Fix The Ticks By Catherine Fox
by David Vilensky
Interview of David Vilensky, BOSS Magazine, May 2012
Lawyer David Vilensky thought his colleagues at Bowen Buchbinder Vilensky would suspect he'd been smoking something odd when he suggested ditching time sheets and moving to a fixed-fee model at the Perth firm, where he is managing director. The switch wasn't particularly easy, and took lots of courage and persistence from the top. But Vilensky's only regret these days is that the law firm didn't do it earlier.
JUST ABOUT EVERYONE WHINGES ABOUT TIME BILLING IN PROFESSIONAL SERVICES. THIS FIRM BIT THE BULLET MOVING TO A DIFFERENT MODEL, AND BOTH THE LAWYERS AND THEIR CLIENTS LOVE THE OUTCOME
That’s because both clients and lawyers are much happier with a system that is also leading to an increase in clients and job applicants in a tight market. When Vilensky wrote about the process in the February issue of Brief (published by the Law Society of Western Australia), he received a flurry of phone calls.
“When the article appeared, we got five more clients, who said, ‘This is great!’ And I got calls from [lawyers at] other firms,” he says. “Three lawyers have joined our firm in the last five months from mainstream firms… because they don’t have to do time sheets. We’ve got seven or eight women in the firm and a lot are working from home, and feel unburdened by not having to do that. Gen Y hate being micro-managed and people are leaving the profession in droves because of time sheet pressure.”
Under fixed pricing, clients are not being asked to take on all the risk in achieving an outcome, Vilensky explains. A set price for a job is negotiated and there are still billing targets calculated from the price, plus you can predict what a lawyer makes because it is all up front.
“When you think about the risk being shared between clients and lawyer, why should you be rewarded by the length of time you take to do a job, rather than for some sort of efficiency and doing the job that works? To me, it seemed the most logical thing to do.”
That said, the “why” was the easy part, it’s the “how” that took time and plenty of effort.
Vilensky was motivated by consultant Ron Baker, a former accountant who started preaching the virtues of fixed fees more than 10 years ago. Baker says one of the world’s most profitable firms is Wachtell, Lipton, Rosen & Katz, in New York, which has never used time billing.
Although BBV is not a big firm, there was still a need to sell the change as well as implement it.
“We are a firm of 14 lawyers and five partners, and they could have looked at us and asked what we were smoking,” Vilensky says. “It’s a lot of unknowns and you have to be courageous. I got Baker out from the US to do a presentation; it wasn’t just the partners but every other person. When we told the clients, they said, ‘We’ve been waiting for a law firm to do this for years’. If you talk to clients, it’s the greatest no-brainer.”
Just because it makes sense doesn’t mean it’s spreading like wildfire though. BBV is one of two or three firms in Australia doing this for all billing, Vilensky says, and in Western Australia, it is the only fixed-price firm across the board.
Baker, who was in Australia in March, says the top professional services firms are not rushing to convert, and only about 3 to 7 per cent of all businesses in this sector have switched globally.
However, demand for fixed price information is on the rise here, he says, from legal commissioners and very vocal judges. And, as Baker explains, the risk of not changing is much greater.
“If you’re afraid of change, you’re really not going to like irrelevance,” he says. “Big firms will be last to do it. Revolution will come from the bottom, but it’s like watching dinosaurs mate.”
“One of the biggest pressure points will be the competition for talent. If David Vilensky can tell people that [there are no time sheets], that will be a slap in the face to other firms competing for talent, especially women. In-house counsel are very interested… but to change the culture is difficult.”
There are clearly no regrets from BBV.
“People said we would go broke,” Vilensky recalls. “It is difficult to do but not impossible, and the outcome is a win-win. Our turnover isn’t less, in fact it’s more, but you add value. Sharing the risk between us and cients - that’s one of the things lawyers like.”