In this week's Law Firm Disrupted, I bid farewell as the original author of this newsletter. I also call for a “Clifford Chance Match Watch.”

I'm Roy Strom, and I thank you for reading this newsletter on the changing market for legal services. This is my last week at Law.com, and my colleague Dan Packel will pick up this weekly examination of change in the legal industry. We've covered a lot of ground in the past 18 months, and I will miss the conversation we started here. I urge you to reach out to Dan here to share your ideas and perspectives on the legal economy. As for me, you can find me here.

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Change Ahead for the Billable Hour, and This Column

Take a walk with me down memory lane. I promise this isn't a clip show. I already did that!

The year was 2002, and a group of Clifford Chance associates were fed up. Call them ambitious. Call them subversive. I guess your view of them would depend on your station.

If you were Peter Cornell, then the global head of Clifford Chance, you could be excused for viewing these young lawyers as something akin to traitors. Because those fed-up associates drafted a 13-page letter that attacked the bedrock accounting method of the law firm business model: the billable hour.

The memo, which leaked to the Financial Times, said the pressure to meet quotas could lead to overbilling. The associates wrote that a newly created 2,200-hour billing requirement (made in response to a recent associate salary raise) “profoundly unrealistic,” “dehumanizing” and “verging on an abdication of our professional responsibilities.”

“It is like being asked to climb Mount Everest without the appropriate equipment,” one associate told The Wall Street Journal.

Not that they were wrong. In my three-plus years at The American Lawyer I've written two stories about lawyers being disciplined for exactly what those associates feared: Succumbing to the perverse incentives that accompany billable hour targets.

Anyway, Cornell found himself squarely amidst a crisis dubbed “Paddinggate.” The main concern among the Clifford Chance people quoted in the articles was that the firm would lose the trust of its clients. They would think they are being overbilled. Through that lens, Cornell's response, as told to The Lawyer around the time of his 2006 retirement, makes sense.

“It didn't matter that it wasn't a real story: This had legs and could do the firm a lot of damage,” Cornell was quoted as saying. “We had to close it down.”

But viewed another way, Cornell—and most of Big Law—missed the larger point.

The letter was not a group of naïve lawyers copping to stealing from clients. The associates themselves wisely said they never had overbilled; just that they felt that pressure. The letter was a distress signal. It was about the culture inside law firms; not the bills that emanate from them.

But this is not meant as an indictment of Clifford Chance. Quite the opposite. This column is in celebration of the firm.

Last week, Clifford Chance announced a year-long pilot in its Abu Dhabi and Dubai offices that will measure and reward young lawyers for things other than their billable hours.

Here is the full statement the firm's chief operating officer, Caroline Firstbrook, provided to my ALM colleague Hannah Roberts:

“While utilization is widely used as a core metric across the industry, it has a number of broadly acknowledged limitations, most notably that it does not directly incentivize efficiency or contributions to nonbillable work that may be invaluable to the firm's overall strategy and to the continued development of exceptional client service.”

“By running a pilot on this scale, with a large number of data points, associate input and partner and management feedback, we expect to be in a position to draw informed conclusions on the way ahead for the firm. The Middle East partners and leadership team are taking a bold and exciting step here that will provide insights into these questions that have simply not been available to us before now.”

Large law firms trip over themselves to raise salaries by $10,000 a year. That race even has a name: The Salary Wars Scorecard. Some people defend these salary raises as the rightful reward for overworked lawyers. I don't begrudge anyone a pay raise, but I think in the long-run they may amount to a pyrrhic victory for law firms and associates alike.

Celebrating marginal pay increases is not only tacitly complicit with billable hours quotas—it strengthens their grip. Remember, a salary raise was the precursor to the 2002 letter.

I spoke this week with Alan Levin, a lawyer-turned-therapist who now treats lawyers. He asks many of his patients this hypothetical question: If you could work in an environment where lawyers were supportive; communicated with each other about the value of their contributions; and were truly teammates; would you be willing to make 50% to 75% less than you do now?

“Every single one of them says, 'Of course. Yes I would,'” Levin says. “Because the quality of our lives as people is far more important than how much money we make.”

Measuring lawyer performance via something other than the billable hour is not a panacea for the profession's mental health problems. But allegiance to billable hour quotas can stifle innovation and can feel just as “dehumanizing” today as it felt 17 years ago. It is time to follow Clifford Chance and look for a new way.

So, to the Clifford Chance associates circa 2002 who wrote that memo, I offer a belated and likely bittersweet congratulations. Your voice may finally have been heard. Let me know how you feel. To fed-up associates at other firms: Your time is now. Write a memo! Tell your partners you want something like the Clifford Chance program.

Seriously, where is the “Clifford Chance Match Watch?” Let's get it started!

In my first Law Firm Disrupted column, I wrote: “Law firms won't be selling time in the long run, and they should figure out ways to quantify and compensate for a lawyer's value.”

As I depart ALM, there's no other message I'd rather repeat to my readers—a group that has roughly tripled in size since a bit over a year ago. Thank you for reading. And thank you to my editors on this weekly briefing: Vanessa Blum, David Bario and Brian Baxter.

You are in good hands with my Law Firm Disrupted successor Dan Packel, a longtime colleague here on ALM's business of law desk. As for me, I will be back writing about Big Law shortly. Now, to the golf course.

 

Roy's Final Reading Corner

On Legal Tech: I have written before about Chapman & Cutler's efforts to build and then sell a piece of software that automated the creation of closing document sets for transactions. The next chapter in that story was written last week when NetDocuments formally launched the Chapman & Cutler tool it bought under the brand name “SetBuilder.” The release says Chapman lawyers have used the tool to create more than 6,500 closing sets, which cost between $500 and $1,500 each. Assuming that work can't be billed to clients (Chapman says it typically can't), that represents between $3.25 million and $9.75 million in savings. That's a lot of money for a firm whose partners make on average just over $1 million, according to ALM data.

On Pornography and Big Law: I have written a number of articles about Lincoln Bandlow, a lawyer who had been a partner at Fox Rothschild and represented super-litigious porn production company Strike 3 Holdings. On Tuesday, my ALM colleague Ross Todd and I reported that Bandlow has left Fox Rothschild, which is now requesting to withdraw from a number of the lawsuits that have been scolded by federal judges as “copyright troll” litigation. Bandlow had filed more than 2,000 copyright infringement suits against individuals accused of stealing Strike 3's porn videos over the Internet.

On The Big Four: Dan Packel has the scoop that Deloitte has signed a partnership agreement with U.S. Law firm Epstein Becker Green to provide U.S. employment law advice to its clients. The deal comes about a year after Deloitte signed a similar agreement with U.S. immigration law firm Berry Appleman & Leiden. Packel reports that Deloitte is seeking similar agreements in the areas of intellectual property, information technology law and privacy.

That's it for this week! Thanks again for reading, and remember you can still sign up here to receive The Law Firm Disrupted as a weekly email.