Branding vs. Naming, Part II.

Just finished Marty Neumeier's "The Brand Gap" this weekend. It is a wonderful (and really short) book on branding. Neumeier defines a "brand" as

a person's gut feeling about a product, service, or company. ... When enough individuals arrive at the same gut feeling, a company can be said to have a brand. In other worrds, a brand is not what you say it is. It is what THEY say it is.

The author suggests every company should be able to instantly and unambiguously answer these three questions:

1. Who are you?
2. What do you do?
3. Why does it matter?

This is a really hard exercise for lawyers. Go ahead, try it. I admit I get hung up on the second question before I even get to the third. I am (and have been for nearly 8 years) a "general practitioner" -- that kind of small-town lawyer who tries to be everything to everyone. In the past week, I've worked on a divorce, filed three evictions, drafted five deeds, and prepared two contracts for a client selling his business. Neumeier argues that "focus, focus, focus" are the three most important words in branding. He says that it is often better to be number one in a small category than to be number three in a large one. And if you can't be number one (or even number two)? Redefine your category. Being a general practitioner runs counter to Neumeier's advice to focus one's business. As I build my new law practice, I clearly have some work to do.

Is this what it is really like?

Value Billing Unethical?

I promised David at EthicalEsq that I would respond to this post of his today. In a response to my previous post on value billing, David argues:

There are a lot of problems with the billable hours system, but most of them are the result of abuses rather than of the inherent nature of using hourly billing. In determining the reasonableness of a fee, therefore, the legal profession has attempted to avoid the worse distortions from hourly billing by not fully charging for hours spent "getting up to speed" in an unfamiliar area of law. The client rightfully expects expertise and needs to be informed by the ethical lawyer when he or she is not yet fully competent in a particular legal subject.

The client also rightfully expects to pay a fee that corresponds -- at least roughly -- to the amount of time spent by the lawyer. And, the honest fiduciary should let the client know approximately how much work is involved. Some sophisticated clients might want to experiment with or negotiate for some kind of value-related fee. But no sophisticate would say "I know you'll only spend a few minutes on this, but it's worth millions to me, so here's a seven-figure check." Instead, the savvy client would negotiate for, or shop around for, a more competitive fee, no matter the "value" of the result.

David and I both agree on quite a few things, the primary one being that a lawyer should educate his or her client up front about the basis for the fee and give them an estimate of the range of costs and outcomes. However, I feel (unlike David) that the billable hour system is the problem, for both lawyers and clients. The best indictment of the billable hour that I've found on the web is in this article where the author writes:

The billable hour, a practice used only since the early 1960s, has become an artificial device that ill serves both professionals and clients. It divides the time of the accountant and lawyer and consultant into parts, turns each professional into a bookkeeper, and creates such profound guilt for every working hour that’s not billable that important non-billable firm needs are inadequately addressed. It affords the opportunity for the worst kinds of excess, such as padding hours, thereby increasing revenue without supplying value – a short-sighted practice bound to backfire. It makes no distinction between the hour spent on trivial activities and the hour spent on substantive matters. Moreover, if the client perceives that there is no added value in the hourly bill, the general practice is to renegotiate the fee, which is becoming a common practice in today’s competitive environment – and makes a mockery of hourly billing. It’s such an anachronism, and so entrenched, that it precludes such rational billing approaches as value added and enhanced worth or contribution to a client’s business, neither of which is best calculated by the hour. As one sage put it, it’s a virtual cartel in which every firm seems to arrive at the same billing rate, even though quality of service is not consistent from one firm to another. Or even from one partner to another in the same firm.

How many other products are bought this way? My wife and I are going to be building a new home this year. We we were given a choice by our contractor to pay a set price or be charged on a "time and materials" basis. We chose the former. I don't care how much my contractor profits on the job so long as I get a quality home for a price I'm willing to pay. To use another example, should I agree to buy a car at $200.00 per hour multiplied by the time taken to build it? If I get a lazy shift the day my car rolls down the line, should I expect pay more than my neighbor who bought the same car built by a more efficient crew for thousands less?

The Illinois Supreme Court requires lawyers to adhere to the code of ethics. Rules of Professional Conduct, Rule 1.5 (which David quotes in part in his post) states:

Factors to be considered as guides in determining the reasonableness of a fee include the following:

(1) The time and labor required, the novelty and difficulty of the questions involved and the skill requisite to perform the legal services properly.

(2) The likelihood that the acceptance of the particular employment would preclude other employment by the lawyer.

(3) The fee customarily charged in the locality for similar legal services.

(4) The amount involved and results obtained.

(5) The time limitations imposed by the client or by circumstances.

(6) The nature and length of the professional relationship with the client.

(7) The experience, reputation and ability of the lawyer or lawyers performing the services.

(8) Whether the fee is fixed or contingent

. Only one of the thirteen underlined factors speak to the time spent on the task. I argue that many of the other factors speak to the value received by the client. In the end, I think David and I both agree that a lawyer should charge a fair fee. In value billing, what is "fair" is in the eyes of the client. In hourly billing, what is "fair" is in the eyes of the lawyer. Which is a better way to serve your clients?

I do know this, I will not be offering my clients the option to choose between hourly and value billing. I refuse to perpetuate a system that allows me to charge more to a given client the less efficient I am. My prospective customers will have the choice to use me and my value billing system – or they can go to a “traditional” lawyer who bills by the hour. As my site says: "No more stinkin' timesheets."

Anticipation

In this post Jennifer Rice at What's Your Brand Mantra? asks:

If the purchase process in your company includes a waiting period, what can you do to alleviate "buyer's remorse" and create anticipation?

As lawyers, there is often a significant waiting time between the time we take on a particular assignment and complete it. In litigation, the "waiting period" is often years. How can we keep our clients engaged from the time they retain us until their work is complete?

Setting Expectations

In this post on his Ripples weblog, David St. Lawrence writes:

Hindsight is so humbling. It took me 45 years of professional life to arrive at the following conclusion: Setting expectations correctly is far more important than the actual work that you do.

I hate voicemail. However, I have heard of a consultant who has voicemail that says, "Leave a message and I'll return your call in 90 minutes." He always returns the call in sixty minutes or less -- or has an assistant do it. He sets a client's expectations and then exceeds them. If we lawyers were able to consistenly do the same thing, we wouldn't be the butt of so many jokes.

Branding vs. Naming your firm.

I know that we have all heard at one time or another about "branding" a law firm. I am going to be renaming my law firm from "Homann Law and Mediation" to some other name because I have spun off my mediation business into a new entity: Consensus Mediation, LLC. Eric Heels writes in this post on his law firm website titled, "Just Say Moo - How To Name And Brand Your Product To Make It Stand Out From The Crowd," that:

You should avoid choosing a brand name that is generic or descriptive. Don't name your bookstore "Bob's Bookstore," or "Affordable Books." Instead, choose a name that is suggestive of the qualities your product stands for. If you are selling data backup services, perhaps include "elephant" in the name, since elephants supposedly have good memories. If you are starting a bus company, consider the fact that "greyhounds" are very fast dogs.

An even better strategy is to choose a distinctive brand name that is unrelated to your product or service. "Apple" is a good name for a computer company because computers have nothing inherently to do with apples.

The best strategy is to choose a distinctive company name that is a brand new word. Like Verio. This is, of course, the most fun and the most challenging. Made-up words can sound cool or they can sound like names that didn't make the final cut for the Seven Dwarfs.

I love Eric's advice to avoid your name as your brand -- especially when you have a name like mine that everyone spells "Holman." However, as this article by William Arruda on the MarketingProfs.com website (registration required, but worth the trouble) illustrates, branding is about more than the name and logo of your firm, it is about the entire customer experience

What separates you from others with similar skills and abilities is your unique promise of value. Communicating that unique promise through all that you do enables you to stand out and greatly expand your success.

But if you send messages that are incompatible, those around you will not know what you stand for or what to expect from you. So remember, being “the same” is essential to successful branding.

“Saming” doesn’t mean that you will be forever stuck where you are. In fact, saming enables you to get where you are going. Once you have built a reputation through consistent expression of your unique promise of value, you have the permission to evolve, as long as that evolution is consistent with your brand promise.

So, to recap: name + logo + consistent (and unique) customer experience = brand.

Lawyers as Retailers

In this interview, retail consultant Paco Underhill answered the question, "What are some of the more innovative things you're looking at and seeing in the physical world of retailing?" His response:

Some are the trends to edu-tainment. Where people have realized that if they give people other reasons to come to the store, people stop worrying about prices. I was at a beautiful store yesterday here in Chicago called American Girl, which is sort of an actualization of the fantasy life of a doll. There's a little lunchroom where you can bring your doll, and little chairs so your doll can sit at the table with you. You could buy matching sets of doll clothes and then clothes for you, for your kid. I mean, the whole thing was wonderful, but it was also very scary. Look at Restoration Hardware, where you go in and sort of get lost in stuff.

Can law firms give people other reasons to engage their lawyers (come into the store)? If so, does providing ancillary services your clients value in an atmosphere they like make them more likely to stop worrying about your price?

There is a law firm I've heard of in Urbana, Illinois that has a pool table and bar on the third floor of its office in a renovated old building. They often ask clients to, "Come by for a beer and shoot some pool." What a cool idea.

Thanks to Marginal Revolution for the link to the Underhill interview.

Scarcity in Law Firms - Part 1

In this article, from the December, 2003 issue of Fast Company magazine, Seth Godin talks about the relationship between scarcity and value. Godin argues that the only way to make a profit is by trading in something that's scarce. Then Godin takes up the legal industry:

It's not just about product knockoffs, of course. While there are almost half a million lawyers practicing in the United States today, there are (gasp!) more than 125,000 in school right now. No matter what you believe about lawyers creating ever more work for ever more lawyers, there's no question that with so many of them, they're hardly scarce.

How can lawyers take advantage of the scarcity principle to make what they do (or sell) more scarce and more valuable? Godin continues:

So what's scarce now? Respect. Honesty. Good judgment. Long-term relationships that lead to trust. None of these things guarantee loyalty in the face of cut-rate competition, though. So to that list I'll add this: an insanely low-cost structure based on outsourcing everything except your company's insight into what your customers really want to buy.

I have been struggling with the scarcity issue for quite some time. I am a general practitioner, and take most kinds of legal work except for personal injury and criminal cases. In the town I practice in, there are seven lawyers (including myself) serving a population of approximately 13,000 people. None of us limit ourselves to just one kind of work, nor do we market our practices except for the obligatory yellow pages ads.

What I would like to do is make my firm stand out to a clientele I want to serve. A friend of mine has an uncle who is a small-town butcher. If he advertises chickens for thirty-nine cents per pound, he sells ten per day. If he says, "Limit 3" at that same price, his sales increase five-fold. Can lawyers capitalize upon this principle? I think I have my answer, but welcome comments. I'll post a summary of my business plan next week when I finish it.

Great Brainstorming Tool

I've been looking for a good outlining/brainstorming tool to use as I rethink my practice and my life. I have spent a bit of time with Mindmanager and really like its features, but was a bit put off by the $300 price tag. Thanks to Joyce Wycoff and her reader Matt Vance, I happened upon Freemind. Freemind is a free mind-mapping tool that allows you to brainstorm, create outlines, and do other free-form thinking on your computer screen. Learning the basics takes about two minutes. Check it out. A screen shot can be found here.

The problem with value billing.

Great Quote

"To do a common thing uncommonly well brings success." Henry J. Heinz

The Grind of Business

In this Business Week Online article, author B.J. Hawkins discusses her company's committment to bring balance to the lives of its employees. Interesting read, and Ms. Hawkins concludes:

I work an average of 10 hours a day now, rather than the 18 I used to put in prior to my advisers' urging me to face the truth about myself. Work is no longer a continuous grind, but rather what it was always meant to be: a fulfilling aspect of a life that also includes family and self -- indeed, even an entrepreneur's life.

How many lawyers can make a similar transition?

It is not just a legal problem.

Adrants had a post commenting on an Association of National Advertisers study which revealed:

a third of marketers think their agencies are suffering from "creative arrogance", charge too much for their work and the work that is produced is off strategy. Seems agencies dirty little secret has been found out. Without bashing all agency creatives, the problem stems from the inability of some in advertising to realize that making an ad is not art. It's a commerce of craft. While agencies do need to stand their ground on creative and strategic direction if they truly believe in it and it's backed up by research but at the same time, they need to realize the client is the one paying the bill and is the one who has the final say. This is not to say agencies should just roll over at the wim of the client but they should realize they are not creating the next Mona Lisa to be hung on the wall or entered into the awards show of the month. An ad has the very important purpose of moving consumers to a distinct mindset or action.

Replace "marketers" with "clients" and "agencies" with "law firms." Sound familiar?

Get Lots of Ideas

"The best way to get a good idea is to get a lot of ideas." -- Linus Pauling

I've been doing an exercise to help me realize my goal of transforming my law practice into an innovative and fun place to work -- and get away from the billable hour. Every morning, I take a legal pad and number the left-hand margin from 1 - 25. Then I spend the next ten minutes generating 25 ideas. The ideas don't have to be business-related, but I find that they often are. I put the list in a folder behind my desk marked "ideas" and don't look at it again until I get ready to leave for the day. At the end of the week, I bring the lists home to think about the ideas. When Monday morning rolls around, I usually have at least one of the ideas that I want to incorporate permanently in my law practice. Each Monday, I'll try to share those ideas with you.

Conversations I don't want to have with my daughter.

One good reason for value billing.

Carolyn Elefant asks the question on MyShingle.com: "How do you know if your big firm lawyer is overbilling?" While I want to answer, "Because he's breathing," I got to thinking about an article I read several weeks (months?) ago about a firm that got in trouble by billing two clients tens of thousands of dollars (in hourly billing) for the same product. The firm's deceit was found out because they failed to erase the metadata in the documents they sent the second client.

While my initial instinct is to say how awful the law firm's conduct was, was the client harmed? The client got a product (the documents, advice, etc.) that they valued at a price they were probably willing to pay. In this case the value received by the second client was at least as great as that received by the first (for whom the hourly work was done to begin with). And while the firm's conduct was dishonest, to say the least, should the second client have been charged significantly less because the documents were already "in the system" and just needed to be revised?

This is the dilemma many lawyers face when trying to bill hourly when they have become proficient at any given task. If my technology investment allows me to complete a task in one-third the time it took me last year, does that task become two-thirds less valuable to my client? Staying away from hourly billing should allow lawyers to maximize their revenue, capitalize upon their efficiencies, and keep their law licenses.

Can a law firm be a purple cow?

From Seth Godin's book Purple Cow: Transform Your Business by Being Remarkable:

Make a list of competitors who are not trying to be everything to everyone. Are they outperforming you? If you could pick one underserved niche to target (and to dominate), what would it be? Why not launch a product to compete with your own -- a product that does nothing to appeal to this market?

My legal niche to target is going to be woman-owned small business start-ups. What's yours?

It's not just me.

This study says that business executives want more job satisfaction, and not more money.

Via The Occupational Adventure blog.

What do lawyers sell?

What do lawyers sell? In this post at startupskills.com the authors (talking to software companies) argue:

No more beating around the bush. You can’t sell software. You can’t sell cool technology. You can’t even sell a good idea. In order to sell anything, you need to sell a solution. And even that’s not good enough. But it’s a starting point—selling a solution to a specific consumer segment

I would argue that the same applies to lawyers. Find a specific consumer segment and sell them a solution -- don't sell them your time.

Via The Entrepreneurial Mind blog.

UPDATE: This article asks the same question (Thanks, David at ethicalEsq).

Solo lawyers as developing countries?

The dilemma most small firm lawyers face -- especially when they first hang up their own shingle -- is a lack of resources. In a new article on the Harvard Business School Working Knowledge site, authors Donald N. Sull, Alejandro Ruelas-Gossi, and Martin Escobari talk about how innovation is often stymied in developing countries. The impediments to innovation faced by developing countries seemed much like those barriers I faced (and continue to face) when I decided to become a solo lawyer:

1. Developing countries generally lack a solid technology base of trained scientists and world-class research universities.
2. Companies in developing countries must manage to eke out a profit while serving customers with low disposable income; per capita gross domestic product in the advanced economies is on average ten times that of developing nations.
3. Managers in these companies must often innovate on a shoestring budget, since the high cost and scarcity of capital preclude massive spending on R&D. As a result, they must innovate from other areas of their business's structure, including manufacturing, logistics, marketing, and customer service

The three keys to innovating on a limited budget, the authors argue, are: knowing your customers' mindsets—intimately; innovating around—rather than through—the technology; and scouring the globe for good ideas. Each key comes with great examples from successful companies in the developing world. My favorite:

Employees of China's Haier, for example, discovered through visiting rural customers that they frequently used their washing machines not only to launder clothes but also to clean vegetables. By making a few minor modifications to the washers they manufactured, Haier was able to market the machines as versatile enough to wash both clothing and vegetables, and rapidly became the market leader in rural areas of its home country

.As a lawyer, a limited budget should not keep you from becoming an innovative service provider to your clienst. Listen to your customers, use your technology efficiently, and look outside the legal profession for great ideas.