Coca-Cola's announcement of value-based compensation or the Pay-for-Performance model for its vendors could be a tipping point.
As I see it: Instead of creative agencies and professional services firms merely experimenting with alternatives to the billable hour and standard flat rates, they could now be forced to provide new billing models. Yeah, plural. Clients could well feel empowered to shop around for the pricing options offered by each vendor. Incidentally, yes, my communications boutique Genova Writing, Coaching and More is a Pay-for-Performance firm.
Fresh kinds of billing models could drive weak players out, therefore creating more business with more incentive for good work for the talented hustlers. I predict that windfall is going to happen to mid-sized and smaller enterprises. Burdened with huge fixed costs, the big brandnames in professional services are finding themselves stuck, unable to change, for instance, fast enough, from traditional expensive strategies to lower-cost digital ones. The New Barbarians [term coined by FORBES] are already eating their lunch, dinner, and breakfast.
One of those New Barbarians is virtual firm Rimon Law Group. Based in San Francisco, California, with international operations, it recently launched a novel type billing program. It's called Satisfaction-Based Billing and it's optional. As Rimon's April 8th media release describes the approach, the model:
"adjusts the amount owed the firm based on how satisfied the client is with the firm's service. The client completes a short survey about factors that matter most to it, including turnaround times, responsiveness and accuracy of the work, among others. Based on the results of the survey, clients can either receive up to a 20 percent discount on their bill or, as the firm hopes, pay up to a 20 percent premium."
Because of the surging interest in models, I asked Rimon's co-founder Yaacov Silberman for an extensive interview. Silberman agreed to this exclusive.
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Exclusive Interview with Yaacov Silberman, co-founder Rimon Law Firm, San Francisco, CA
JG: Why did you and your colleagues decide to form Rimon?
YS: My co-founder Michael Moradzadeh and I began our careers at a Global 100 law firm. It was a time of rapid expansion, skyrocketing salaries and correspondingly escalating rates. The game was one of scale: The experienced lawyers at the top could only increase their profit by adding more inexperienced lawyers at the bottom to do most of the legal work.
We viewed that as a fractured model that could not be sustained, particularly in the event of an economic downturn. Rimon was founded as the 'anti-Big Law Firm' - our focus was on finding ways to deliver the services of top-tier lawyers at reasonable rates. We did this by flattening the pyramid of traditional law firm, eliminating as much overhead as possible that didn't add to client service, and by relying on technology to drive down costs.
"We viewed BigLaw as a fractured model that could not be sustained."
JG: What obstacles did you encounter in the startup?
YS: The biggest one was finding legal talent to join our model. Before we even began recruiting, we had set the criteria for every lawyer who would join our firm.
Each would have to come from a top law school and university, have 10 years of legal experience, and have worked at first-rate corporations or law firms. Because we were unwavering in standards, we had to sift through hundreds of resumes. When we launched we were only a group of five. As our reputation developed, we are able to attract more talent. We grew to the current 24 lawyers.
In addition, recruiting became a little easier once we opened up to Americans living abroad. Israel in particular proved fertile ground.
JG: What went easier than expected?
"As the economy took a dive, users of legal services were increasingly turned off by their lawyers's expensive office space, inefficient hierarchies and being serviced by overly-priced junior associates."
YS: We were uncertain how the model would be received by clients. Among many, the impression still exists that lawyers necessarily meet with their clients face-to-face. In the end, the virtual model instantly made sense to most clients we approached. Many of them, particularly our startup clients, wee operating virtually themselves.
As the economy took a dive, users of legal services were increasingly turned off by their lawyers's expensive office space, inefficient hierarchies and being serviced by overly-price junior associates.
JG: How do you see yourselves now?
YS: As two lawyers starting the company, we've learned a lot about the business of law and about what clients really care about when choosing a lawyer or law firm. In addition, we feel our model has become validated.
JG: Future plans for the firm?
YS: In the instant future, we're launching a really innovative pricing program we hope will resonate well with our client base. Read about it here: http://rimonlaw.com/satisfaction_based_billing.php.
Large firms often create incentives to bill as many hours as possible with minimum billable requirements and larger bonuses for associates that bill the most hours. That can generate inefficiency and can actually harm the client. Therefore, we decided to create opposite incentives for our lawyers.
In addition, we are also part of a group that is launching an office in Israel to help Israeli high-tech companies start doing business in the United States.
JG: What about Rimon's work/balance, if that issue had been important to you?
YS: Me? Personally, I work much longer hours and get paid a lot less now but that's to be expected in a startup. But compared to working at a large law firm, I can exercise greater control over my life and find myself spending more time with family and friends. That's true of most of the lawyers at Rimon.
JG: Feedback from clients?
YS: Here are some testimonials, Jane. Http://www.rimonlaw.com/advisory/36.
JG: Feedback from referral sources?
YS: As we grow, our key referral sources are current and past clients. We also receive a fair amount of referrals through social media networks such as Facebook, LinkedIn and Twitter.
JG: Feedback from competitors?
YS: As yet, there is no significant competitive pressure.
JG: What advice would you give other lawyers considering traveling in your footsteps?
YS: Be prepared to take off your lawyer hats and put on your business ones. Marketing is important. For some lawyers that can represent a steep learning curve.
JG: How will technology impact the business of law?
"Sites like FastCase and LoisLaw are taking market share from costly research tools like Westlaw and Lexis."
YS: As with other industries, technology will continue to make the business of law more democratic and lower the price of entry. Sites like FastCase and LoisLaw are taking market share from costly research tools like Westlaw and Lexis. Secure document storage and project collaboration no longer require capital expenditures with the availability of sites like DropBox and BaseCamp. The business of law is going to occur much more frequently in the cloud.
JG: Before we wrap, anything else?
YS: The good news for users of legal services is that our partner-level attorneys bill at an hourly rate of between $185 and $250. In addition, there's the Pay-for-Performance option.
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Yaacov P. Silberman can be reached at Rimon Law Group at Yaacov@rimonlaw.com, 917-720-4027.
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