Toiling on an article about the bedeviling issue of value from firms, I decided to pull together what I have written about the topic other than those in an earlier metapost (See my post of Aug. 21, 2009: value compared to fees paid with 22 references.). Much has been written here about general counsel griping as to insufficient value from law firms (See my post of Nov. 11, 2007: proclaimed imbalance between fees and value in UK firms; Nov. 22, 2007: prospective assessment of value is easier; July 17, 2008: law departments flail firms for inefficiency; and Aug. 10, 2009: “value for money” rating.).
The reasons for the criticism are varied (See my post of May 1, 2006: sometimes inside counsel know too little to assess value; Feb. 4, 2007: can’t put a dollar value on some matters; Oct. 29, 2007: inside lawyers do not like to assign value; Nov. 28, 2007: law departments bear some blame for gap; Sept. 21, 2009: even hard in bankruptcies to determine value of lawyers’ work; March 30, 2008: three bumps on the road to value pricing; June 1, 2009: value-based billing and changes at advertising agencies; July 4, 2009: clients set value; and July 5, 2009: “cost” compared to “value”.).
The value of some firms extends beyond costs and deliverables (See my post of June 20, 2008: achieve value for money; Aug. 28, 2009: Pfizer requests “value reports”; Sept. 12, 2008: value proposition of regional and local law firms; and Oct. 4, 2009: no one ever got fired for hiring [big name] firm.).
Value is not as simple as low hourly rates. If it were, general counsel wouldn’t disdain first year associates. If it were, legal departments could simply alter billing rates (See my post of April 5, 2009: discounts vary by value of work; May 26, 2007: different billing rates according to value delivered; March 12, 2006: different billing rates for same lawyer.). If it were, blended rates would prevail more often. Rather, value combines cost and the perceived appropriateness of the outcome obtained for the cost (See my post of Nov. 21, 2008: definition of value-based payments; Aug. 20, 2006: value-based payments to a firm from a performance index;; Nov. 5, 2007: Cisco and low value work with law firms; and Oct. 19, 2008: marginal value added of a better partner.).