The price of information (and negotiating in the dark)

Money case

I have enjoyed training negotiation skills to lawyers for many years. For newly qualified lawyers, I note that there are some key differences between those coming from education, and those who come with an employment history. My purpose in this article is to identify one of the pressing issues for those (in the majority) who do not have prior careers and whose approach is broadly still academic. The point is that, for the conventional graduate, there is generally a deep resistance and aversion to making decisions on imperfect information.

A degree of phlegmatic pragmatism seems to seep into those who have had a working life before coming to the law; almost no matter what that prior work was. I should know. I have trained lawyers who were formerly (to name just a few examples); a nun, an Argentinian shepherd, a Mauritian taxi driver, a Caribbean police officer, and a Pakistani Cabinet Minister.

In formal education, how can it ever be a bad thing to try to acquire knowledge? More knowledge tends to equate to more marks in assessments. ‘Wanting to know things’ is the attitude that understandably comes with the graduate into their work. It is hard for junior lawyers to appreciate that in the real commercial world, there is a price attached to acquisition of knowledge, and that the price can sometimes be too high to pay. One of the skills of a negotiator is knowing when it is not worth finding something out, and settling a case in a degree of ignorance. It is not an easy or intuitive skill for anyone, most particularly for a recent graduate.

Colin Powell (former General, Secretary of State, and Joint Chief of Staff under George Bush), has described that in many of the military campaigns in which he took senior leadership decisions, he had a rule of thumb for decision making. The rule was that he would locate his decisions within a ’40-70%’ margin. That is to say, that he would make decisions when he had between 40% and 70% of the relevant and available data. The range is striking because it is so low. It serves as a sharp reckoner for the junior lawyer entering litigation with a desire to interview scores of witnesses and instruct a barrage of experts. Colin Powell would make life and death decisions with as little as 40% of the relevant available data.

For Colin Powell, time was the key factor. If he waited to acquire more data, the situation would move on, and the data he had would no longer describe the situation as it had then become. In order to control the cycle of decision making, it was imperative for him to act at speed. That meant sacrificing the quest for perfect intelligence. He describes ‘analysis paralysis’ – a state of affairs where a combatant state was delayed by burdensome volumes of data which would run cease to be current by the time it had been fully assessed.

For lawyers, the driver is ‘cost’ (rather than speed). The data we strive to acquire may not be worth the cost its acquisition. By the time we have spent so much money acquiring the information, there is no margin left with which to negotiate. The margins tighten so much that a form of ‘negotiation paralysis’ can set in, where no negotiation can succeed because the only way left to win is to recover costs following success at trial.

Of course, we bear a risk when proceeding in the dark. Negotiation is all about balancing risk and pricing the risk as best we can. Mistakes will inevitably be made.

I recall from my own practice, a very dull case with a remarkable twist. It was a small road traffic accident, involving two motorists colliding on an icy road. The value of the claim was low, and consequently the pre-trial preparatory work had clearly kept outlay to the bare minimum. The insurers’ outlay in non-recoverable costs was bound to exceed the value of the judgment. The motorists had filled in pro-forma questionnaires about the incident. The forms were short and had clearly restricted the opportunity for either driver to engage in much narrative. No one seemed to have met the drivers yet. With such understandably threadbare preparation, a crucial piece of evidence had not emerged.

My opponent (by chance an old university friend of mine), had the pleasure of letting me know the missing gem of information in the case – 10 minutes before trial. He told me in a particularly smug and irritating manner that his client turned out to have a rather useful occupation. ‘WHY?’ (I asked in genuine incredulity – hence the capital letters) ‘should any of us care what your client does for living when it comes to two motorists skidding on an icy road?’ He told me (with glee at his impending victory) that his client’s job was…(a drum-role would serve well here) a NATO ice-driving instructor. He was based in Norway, and trained the special forces of NATO signatories how to drive safely on ice. He was probably the best ice-driver in the world.

Early knowledge of that information might very well have saved expense and caused an early resolution of the case, which I lost predictably and emphatically.

In terms of training, I see great merit in sessions designed to really illuminate the costs of various enquiries and procedures, and giving examples of how and when good money had chased bad. Trainees and junior lawyers will need help in many cases to build confidence in making decisions which may be based on imperfect knowledge but are proportionate on cost and serve the overall aims of a client.

James Welsh

Posted by James Welsh in News

Mental Health Awareness Week – 13 May 2019

The profession is not getting any less stressful any time soon.

Metal health and wellbeing of staff are crucial considerations for any employer and many firms are running initiatives this week to promote these important issues.

Encouraging mindfulness, meditation and yoga all have their place.

But at Kinch Robinson we focus on helping fee earners and support staff change their working practices to reduce stress and improve work life balance.

  • Our new Legal Project Management courses for trainees and qualified fee earners provide training in a critically important skill that helps fee earners deliver great results for clients and improves your firm’s profitability
  • Our ‘Regain Control’ sessions provide masses of practical suggestions to help you get on top of your work, from dealing with conflicting priorities to smooth and effective delegation
  • And if you want help with understanding law firm finances, improving your writing skills or increasing you reading speed we can help with that too

Call Kath Kinch on 0114 273 8300 for more information.

Image mental health tiles
Posted by News Desk

Social media for lawyers – e-learning

social media image

Social media platforms are powerful tools for engaging with current and prospective clients. However many lawyers are nervous and confused about to how to use them effectively.

This introductory course into the two key social media platforms used by lawyers – Twitter & LinkedIn - will help you to engage more confidently and use them to enhance your personal reputation and that of your firm.

This course will take 30 - 45 minutes to complete.

Objectives

 As a result of completing this course you will:

  • understand the benefits of engaging in social media;
  • have the skills to engage with social media confidently;
  • take into account professional ethics when engaging with social media;
  • be able to differentiate between good and bad practice;
  • know how to compose an engaging tweet; and
  • know how to improve your LinkedIn profile.

Social media for lawyers course

Posted by News Desk in News

Billing – Remove the Pain and Make More Money. It’s not difficult!

The word “Billing” tends to strike dread in the hearts of lawyers who view it as a necessary evil.  Other professions view it as an opportunity to convey value and strengthen client relationships.  Sounds easy?  Well, actually it is if we adopt established Best Practices.  David Ellis, a former billing Partner at PwC for 10 years, shares some insights into successful and painless billing.

Firstly, let’s be frank about the comparisons with other professional services providers like the big 4.  Lawyers tend to write off 20% of time on the tab before raising the bill. They bill on average 3 months - and more - after the start of a matter (and frequently, only at the end of a matter). They  regularly have uncomfortable discussions with clients about the final bill and end up writing off further amounts.   The big 4 just don’t operate like that at all.

Why?  Largely because they have adopted well established Best Practices to their Billing Disciplines.

And while we are at it, let’s get rid of a one urban myth.  Yes, our work is uncertain – we don’t know exactly what will happen during a matter.  However that is no different from these firms.  Far more importantly, it is no different from our clients!

So what are these Best Practices that make Billing easier and improve collections?  Here are 5 unerring Must Do’s

1.       Tell the Client how and when you are going to Bill.  State it clearly in the Engagement - and then do it!!  This sets expectations, is professional and gets you on the front foot.

2.     Set a Budget for the job and manage to it.  Budgeting Pricing.  Set your colleagues a time / value budget and manage to it.  This is how our clients operate their projects and they expect us to do so too.  Yes, things change during a matter but we can also adjust our approach too (often in agreement with the client). So manage the client too.

3.       Bill Monthly. Review WIP and bill the client.  Again, this sets expectations, shows them we are operating professionally and alerts them (and us!) to and changes.  Not least it improves cashflow for the firm – and worth remembering at appraisal time!  Variations to this principle include stage payments, milestone billing and so on.  But don’t wait until the end!

4.       Talk to the Client about the Bill.   Yes, it sounds obvious but we generally shy away from it.  Ironically, it is invariably on the mind of the client.  Ideally a simple comment of “we are on time and on budget” is enough (and we should be if we have followed the above Best Practices J)

5.       Let your Finance department take the strain.  The lawyer’s role in the billing cycle is to review and make decisions.  It is Finance’s role to execute those decisions.  So let the finance professionals prepare, adjust, issue, and collect the bills.  They should also deal with first line queries and chasing of payment.  That is their skill after all!

Do all of this and you will have happier clients and an easier and more lucrative life.  Told you it was easy.

p.s. (There’s a sixth Best Practice too.  Bill Fixed Prices.  Don’t hourly bill.  No other professional service does it, clients don’t do it, it is grossly time consuming to review (pun intended), and focuses on inputs not outputs.  Time to join the 21st century)

Posted by News Desk in News

Legal Project Management: what do clients really expect?

Our Legal Project Management (LPM) course helps lawyers apply best practice principles of project management to the effective delivery of legal services. This new course has been developed and delivered in conjunction with OMC Partners, specialists in legal operational efficiency, and is a must for all those grappling with the challenges of meeting client expectations and winning more work.

Why LPM?

In an era where margins are continually under pressure, and clients demand increasingly sophisticated service levels and greater cost certainty, strong project management skills are essential for any modern lawyer. Law firms have much to learn from the likes of the Big 4 accounting firms, leading consultants such as McKinsey and Accenture, and other professionals who have successfully applied project management approaches to great effect for decades.

LPM does more than just help lawyers to manage their work productively and profitably. LPM ensures they understand and meet their clients’ objectives, deliver engagements on time and to budget, and communicate the value of the services provided. Done well, clients will keep coming back for more!

Who is the course for?

This course helps lawyers from all disciplines deliver services using a consistent methodology that captures all the benefits of LPM Best Practice. There are 4 modules covering:

1. Understanding what your clients want

2. Planning work

3. Working the plan

4. Delivering value

Free Briefing sessions

To help lawyers and law firm managers understand exactly what this course entails and the business benefits to be derived, we are running several Legal Project Management Briefings throughout the UK over the coming weeks. To book a place, please contact Kath@KinchRobinson.com

LEEDS 27th July 2017, 8.00-9.30am @ Leeds University Business School

MANCHESTER 28th September 2017, 5.00-6.30pm @ Berwin Leighton Paisner

BRISTOL 4th October 2017, 12.30-2.00pm @ RPC

LONDON 12th October 2017, 5.00-6.30pm @ Berwin Leighton Paisner

BIRMINGHAM 2nd November 2017, 5.00-6.30pm @ Shakespeare Martineau

Related blogs on the topic of LPM

Better Engagement Letters by Peter Kinch

Don't just do a "job" well - meet your client's business needs by Matthew Peacock

Posted by News Desk in News