LawVest: silk embroidery
So DLA Piper’s investment in soon-to-be ABS LawVest isn’t as much of a random punt as many first thought. As we reveal today, LawVest is launching with a bang.
So far the ABS moves have been largely consumer-facing. LawVest, though, is squarely aimed at business clients. It’s also the first to involve the bar through Riverview Chambers, a vehicle that provides direct access to no fewer than 12 silks, including names such as Richard Lissack QC and Jonathan Caplan QC, plus 43 barristers in total, all on a fixed fee.
It’s the fixed-fee package that is the key to the LawVest sell. It’s not like it has much competition here; question most litigators about cost predictions and they always answer that it’s like asking, ’how long is a piece of string?’. While these litigators may think they’re keepers of a mysterious flame, unfortunately that response tends to come over as being at worst patronising and at best clueless. After all, as we revealed earlier this year (The Lawyer, 16 January), a heuristic approach can work even for the big names.
Quinn Emanuel, for example, is more than happy to estimate trial costs for its big-money clients and does rather well out of it. Riverview Chambers is unlikely to become involved in multibillion-pound cases, but given the clout of the silks involved, neither is it after low-rent litigation.
There’s also a slightly more workaday end to LawVest, which is Riverview Solicitors. This is where you can see where one element of DLA Piper’s involvement panning out. The firm is in the process of sloughing off its lower-value clients, so giving them an option of a home to go to is a neat idea, although there’s no contractual compulsion attached.
As one poster on TheLawyer.com commented when the news of DLA Piper’s involvement with LawVest broke, this turns the screw on those firms delivering services to the SME market. Not only is LawVest unafraid of telesales, the product it’s selling is certainty, at the very least when it comes to budget.
In an ABS world, content is not king; content is commodity.
Readers' comments (3)
Andrew Keogh | 20-Feb-2012 10:37 am
This line in the article is quite telling:
"Quinn Emanuel, for example, is more than happy to estimate trial costs for its big-money clients and does rather well out of it."
I thought that the argument for fixed costs was that the client would do better out of them than hourly billing. Is there any data one way or another on that?
Genuinely curious to see data on this.
Unsuitable or offensive? Report this comment
Catrin Griffiths | 20-Feb-2012 10:50 am
Andrew, I'd also be interested to hear if any readers know of research on this topic. Here's the link to the Quinn Emanuel article we ran earlier this year. http://www.thelawyer.com/sugar-coated-bills/1010926.article
Unsuitable or offensive? Report this comment
Jordan Furlong | 20-Feb-2012 3:49 pm
There's no contradiction between law firm profit and client satisfaction in a fixed-fee billing system; unlike the inevitably zero-sum hourly billing model, fixed fees give each party a fighting chance to come away happy.
The classic example is FMC Technologies in the US, whose GC, Jeffrey Carr, is a leading fixed-fee advocate. His outside counsel agree to the following system: 80% of the pre-set fee is guaranteed, while the remaining 20% depends on the success of the mandate. If the firm fails to meet the client's criteria for success, the 20% is lost. If the firm meets the criteria, the 20% is paid. If the firm exceeds expectations, the 20% is paid and an additional 20% is tacked on as a bonus.
Jeffrey has stated that his average payout is something like 106% of the agreed fee. The firms obviously are happy, but so is he. Number one, he has price predictability: he knows he will pay no less than X and no more than Y. And number two, he knows the firm is heavily motivated to meet his performance indicators and earn a bonus -- and like all GCs, performance is his number-one priority. That kind of common ground is usually impossible with time-based billing, though it stands to become more common as more LawVest-type operations emerge in the corporate/institutional legal market.
Unsuitable or offensive? Report this comment