When Will the Billable Hour Die? Conversation with Law Firm Change Agent John Chisholm (Part Two)

JD Supra Perspectives

I recently talked to John Chisolm, a former practicing lawyer and law firm CEO who works with firms around the globe to help them evolve from traditional billing – by the hour – to what has become known without irony as non-traditional: pricing services based on their value.

This is the second part of our conversation, in which we talk about the role of the client in bringing about new ways of pricing legal services, challenges that law firm leaders encounter when they try to implement change, and the future of value pricing, among other things. [If you haven't yet read it, follow this link to read Part One.] 

GODARD: What role does the client play in all of this? Do firms find that convincing the clients to change can be the biggest challenge of all? What can a firm say to a client who hesitates to adapt to a new method of paying for their legal services? 

CHISHOLM: Interestingly enough – with one caveat – I will say that clients are the least of any firm’s problems when embarking on such a move. Sure, you have to communicate with clients, to explain why you are doing this and what the benefits are (to them), but in my experience clients love having more certainty and predictability around the price of their legal fees. The trust and relationship with clients of law firms that have ditched the hourly rate and timesheets have increased immeasurably.

...clients are the least of any firm’s problems when embarking on such a move.

The one caveat – and to some degree I am ashamed to say this – is when the client is another lawyer, i.e, in-house counsel. When an in-house counsel is not involved, adoption of non-time-based pricing has been more successful in my experience and that of firms who have adopted it.

Clearly there are some really innovative in-house counsel when it comes to non-time-based fee arrangements, although I have to say overall that I believe most lawyers inside the client – even those that complain about time-based billing, about fee estimates continually being exceeded, etc. – are not really prepared yet to move away from buying their legal services by time.

I think there are a number of reasons for the slow adoption by in-house lawyers of genuine alternatives to time-based billing, but mostly I think it is because they know how the time-based system works – after all, most of them came from external law firms and were taught well by their former employers. Lawyers selling and buying from each other does not always make for innovative solutions.

GODARD: You practiced in Australia, but now you work with firms from around the world. What regional differences do you see in the way firms approach billing in general, and value pricing in particular?

CHISHOLM: I don’t believe the regional differences are as stark as what is often made out. For many years I used to be told “well, that might work in Australia, but won’t work in the U.S.” or “that might work in real estate but won’t work in M&A” or “that might work with the firms’ other clients but not with mine,” etc. I was also told that local bar regulations and other rules made it mandatory that firms had to record time, if not bill by time. Of course, when I asked to see a copy of those regulations I usually got blank stares. In fact, I am still waiting for the regs to come to me.

I know time-based billing is accepted practice for most western lawyers and their clients, but again there is ample empirical evidence to show that there are successful and profitable law firms now operating all over the world without billing by time nor keeping timesheets.

GODARD: What advice do you have for a managing partner who sees the future, wants to change her firm, but knows that the partners are going to push back against doing things differently? 

CHISHOLM: Start her own firm with a bunch of believers? I am only half kidding. I understand from personal experience just how hard it can be to get any sort of meaningful change in many law firms, especially with a partnership structure that often allows the lowest common denominator to predominate when trying to get universal acceptance of an idea. This is especially so when you are seeking to change a long-established and successful (to date) business and billing model. Unless a managing partner can positively respond to “can you guarantee this is going to work (i.e., make me more money)?” little is likely to happen.

A lot of this gets back to a firm’s culture and their purpose and why they exist in the first place. If there is no common understanding and agreement of a firm’s why or if the why is really to make money in the short term, then good luck is all I can say to any managing partner who runs such a firm.

What I can say, though, is that successful change to value-based pricing – indeed, successful change, period – will never ever be sustainable unless there is an internal champion or champions. I don’t care how good your consultant or strategic advisor might be. Good leaders, if they believe in something, will make things happen. Maybe not for everyone but for the people that matter most. 

GODARD: Finally, where do you think this is all going to go? Is value pricing merely another point on the swinging pendulum, and that at some future date firms will be struggling to implement what we now view as more traditional billing methods? What does your future look like? 

CHISHOLM: I don’t pretend I am a futurist, Lance, by any means. I continue to be surprised how some things in the legal profession get traction and others don’t. I do, however, subscribe to Bill Gates’ view of the world when he said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” 

While I wish the pace of change to move away from time-based billing was quicker – and I do think the legal profession is lagging behind most other professions in this regard – I am an optimist and believe that we will see the day when the billable hour is the alternative fee arrangement and in the minority. It is just a sub-optimal business model and, when you think about it, it places a ceiling on any law firm’s potential earnings. I have seen many, many pricing mistakes lawyers make over the years. And guess what: For good lawyers in particular, their pricing mistakes are underpricing their services. They leave value on the table because they both don’t appreciate nor do they properly communicate the value they are providing to their clients.

I think the pressure from clients for more price certainty, coupled with technology advances (why invest in technology to make things happen quicker if you continue to bill by time) and competition from an increasing number of agile and innovative providers in the legal space, will hasten the change. I wish it were lawyers making the change themselves for the right reasons. After all, we adopted time-based billing ourselves – it was not forced on us by clients – so we could change our pricing model again. The innovators and early adopters will do that, whereas the early majority and late adopters will do when everyone else is. Again, the majority of the legal profession is too reactionary - there are still first mover advantages to be had, but this too will change.

Adopting value-based pricing per se is not a panacea for all the challenges the profession still has to face in the future - far from it - but I believe adopting mindset change will and has opened up smart, courageous, and innovative lawyers to be much better prepared for whatever the future holds.

As Gen Shenski said, “You might not like change, but you will like irrelevance even less.”

GODARD: Thank you, again, for this interview, John. Before we end it, tell us about your path from practicing lawyer to consultant. How did you become an advocate for a different kind of fee structure and, equally important, why do you think that the way lawyers charge for their services is the problem to fix, the thing that will make them more successful and their clients happier?

CHISHOLM: I was a practicing lawyer, managing partner, and CEO of law firms in Australia. From about the early 1970’s, Australian firms ran on the Biglaw model – what I prefer to call the Oldlaw business model – which essentially leveraged people X time X hourly rate. It was how 95 percent of firms ran their practices. It was profitable and it was financially successful for the firms, provided three things: you could increase your hourly rates annually more than you increased your expenses, your clients remained happy with both the hourly rate you demanded and the time it took us to undertake work, and finally that there was always enough work around to make sure our lawyers worked to capacity.

In the main our clients accepted this billing model – after all, there were not too many alternatives out there. But as hourly rates crept higher and higher, “estimates” of fees were invariably exceeded, clients themselves came under increasing cost pressures and demanded lower fees or more predictability, and the glory days of the billable hour began to fade.

It wasn’t until I left mainstream law and started up my consultancy practice that I seriously looked at real alternatives to the billable hour, however. In late 2005 I heard Paul O’Byrne (RIP) speak at a conference in Sydney about “value-based pricing.” I had never even heard of the term but for me this was my “aha” moment. The rest, as one might say, is history: I was hooked. It is no lie to say that discovering value-based pricing transformed my life – as it has transformed the lives of many of my clients and colleagues who practice it daily in their professional firms.


[Lance Godard has spent three decades within the legal profession, in-house and as a consultant, helping lawyers and practice groups grow their book of business. Connect with him on LinkedIn and follow his new work on JD Supra.]

Written by:

JD Supra Perspectives

JD Supra Perspectives on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.