John Chisholm

Episode 5  24 May 2021

The billable-hour model is, frankly, just dumb!

John Chisholm value pricing consultant

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The billable hour model is frankly just dumb!John Chisholm
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John Chisholm

Founder & Managing Director at John Chisholm Consulting

Value pricing expert

John Chisholm is a lawyer and value pricing expert and an advocate for professional firms to depart from the traditional firm model which prices solely on time.  A former Managing Partner and Chief Executive of two leading Australian law firms, he compellingly runs through the many arguments for a move away from the billable-hour model - satisfied clients, more enduring client relationships, a collaborative culture, a more sustainable model, healthier lawyers, greater retention of talent, more robust financial position, increased trust and relevance in the business and wider community, and the list goes on.   

Bio

Show notes

Links

Transcript

Comments

Bio:

John Chisholm is a third generation recovering lawyer who, prior to establishing John Chisholm Consulting in 2005, was a Partner, Managing Partner and Chief Executive of 2 leading Australian law firms for more than 20 years. His time with those law firms saw them transformed into market leaders in their fields.

 

John established his own consultancy to share his expertise and experience with professionals looking to move beyond the traditional firm model which essentially leverages people x time x hourly rate.

This has seen him become a leading advocate for professional firms to:

  • move away from pricing their services solely by time;

  • stop using ineffective performance management ‘tactics’; and

  • implement alternatives to the partnership model including partner compensation.

 

For those firms willing to do so, the result is a knowledge firm rather than merely a product or service firm.

 

Knowledge firms have far happier clients and team members that are more committed, creative and entrepreneurial than traditional firms. They use a pricing strategy that is no longer limited by people or hours but linked to the value they create for their clients.

 

John also provides one on one coaching, mentoring and personal development to a number of professionals looking to move their individual practice to the next level.

Show notes:

  • [02:14] John describes his journey from law firm Managing Partner to consultant, which he 'fell into' at first. We talk about the challenges of being an outsider advising law firm Partners.

  • [08:04] John remembers his 'a-ha' moment when he encountered value-based pricing, after hearing the late Paul O'Byrne talk about it. 

  • [12:04] The legal profession is stagnant on client-friendly pricing models, while the rest of the world innovates.

  • [15:19] Billable-hour pricing leads to a production mentality, which demeans lawyers.  

  • [17:39] The private profession is losing good people, especially women, who will vote with their feet away from an outdated model that damages wellbeing.

  • [20:32] As John says, clients don't even buy lawyers' time, which is an input. They buy outputs, outcomes and value. And they want certainty.  

  • [21:55] John answers my question on how law firms can move to a new model, away from the billable hour. 

  • [26:56] Removing the billable-hour as a basis for charging clients can also mean a different way of measuring and rewarding lawyers' performance, from individual- to team-based metrics.

  • [28:20] More advantages of value-pricing include how it increases cash-flow and releases management and Partner time previously spent on billing disputes.  

  • [30:50] John challenges in-house counsel to participate in the push for law firms to innovate in pricing. Law firms also need more courage to lead.

  • [34:48] John touches on the loss of trust the profession is facing due to our inability to adapt.

  • [35:01] John predicts that global law firms will develop or merge into consulting firms which will see a business model shift.

  • [36:22] John is moving his expertise into the subscription-model of pricing, an exciting new idea that already exists in many items we consume, and helps deliver more options and build stronger client communities for lawyers. 

Links:

John Chisholm Consulting:  www.chisconsult.com.au

Innovim Group, pricing consultancy where John is a director: www.innovim.com.au

 

VeraSage Institute, a think tank dedicated to promulgating and teaching value-based pricing, economics, and human capital development, where John is a Senior Fellow.

The late Paul O'Byrne, an accountant who successfully implemented value-pricing in his practice.

Ron Baker, a world leader in pricing for professional services firms and founder of VeraSage Institute

 
 
 
John Chisholm clients buy outputs, outcomes and results not time.

Transcript: 

Geraldine  0:13  
Hello, everyone, and welcome to the New Earth lawyer podcast where we feature conversations with lawyers who are changing the practice of law to change the world. I'm Geraldine Johns-Putra. I'm your host. I'm a lawyer myself, and I'm based in Melbourne, Australia. Today, my guest is John Chisholm. John is a lawyer, but not just any lawyer, he is a third generation recovering lawyer, who founded John Chisholm Consulting in 2005. But before that, he was a Partner, a Managing Partner, and Chief Executive of two leading Australian law firms for more than 20 years. 

Now, John was also my principal, when I was an articled clerk. So literally, without this man, I would not be a lawyer today. But the firms that John led, they were transformed into market leaders in their fields. When he stopped practising law, John began to share his expertise with the wider profession. And what he has focused on is helping professionals move beyond the traditional law firm model, the one that uses the billable-hour to charge clients and measure performance. John, welcome to the podcast.

 

John  1:33  
Thank you, Geraldine. And thank you so much for inviting me. God, yes you were my articled clerk, probably my last articled clerk, but you've been successful in spite of that, in spite of me being your principal. So great to catch up again.

 

Geraldine  1:50  
Thank you. If I wasn't the last I was close to the last because I know that very soon after that you went on, you became Managing Partner of another firm, well, the firm I was at and then another firm. And then you struck out as a consultant. So, what a journey. Can you tell us what motivated you to do that?

 

John  2:14  
Oh, I look. 
I'd like to think that after, yes, I think  I was managing partner for eight or nine years, at Maddocks, or Maddock Lonie & Chisholm as it then was, because as you know, nepotism was still acceptable in the legal profession, back in those days. And I left Maddocks the end of 1999, and went to another firm that was then called Middletons Moore & Bevins that since then has morphed into K & L Gates and I was Chief Executive there for four years I think, and then, yep, I think I was burned out. And I suspect the profession or the law firm was burned out with me. In 2005, my wife Karen and I took off and literally drove around Australia for five months, I think, Geraldine.

 

Geraldine  3:07  
Yeah.

 

John  3:08  
I think my accountant and bank manager sort of tried to convince me, I should come back. But just to answer your question, I didn't do that I didn't have any, at least in those days, amazing purpose that I was going to reinvent myself as a consultant back to the profession. In fact, if I'm honest, the last thing I wanted to do was have anything to do with lawyers again. But I did think I had to think of what I was going to do with the next stage of my life. I'd turned 50. Then and I think to be frank, I just, I fell into the consulting. I had, was lucky enough that I had, a couple of friends or Managing Partners of other firms that said, Oh, John, before you go to move on to your next firm, or whatever you're going to do, you know something about management or the legal profession, can you give us a hand with a couple of projects? And so I guess one thing led on to another, I then sort of worked out that maybe I could at least for some time, you know, scratch a bit of a living out of this. I did enjoy it. I ... it was a mindset change for me, actually being in the firm and, or being in firms, but then as a consultant, to sort of distance yourself and going well, it's not my firm, so also don't take things on on board. So that was hard. I'm not trying to say it was all care, no responsibility, because I do care about my clients very much, but...

 

Geraldine  4:44  
It's different when you're the outsider. And also because when you're talking about partnerships, there's a certain culture that grows up between Partners, I mean, I know because I was a Partner as well at the firm that I left last year. And it is, once you have established that relationship between people, for better or for worse, having someone else come out, come in from the outside to tell you what to do or fix your problem can be a little bit of a challenge. So, rather than be the insider you found yourself doing the opposite.

 

John  5:19  
Yeah, I think I found, look, I guess anyone can find a problem, it's then how do you get to some of the solutions, and they're not easy, and most of them are quite complex. And, you've mentioned the partnership structure, I have to say, most of them have got to do with, that sort of structure and personalities and behaviours. So it's usually not one simple solution  or even a cause of things, it's to do with we're a people's profession, and a lot of it has to do with the people I have to say. In fact I'd say 90% of it is.

 

Geraldine  6:01  
It all comes down to the people, whether it's dealing with clients or your other Partners, I always used to think that being at Partner meetings was like being at a big family reunion, where you kind of know what everybody's personality is and how everybody's going to react, and where the fights are going to be or where the issues are going to arise - not that there were a lot of fights - but the old, the relationships really come to the fore.

 

John  6:26  
And I think sometimes I mean certainly in the role as a Managing Partner and CEO, at times, you tried not to be compromised, but you did have to use influencing skills as much as anything else to the fore. And I still do I mean, my why, my purpose is to, influence motivated professionals to make a difference. And I realised that I can't actually change anyone's minds, I can't go, like, change the behaviours, I needed to work with people who perhaps were already motivated. People who, just wanted some help with the change. And the best I could do was influence them. As a consultant, I usually whilst I may say I work with firms, it's usually individuals. It's usually, you know, an internal champion that you latch on to and, hopefully that internal champion themselves has influence within the firm because I quickly realised in the consulting profession that if there wasn't an internal champion, or champions, very little is going to change. Sustainable and genuine change.

 

Geraldine  7:41  
And then you went from having this opportunity to make a difference at a couple of law firms through your network to becoming the, shall I say, poster boy, for new pricing models. I remember that in the early 2000s or mid 2000s.

 

John  8:04  
I became the target. Target, not the poster boy, let me tell you Geraldine. Yeah, and look that was just something again. You know, I was shite filling out timesheets when I was a lawyer. And as Managing Partner and CEO, I didn't have to fill out timesheets, I could just make everyone else in the firm fill out timesheets. But I guess, and I didn't think deeply enough, when I did pay, particularly as a CEO, occasionally, where you had a client who wouldn't pay the bill, or was suffering bill shock or whatever, on the one hand, and then you had a partner who you know would say, oh, look, I did the time, blah, blah, blah. And that caused, you know, I hated those discussions, if I was involved. Invariably, there was a compromise or, you know. But trust took a hit too with clients, and you can understand it.  Perhaps back in those days, we didn't even give estimates. But if I tell you, you know, ballpark, it's going to be around $20,000, and I finish billing you $60 or $70 or $80,000. Well, you know, there's often a bit of explaining to do. So I didn't like that, that side of things, I'd say. And also, perhaps, internally, it had, the effect of the billable-hour, I think and it still does, regrettably, of a production mentality.

 

Geraldine  9:38  
Extraction, I think, rather than regeneration.

 

John  9:41  
Look, I just think and I say this all the time, and I genuinely mean, not that I was a good lawyer, but I think it's terribly demeaning to really expert and good lawyers that their whole value is really measured on a unit of time. It's just, it's just dumb. It's just not how the real world and other businesses operate. So, but I, you know, I think it's towards the end of 2005. I went to a conference in Sydney, I heard a guy from England, the late Paul O'Byrne, who sadly passed away. He was an accountant, two-partner firm out of London, and he talked about value pricing, and Geraldine. I had never heard of that concept, even pricing. It's not really what most law firms, least in those days, did. And he talked about value pricing, and you know, pricing all services upfront, getting rid of not just the billable-hour, but timesheets in his accounting firm. And for me, it was just an a-ha moment, like, wow, where have you been all my life?

 

And Paul, I followed him around for I think the two days he was in Sydney asking him all these ignorant well, what seemed at the time, questions and da-da-da. I think out of almost frustration, he said, well, if you're ever in England, come and visit me. And I went back to Karen and said, I'm going to go to England and spend a couple of weeks with this guy, I've just, you know, she goes, mmm,  I know you've sort of gone through a midlife crisis, John, but, do you really have to go to England? But I did. So a couple of months later, I ... and Paul not only embraced me into his family, and in his home, but to his accounting firm and to his clients. And I realised that yeah, there is a different way of practising. I know, that was accounting, but still a professional firm. And I guess one thing led to another, I used to bring Paul out here to work with law firms.

Geraldine  11:42  
And so that enthusiasm you're talking about, right? I can really relate to that. Because once you've got that energy for something because it strikes you as just the right thing to do you'll learn all that you can about it right? And then other people will also see how enthusiastic you are about it. So like Paul did with you.

John  12:04  
Yeah. I think, I mean, I used to think, oh, I could change the world or change law world but I realised pretty quickly, that wasn't going to happen. But it did, it, you know, excited me passionately, I got to meet some other lawyers in those days, there weren't many, who were practising that way, reasons they left what you may call Big Law and that leveraging people by time, by hourly rate. And yeah, so I guess I look, I was fortunate enough to, touch wood, make a practice about it. And just meet some wonderful people and I have to say, I thought, I used to, whether it was Maddocks or Middletons, used to benchmark our performance against other law firms' performance, and when I look back and think of it, how that's like Dumb and Dumber. I mean, the rest of the world was changing enormously. And just because, another law firm that we thought and was probably better than us were doing these things, it must be right. But once I left the mainstream profession, and it just opened a whole, you know, opened my eyes to what some other professionals were doing out there. Far smarter, inspiring people than what I was, but you learn from them. And I guess I was fortunate I had the time. And the curiosity to see. And could this apply to law?

Geraldine  13:36  
I think in 2005, the idea that there was another model for law firms was revolutionary, I think where we've got to in the last 15 years is an acceptance that it's a problem in various perspectives, from various perspectives, it's a problem. But we just don't really know what to do about it. So when you started your consulting firm, I remember I was a Senior Associate in a national law firm, and I couldn't see beyond billable-hours. Because that was my reason for being. I was billing as much as I could. And then not long after I moved to a global law firm and I carried on, you know I was climbing up the ladder furiously. And in my first year at that law firm, I billed 50% more than the standard billable targets for an associate in an Australian law firm. And I still wasn't the highest billing associate in my office. And it was at that point, that I got it because of the impact it was having on my entire life. And even the way I was practising and just holistically, right, I could see the negative effect it was having on me. And so I got it and from then on I began to see it, see all of the issues everywhere. Because once you see it - billable-hours is that thing - once you see it, you can't unsee it. 

 

John  15:09  
Yeah. 

 

Geraldine  15:10  
So I was gonna touch on that wellbeing part because that was how it came to me that it was just terrible for lawyers' wellbeing. 

 

John  15:19  
And I think it is, and I won't go into all the deleterious effects of the billable-hour, but as I said, a production mentality, and you know, that the whole, business model means to make more money, I've got to work longer hours, real or imaginary, that sort of thing. And I think it's just, it was just silly. But how do you escape? How do you get off that treadmill? I don't, you know, I certainly didn't go to law school, I don't think you did, to be the best, to be the highest biller. I don't think many do or to be the best person who could fill out timesheets. But that's what it's sort of led to, and I'm being a bit facetious, but not all that much. So it really meant that we had to have both a different mindset and business model. 

And you're right, back in 2005 perhaps a lot of it was theory, and there was certainly interest going, wow, and I've got to say, I can't remember whether it was specifically your former firm, but other firms, even large firms, I went to, you know, the feeling was, particularly if I brought the late Paul O'Byrne with me, or Ron Baker, who's my pricing mentor out here, they'd go wow, that is so, so interesting how, you know, don't ring us we'll ring you and invariably, they'd go back to a Partners' meeting and you talk about Partners, they'd go, well, you know, can they guarantee us we're going to make more money, can they get, you know, that sort of thing. And so, there wasn't a lot of take up and to be frank unless they see it differently. But in most of the firms, I work with at least two bigger firms, unless a client was really insisting on 'we wanted a fixed fee or different billing or pricing model', there wasn't a lot of motivation to change. And, you know, I understand that it's hard to tell a roomful of millionaires, that their business model sucks, because our profession's done well out of the billable-hour model.

Geraldine  17:28  
It has so far, but the issue is whether it can continue to. And I think that rather than wait for the change to affect us dramatically, we need to be ahead of it.

John  17:39  
And Geraldine, you're so right. I don't, you know, I don't like it when they say well, we're waiting for a client to tell us it's not acceptable. We shouldn't do that. I mean, we should have such a value proposition that a potential client says, wow, I've got to work with you people. But also, you touched upon it too, I think the wellness of those in our profession, and you saw it and I was not naive to it, but I didn't know how to deal with it in those days. We had a lot of good people leaving the private profession. I have to say, I don't know what the statistics were, but I think to me, they were much more women, females leaving the profession than males. I suspect that's because they are actually making decisions with their feet. Whereas some of the males even if they hated the ...

 

Geraldine  18:31  
Yeah. 

 

John  18:31  
... culture, the billable-hours. It's a macho thing, we have to stick with it.

 

Geraldine  18:34  
Or they were more likely to be the main breadwinner and so they had less options,

 

John  18:39  
Yep. And, but now, there's so many more opportunities for those that you know, I wish they didn't leave the private profession, but many of them are starting up their own firms. 

 

Geraldine  18:52  
Yeah. 

 

John  18:53  
Like you do with a different business model, not just a pricing model, because my view is that if you move away from the billable-hour and timesheets, a whole new world opens to you.

 

Geraldine  19:07  
I've had conversations with clients or potential clients when they want to know what my charge-out rate is. And I say I don't have one because I wouldn't even know how to set one for myself because that's just not how I charge. So I'll charge on value, a fixed fee and then a conversation around it. 

 

John  19:27  
Yeah. I haven't, never had a chargeable rate. Although I have to tell you one of the, I won't name the firm, but you know, I was going in to help them in moving away or doing more fixed fees or upfront pricing-based pricing and they said, you know, what's your hourly rate? I'm going well, no, I don't have an hourly... no, but you got to have an hourly rate, we've got to put it in our system.

 

Geraldine  19:58  
That's it. Because it's so embedded, right? It's the metric as well as how the revenue is earned. So it's a metric of everything. It's the metric of performance. And when performance is measured by how many hours you record, that is actually what ties back into the wellbeing. And I can say that from personal experience, when you begin to feel like you can't even get up and take a break, go have a coffee, leave early, because you are absolutely wrecked from the big night before working at your desk... 

John  20:29  
Yeah.

 

Geraldine  20:30  
...on a deal, blah, blah, blah. Yup.

 

John  20:32  
But I think when you think about it, it's not what clients even buy from law firms, you know, they really don't buy time. And, I say to some firms I work with, if you don't believe me, when we've finished this conversation, ring up your best client and ask them what they buy from you, I guarantee, it is not time. I mean, they buy things like outputs and outcomes and results. And yet...

 

Geraldine  21:00  
And certainty.

 

John  21:02  
And we focus everything on inputs and activities and time, which really is and should be quite irrelevant to clients. I mean, if a client is at all worried about time, it's usually elapsed time or turnaround time, you know, you're gonna get me this when you promised it, John, or what have you not get we make it about the time being spent on something?

Geraldine  21:25  
Yeah. So I think there is a realisation that I touched upon earlier that the billable-hour model has, is responsible for a lot of problems that we're seeing within the profession and within law firms. So if we know this, if you're talking to leadership at a law firm, and they say, we are converted, we're going to move over, how do you do it? What's the model that they move over to?

John  21:55  
Look, that's a fair question. Quite I, so it's a, you know, there are different, whether it's upfront pricing, or what-have-you value-based pricing, which I love, which was really agreeing, firstly, you've got to agree on value with your client that I'm gonna deliver, or hopefully, deliver value. To do that, I have to have what I call, Geraldine, a value conversation with you. Forget about the actual work. So I've got to sit down with you get to know you find out what you value, what's important to you, what are your needs, and those sorts of things. And then hopefully, we can agree, I call it a scope of value, but a scope of value, a scope of work, then we can agree on the price or prices for that scope of work. And, again, that's based on outcomes and outputs, and then I go and do the work. Now, if the scope materially changed, changes, not if I spend an extra six minutes on the phone with you, you know, the price may change. But at all times, it's about agreeing, and some of my clients use the word agreed pricing, because it's about agreeing these things, agreeing on the scope with the client, agreeing on the price. And, again, if it's going to change, I sit down with you and say, look, because we can't foretell everything that's going to happen in a matter, I know that, so things will change. But I think it's a lot, that having that predictability, the certainty for clients and for the law firm.

 

And one of the greatest advantages for many of the firms that I've worked with is, yup, maybe they can get higher prices, maybe they can't, but their cash flow, when you and I agree a price up front, clients just pay quicker. If we've agreed that it's going to be $5,000, and you're going to pay this by next week or whatever, unless I haven't done the work or delivered the value, people pay it. Whereas in the billable-hour as you know, you wait to the end of the month, and then you going to, whatever, bill it and then you hope, I call it duck-and-hope, you know, hope the client sees that when they get the bill that they see value in it. It's a silly business model.

Geraldine  24:18  
That's money in itself.

John  24:20  
And not having cost disputes with clients is an enormous... 

Geraldine  24:23  
Which takes up management time, Partner time.

John  24:26  
It does. Yeah, so I guess it's all that. But I think more so just internally, and I know it's hard until you've experienced it, but it just generates a different internal culture that's much more collaborative, much more a team-based environment, but flatter structure. That's less cost to the firm because they don't have the, what I call the 'feeding the animal' cost of the billable hour thing and so it just does engender... And I don't know, look maybe it's not for everyone, but I have to say, after doing this for 15 years, and maybe I'm just lucky, but many of the lawyers I spoke to that they love working in a timeless environment. And I think if you love working in your environment, it transfers over to your clients too. They, you know, they get it and get enthusiastic.

Geraldine  25:20  
Exactly. Because then it's truly relationship based and not transactional. Because you've got to have all those conversations upfront about value, and what are your needs, etc. What's really interesting is...

 

John  25:32  
Sorry, I'm just gonna say that, when asked about the first step is, and I particularly in the bigger firms, you've got to take small steps, I know that, you know, a big firm isn't gonna get rid of their timesheets or the billable-hours next Monday, or what-have-you. So it's about taking a whole lot of small steps. For some firms, they do pilot programs, for some firms, they may experiment, pricing upfront with particular clients, or sometimes with new clients. But I have to say, usually, it's because someone internally gets it. Now, they mightn't necessarily, it mightn't be the whole partnership, but there may be a Partner who heads up commercial or property or shock-horror, even litigation, you know, usually when they get it, it's much easier to get it in-built into the firm and it starts like that.

 

Geraldine  26:26  
So then if you're removing billable-hour as a basis for billing clients, are you also removing it as a basis for rewarding lawyers?

 

John  26:37  
Yeah. Great question. Because that is one of the hardest things, with the best will in the world, if say, we're going to do fixed fees or value-based pricing, and yet, you're still measuring and rewarding me by time spent or whatever. 

 

Geraldine  26:53  
Yup, that's the shadow billable hour model really.

 

John  26:56  
And Geraldine, that doesn't mean we take away, at the firms that I work with still have financial goals, sometimes not for individuals though, sometimes say, for a team. We know, I mean, law firms are fantastic, they know, almost to the decimal point, what their costs are for the next 12 months and most of these costs are fixed. 

 

Geraldine  27:19  
Yeah. 

 

John  27:20  
So, you know, okay, and we want to make whatever return to Partners or margins, or whatever, so it costs us $5 million to run this part of the practice, we want to generate $8 million in fees. So they do have financial benchmarks and goals and those sorts of things. So it's not all, you know, some say, oh, this sounds like it's a holiday or picnic. It's not and it's not for everyone to actually sit down with your client and have a discussion about value and to talk to them about prices is quite frightening for a lot of lawyers, let me tell you.

 

Geraldine  27:58  
I know. 

 

John  27:58  
Scary stuff. 

 

Geraldine  27:59  
That's because there's so much of an overhang from when we, when we would send a bill out to a client, and in many instances know that there was going to be a problem, because we hadn't stuck to the estimate, or we knew it would be a shock, so there's a stress attached to it. But when you're having those conversations up front, and everything is blue sky to begin with, then your stress should be removed, and you've got far more of a, let's say, a conversation.

 

John  28:30  
And I think also not all clients are going to like your price. But if a client doesn't like your price, when are you better off knowing before you've done the work or after you've done the work? And apart from anything else trust takes a huge hit when you, particularly if you're and I think you mentioned it before, depends if your firm's all about transactions, maybe it doesn't matter. But if it's which most of the firms saying deep and meaningful relationships, sustainable relationships, then yeah, I think... And it's not just one fixed fee, you know, phased or staged pricing milestones fee. The subscription model is gaining traction everywhere in the world. So it's no surprise that it's coming to law firms, success fees, and contingency fees for non-litigation matters. So there's a whole range of what I call upfront pricing. And pricing's what you do before the work is done, billing is what you do after the work is done. So there's a big difference when people talk about pricing and billing.

 

Geraldine  29:39  
Have you found  that there's an element of educating clients? So for example, if you were a law firm about to submit to a panel with a large client and they ask for your charge-out rates because they're going to do the beauty parade comparison, what then?

John  29:57  
Yeah, and that's another good question. And I think it's fair to say that, at least to date, with a couple of notable exceptions, most of the firms that have adopted, you know, fixed fees or upfront pricing have had more success with their clients who, I hate to say this but are not lawyers, they're the economic buyer or they're private clients or they're business people or what-have-you. I just, and I know, in-house counsel don't like me saying this, but there is still this resistance. It is changing. But at the big end of town, they may complain about the hourly rate or the bill shock or whatever, but they are still more accepting of the hourly rate than what I wish they were. But you can, I can understand that it's...

 

Geraldine  30:49  
They've grown up with it.

 

John  30:50  
They've grown up with it. We taught them. You know, to be frank, lawyers buying and selling from each other is often not a great recipe for innovation or taking risks, or what have you. And look sometimes in-house counsel themselves are not actually the economic buyer, or they're seen as a cost centre, unfortunately, in their own organisation. So that... But yeah, and then you've got procurement that comes in and says, you know, and I've had that experience, and I've worked on both sides of the fence, oh, we've got to see their hourly rates, because it's a beauty parade. I think it's and to give, there's firms out there, and I give them some courage, they just say, no, we, like you said, don't have an hourly rate. But we will always agree to price whatever we do with you upfront. And if you don't like the price, have a discussion with us. Or if we haven't created the value we agreed, that we mutually agreed, we create, we'll discuss the price.

Geraldine  31:47  
Yeah, it's starting somewhere, isn't it? If it's not going to come from large in-house legal departments then actually does mean law firms being brave about it. It will pay off ultimately, because the change, the shift must come. So I was gonna ask you, you know, when you made that shift from third generation lawyer, Partner, Managing Partner, Chief Executive, done it all, and you talked a little bit about this, but what do you think it was in you and your personality, that meant you went, you know, I'm gonna do it differently?

 

John  32:32  
Gee, I, so I probably, it wasn't till I got into law school that I actually thought I'd even be a lawyer, Geraldine. Even though I was the eldest of four boys, I wasn't the one who had his heart set on joining his father, and before that grandfather, in law. So that was a surprise to everyone, including my father. But I really enjoyed it. I'm not saying I didn't enjoy my clients, but I enjoyed, sometimes maybe too much. I enjoyed the management and leadership side of it much, much more. So I probably and I was never a, come on, you know, I was never a black-letter lawyer. It's one thing as you moved up to employ people like you, who are much better black-letter lawyers than what I ever was, but I just think it gave me much greater personal satisfaction in doing these other things. And I think if it gave me and I was happier, that could translate much easier into my, you know, friends and colleagues and clients.

 

Look, it's a, it's an ongoing journey. I don't know what the, and I'm curious, I'm doing a lot of research and work in a subscription based model. But there are other things I think the whole, I don't want to see, I used to get this not so much now, but all the time, oh you're trying to destroy the legal profession or make us lose money or ... that's not what I want to do. I don't But I think we didn't, it wasn't clients that introduced the billable-hour on the lawyers, the lawyers, we introduced it to our clients. So therefore we can giveth and taketh away and I think there are just better ways of practising our craft. And I think if we want to be serious about still being a profession that is trusted, and I think we've lost a lot of that trust, you only have to look at some of those ethical surveys and that done.

 

Geraldine  34:48  
Yes 

 

John  34:48  
And, you know, lawyers are still, they're making more money but we're still going down the totem pole in trust doesn't that say something. Somehow we've got it wrong.

Geraldine  34:55  
And relevance. 

 

John  34:57  
And relevance.

 

Geraldine  34:58  
We're making ourselves irrelevant. This is an issue for us.

 

John  35:01  
And so I just think, I mean, I don't think there will always be law firms, I think there'll always be lawyers, but I think we probably reached the zenith of what law firms are, and even now, and perhaps we always have been, even the big law firms that are much more morphing into consulting advisory firms. I think, to some degree, the Big Four have been ahead of the global law firms pack and perhaps not profitability wise, but they're much more dealing with advisory consulting, many of those are at the C-suite level at their corporate clients, whereas still a lot of the global law firms are with the in-house counsel side of things. And I'm optimistic enough to think at some stage, there'll be a business model change at the big end of town, but I honestly think that will probably occur with a Big, one of the Big Four first, before it actually happens with one of the global firms. But I could be wrong about that.

Geraldine  36:09  
So you said that you were working on these subscription-based models, I was actually gonna ask you what you were working on, just if you wanted to share with us. That intrigues me, so I'd love to hear about it.

 

John  36:22  
So I guess the subscription model is, I guess that it's the retainer model on speed to some degree. So but it's quite a bit wider in its, I mean, we subscribe to everything, the tech stuff you've got, presumably, you'll buy some things, but you probably subscribe a lot to that. We, it's not a lot we buy these days, we subscribe to everything and a lot of things and having almost a membership model, which is another way of looking at subscription models, so you're a member, you come into my firm as a member, legally a client, I understand that, and we'll agree that whatever legal problem or whatever it is, for the next 12 months or whatever, we will deal with that. And this is the price. And it may be you know, you pay a monthly subscription model. Sometimes it may be limited that it'll only be in employment law, or it may only be in but more and more, I'm seeing some firms saying we've got a subscription, it's almost akin too to buying insurance. 

Geraldine  37:37  
Yeah.

 

John  37:37  
It's like, we all pay for insurance, whether it's car or house or whatever, hope to hell, we don't have to make a claim. But we know that it's there. I can't get a refund on my premium if I haven't made a claim. And with a subscription model, it's not based around time, or whatever. And, you know, some of my clients are on a subscription model. Now, I won't hear from them, you know, sometimes for a couple of months, but under whatever terms I have with them, when they do have something they need, you know, that I have to drop everything and deal with it.

Geraldine  38:11  
And we've been, we've become accustomed to it, like you said in other things that we consume. So in a Netflix world, everything is on-demand. So this is what it is, even when you compare it to the insurance model, it's that on-demand when... 

 

John  38:25  
It is on-demand.

 

Geraldine  38:26  
When you need it, it's there.

 

John  38:27  
Yep. And, and I think, yeah, and you're right, Netflix, or any of those others, if they have an improvement, or add a new film, or new movie or whatever, I then don't pay any more, it's on paying that subscription model because part of it is I'm going to get these other advantages when they do add a new movie or whatever. Whereas in the old days, you know, we used to buy movies or buy things from Blockbuster and...

 

Geraldine  38:50  
And it creates the community as well, which is what I'm seeing and having gone out on my own and building my own client base. It's also about interactions between not just me and one client, but then introducing them to another client. So that membership, your subscription, membership-based idea means you grow a community, which I think is really exciting.

John  39:17  
And it's, I think it's deeper value with your clients too or with your members. And you're right, you can I mean some of those organisations that do it, they they get their members together and they feed off each other and, you know, it does develop that community and 
I just think, you know, again, it's that certainty of that subscription model in the fee that's being paid. They know what it is and also, you know, I'm a great believer in options. So some of them have you know, we have this subscription model for this or you know, you get get this and you pay Y or you get this it's a bit lesser and you pay a bit less you know those sorts of things and so...

Geraldine  40:01  
Tiered membership, which is meeting the market, because we're all there, in our mindset, especially after COVID, we've become so used to actually sitting in one place and then reaching out over the Internet and acquiring what we need that way. And I think that that mindset means we've shifted towards this whole idea of being members of whatever it is that we consume.

John 40:24  
And I think even under the value pricing model, I'm all, and I do the same thing for my clients, you know, give them options. There's this thing about three options, they call it the Goldilocks effects. But when you have an option, and here's the benefit you receive for the price you pay. And that's, you know, the top option then there's a lesser one and there's a lower one on. 
It's true, it just makes clients or potential clients think much more how they're going to work with you, rather than whether they work with you. 

Geraldine  40:59  
Yeah. 

 

John  41:00  
And if I don't give you a choice, and you want a, you know, you'll go to another consultant around the corner and see what they come up with. And then you start comparing. But if I can give you those choices.  And when you and I make a choice on something, we're happier. Yeah, we may make the wrong choice, but that's our problem. But we're happier when we have choices available to us. So...

 

Geraldine  41:24  
Yup, well, John, I think we'll wrap it up there. I could have gone on with many more questions. 

John  41:33  
And I could have gone on and on and on. Thank you, Geraldine. 

 

Geraldine  41:37  
Thank you for being a guest. 

 

John  41:37  
It was a pleasure speaking with you.

 

Geraldine  41:38  
Absolutely.

John  41:40  
Thank you.

 
 

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