFORE they buy, not during, or after.

Yes, kiddies, up-front pricing can be done all the time. My insurance company sells me earthquake insurance, and they certainly don’t know when the next quake is going to strike, or how large their costs will be. But I get a fixed premium.

Isn’t it amazing that they can price with so much risk but you think your fellow lawyers can’t? You don’t think lawyers aren’t subject to the laws of economics do you?

You’re recent rant here has added absoutely nothing to the debate that hasn’t been thoroughly refuted by both Richard Reed in his 3 seminal ABA books (ever read them?), and by myself in my 5 books, as well as our Web site, which lists Trailblazer firms actually doing what you say can’t be done.

Don’t you hate those black swans that exist when all you think that exist are white swans? The black swans refute how you believe the world works, and yet you ignore them, are not aware of them, or dismiss them. Not very scientific. Yet they bring down, like a house of cards, how you think the world works.

If the billable hour is so great, why is everyone so unhappy with it? And why doesn’t every other business use it?

To take your argument to the logical extreme, I should insist my airline charge me $4 per minute, that way they won’t cut corners on safety, maintenance, etc, by giving me a fixed airfare.

This is not just nonsense, its nonsense on stilts, and goes against everything we know about economics, human behavior, and value.

One more time (for the kiddies): hours don’t equate to value. And that is the fundamental problem with the billable hour.

Respectfully,
Ron Baker, Founder
VeraSage Institute
http://www.verasage.com