Billing Abuse Scoreboard — Clients 1 BigLaw 0 (DLA Piper Folds ‘Em)
As Kenny Rogers croons in “The Gambler“:
You got to know when to hold ’em, know when to fold ’em,
Know when to walk away and know when to run.
It warmed the cockles of my heart to hear that DLA Piper has oh so meekly settled the now infamous “churn that bill, baby!” case.
Less than a month ago, DLA Piper was loudly professing its indignation at any possible billing irregularities occurring within its hallowed halls:
It is unfortunate that the unprofessional behavior of these lawyers by writing those e-mails has distracted attention away from the fact that a client refused to pay his bills.
One would think with such a strong hand, not to mention its reputation at stake, that DLA Piper would have gone to trial to prove its innocence. Heck, even Tim Bratton, GC of the Financial Times, and Adam Smith, Esq., guru to the BigLaw stars, were throwing out lifelines by suggesting that the emails were only “bad jokes” that say “nothing much at all about DLA Piper,” which is a “high calibre firm.” (See Bruce’s comment below – it appears only Tim would offer a lifeline to the S.S. DLA Piper.) Yet, within a month, all of DLA Piper’s bluster ended with a whimper – a quiet, confidential settlement.
So why cave with such a strong hand? First, as I’ve not bashfully suggested in my two previous posts, they didn’t have a strong hand, i.e., they were in fact overbilling, uh, I mean allegedly overbilling. But it’s one thing to say it, and quite another to see hard data demonstrating it. In a really bad development for DLA Piper – and all of BigLaw – that hard data now exists, and almost assuredly played a big part in DLA Piper deciding to fold ’em. Shortly before the case settled, and virtually unreported in news reports of the settlement, the defense team in the DLA Pipergate case retained the legal spend number crunchers, Sky Analytics, to provide actual data on DLA Piper’s billing practices. It doesn’t take a whole lotta brainpower to figure out who got the better end of this confidential deal:
- DLA Piper response: “No comment.”
- Client’s attorney: “Let me simply say we were very impressed with Sky Analytics’ work product and how quickly they were able to deliver those results.”
- Sky Analytics: “Under the terms of the settlement agreement, Sky Analytics is prohibited from disclosing any work product developed during its analysis.”
Just in case you still need a hint, the smart money is behind DLA Piper being taken behind the proverbial woodshed on this one. But clients, while celebration is in order for winning one against the dirty rotten scoundrels, you have to realize that you rarely get smoking gun emails and national news coverage when you are mauled by your favorite BigLaw firm. The good news, however, is that smart clients can now get their mitts on their own specific legal spend data, just like in DLA Pipergate. Even better news? How about getting some of that hard data intel on your firm(s) before you let them rob you blind. I’ve seen this data, grasshoppers, and trust me, its a game changer for clients.
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- Are Billable Hours Eroding Trust Between Lawyers and Clients? - Lawyerist.com
In many ways the most mysterious aspect of this is why DLA didn’t “fold ’em” as soon as those blistering emails came to light in discovery. Wouldn’t they tell a client to do as much–posthaste?!
But one quick correction. The “lifeline” quotes you mention were actually thrown out by Tim Bratton, not me. Indeed, the first paragraph of my piece states:
I wasn’t going to write about the DLA over-billing allegations that came to light about 10 days ago because I didn’t think there was much to say except that they reflect badly on all of us, and on second thought that they reflect badly on all of us.
And I nowhere defend the indefensible. (Well, at least not in this particular column!)
Thanks for the continuing dialogue and all the best,
Bruce
Bruce, thanks for your comment and clarification. Some, unfortunately, are still defending DLA Piper. FindLaw’s “In House” blog notes that DLA Piper’s *they were just joking defense* “may have been correct,” but “you’ve got to weigh the cost of fighting the good fight against the principles underlying the lawsuit.” http://bit.ly/12b5rg2.
Mike, you’ve gotta come out of your shell a bit. You know, express yourself more directly.
Kidding aside, we have too little directness in the law biz conversation. Thanks for a dash of it.
[Originally posted in LinkedIn group “Law Firm Profitability”]
Excellent article. I can’t get enough of “piper-gate” and your site has maintained a great perspective on things.
Thanks for this, Mike. I’ve spoken to Chris at Sky Analytics a few times, and I’ve seen a demo of their product. It’s very compelling for in-house counsel and gives a frightening (for lawyers) amount of information on what your external lawyers are doing for you and what they and others charge. I hope law firms are starting to pay very close attention. DLA Piper won’t be the only firm to find out the hard way that clients have data on billing. Unfortunately for our clients here in Canada, Sky Analytics can’t offer the benchmarking yet. We’re waiting…but still advocating the program for clients to keep track of their own spend even if they can’t use it to compare to market.
Also, how could I not share an article that used my favourite expression: reading it warmed the cockles of my heart…
Karen.
[Originally posted in LinkedIn group “Law Firm Management Professionals”]
While our cockles are warm and toasty, I’m sure BigLaw’s cockles are beginning to shiver from the emergence of hard numbers on their billables.
I agree we must not defend the indefensible, e.g. the billable hour.
If all law firms-like the majority of the rest of the business world-priced their services up front you would never have these type of issues period.You would also never have to spend big $’s on “keep the bastards honest” software.
Sorry but continually tweaking the current business model (“we sell time”) will never work.People (lawyers and clients) will always find ways to game the system.
A new business model is needed which is not based on “we sell time” but on “we sell intellectual capital” and that can never be measured by time.
Thank goodness for the few outliers and innovators who not only intellectually realise this but are actually implementing it.
I would be very careful about being a client of a firm that states “we sell intellectual property”. I go to a lawyer because either they know more than I do or I do not have the time to do it myself. With the second reason I am paying for time but the rate needs to be less than my opportunity cost of my ‘charge rate’. With the second it is limited only by the value it generates for me or the cost that it saves me.