I think one of the thing many young lawyers don't understand is the idea of "client value." It simply means that the utility of the legal services rendered should exceed the cost. Now that I think about it, many law firms may not understand the concept as well. Let's think about it mathematically:
Client Value = (Utility of Legal Services Rendered) - (Cost of Legal Work Provided)
So, as long as the cost is less than the utility, then there should be value created by the legal services rendered by the lawyer.
It sounds simple doesn't it? The truth, however, is that the calculation is infinitely more complicated than the simple equation would suggest. Here's why:
Determining the utility of legal services is a lot harder than it looks. For example, the utility of helping to keep a criminal cefendant out of jail can have an almost inestimable value to that client. On the other hand, determining the utility to a client of recovering the expected "benefit of the bargain" in a contractual dispute can often be determined to the penny.
At the same time, the lawyer must balance the amount of time required to deliver value with his ethical obligation to zealously represent his client.
Suppose, for example, that the criminal defendant has a lengthy criminal record and has served much time in prison. The utility of avoiding prison to that defendant might be low. However, just because going to prison isn't a big deal to the client, this doesn't mean that the lawyer can simply capitulate and say "Your Honor, my client doesn't really care whether or not he goes to prision. He's been there many times before. I've got a really lucrative civil matter I'd rather work on. Why don't we all agree to send my client to jail for a few years?" The lawyer has an ethical duty to mount every defense he can, in an effort to help his client avoid jail time. Anything less is potentially malpractice, a derelection of duties. Further, it's the right thing to do. It's why you became a lawyer.
Now suppose you are representing the plaintiff Acme, a small corporation, in a breach of contract claim. The defendant Beta, a widget supplier promised to deliver 100,000 widgets to your client by a certain date and failed to do so. As a result, Acme lost profits of $100,000 because he could not deliver the widgets to his customer . You've been hired to file a lawsuit against Beta. It would seem that your services should cost less than $100,000, in order to deliver value to your client. And the lower the costs are, the greater the value to your client. Now suppose that your client Acme is also named as a defendant in a lawsuit filed by his customer, Alpha who claims $100,000 in expectation damages arising from lost profits. Suddenly, the value of your services has doubled, and increased perhaps even more because of other risks- such as the court awarding damages, costs and attorneys fees against Acme. Or perhaps Acme has built a thirty-year history of service to its customer base. Acme's failure to deliver goods may result in a serious hit to its reputation and perhaps a loss of future business.
The trick in delivering client value is understanding the utility of your services to a client and always delivering substantially more that utility. This is of course, easier said than done. What if your client's case is unwinnable? Anything they spend on your services is arguable money down the drain. Settling the case as quickly and as inexpensively is your best option.
And that brings me to the point. As a lawyer, you have a duty to zealously represent your client. But zealous representation, without a basic understanding of the task at hand will lead to an unhappy client. You must investigate, listen and understand what your client needs. You need to identify the risks involved and articulate those to your client. You need to engage in dialogue with your client about the issues. But ultimately you have to use your best professional judgement in deciding the best way to approach your client's problem. If your legal expenses are greater than the value delivered, your client won't be happy.
Is it possible to always ensure that the utility of the legal services rendered exceed the cost? I don't think so, unless you have somehow figured out a way to predict the future. Unless you know the outcome of the matter with certainty, its difficult to quantify the utility of the services. But you have to give it your best shot. Do not simply try to solve the problem with hours invested. Instead, develop a strategy. Think about the possible outcomes. Think about the cost and value of those outcomes. Use the same judgment in developing your problem-solving approach, that you use in actually solving the problem. If you don't, you risk missing the "forest" for the "trees", over-engineering the solution and ultimately delivering negative value to your client.
A caveat: we lawyers like to think of our practice as a profession, as opposed to a business. And that's the right way to think about it. We must use our best judgement, creativity, analytical skills and professional skills to solve legal problems. And often, it's difficult to quantify the utility of one's services. It's sort of like a doctor charging varying rates, depending upon the severity of the illness- not a good idea. But unless we understand the business implications and the value equation in our service, we risk having unsatisfied clients. And remember, a satisfied client is likely a lifetime client. And certainly, as with the other professions, it's about more than just client value. It's about becoming a trusted advisor. It's about serving others. And it's about being able to help people when perhaps no one else can.
I wish you much success in your legal career.
Client Value = (Utility of Legal Services Rendered) - (Cost of Legal Work Provided)
So, as long as the cost is less than the utility, then there should be value created by the legal services rendered by the lawyer.
It sounds simple doesn't it? The truth, however, is that the calculation is infinitely more complicated than the simple equation would suggest. Here's why:
Determining the utility of legal services is a lot harder than it looks. For example, the utility of helping to keep a criminal cefendant out of jail can have an almost inestimable value to that client. On the other hand, determining the utility to a client of recovering the expected "benefit of the bargain" in a contractual dispute can often be determined to the penny.
At the same time, the lawyer must balance the amount of time required to deliver value with his ethical obligation to zealously represent his client.
Suppose, for example, that the criminal defendant has a lengthy criminal record and has served much time in prison. The utility of avoiding prison to that defendant might be low. However, just because going to prison isn't a big deal to the client, this doesn't mean that the lawyer can simply capitulate and say "Your Honor, my client doesn't really care whether or not he goes to prision. He's been there many times before. I've got a really lucrative civil matter I'd rather work on. Why don't we all agree to send my client to jail for a few years?" The lawyer has an ethical duty to mount every defense he can, in an effort to help his client avoid jail time. Anything less is potentially malpractice, a derelection of duties. Further, it's the right thing to do. It's why you became a lawyer.
Now suppose you are representing the plaintiff Acme, a small corporation, in a breach of contract claim. The defendant Beta, a widget supplier promised to deliver 100,000 widgets to your client by a certain date and failed to do so. As a result, Acme lost profits of $100,000 because he could not deliver the widgets to his customer . You've been hired to file a lawsuit against Beta. It would seem that your services should cost less than $100,000, in order to deliver value to your client. And the lower the costs are, the greater the value to your client. Now suppose that your client Acme is also named as a defendant in a lawsuit filed by his customer, Alpha who claims $100,000 in expectation damages arising from lost profits. Suddenly, the value of your services has doubled, and increased perhaps even more because of other risks- such as the court awarding damages, costs and attorneys fees against Acme. Or perhaps Acme has built a thirty-year history of service to its customer base. Acme's failure to deliver goods may result in a serious hit to its reputation and perhaps a loss of future business.
The trick in delivering client value is understanding the utility of your services to a client and always delivering substantially more that utility. This is of course, easier said than done. What if your client's case is unwinnable? Anything they spend on your services is arguable money down the drain. Settling the case as quickly and as inexpensively is your best option.
And that brings me to the point. As a lawyer, you have a duty to zealously represent your client. But zealous representation, without a basic understanding of the task at hand will lead to an unhappy client. You must investigate, listen and understand what your client needs. You need to identify the risks involved and articulate those to your client. You need to engage in dialogue with your client about the issues. But ultimately you have to use your best professional judgement in deciding the best way to approach your client's problem. If your legal expenses are greater than the value delivered, your client won't be happy.
Is it possible to always ensure that the utility of the legal services rendered exceed the cost? I don't think so, unless you have somehow figured out a way to predict the future. Unless you know the outcome of the matter with certainty, its difficult to quantify the utility of the services. But you have to give it your best shot. Do not simply try to solve the problem with hours invested. Instead, develop a strategy. Think about the possible outcomes. Think about the cost and value of those outcomes. Use the same judgment in developing your problem-solving approach, that you use in actually solving the problem. If you don't, you risk missing the "forest" for the "trees", over-engineering the solution and ultimately delivering negative value to your client.
A caveat: we lawyers like to think of our practice as a profession, as opposed to a business. And that's the right way to think about it. We must use our best judgement, creativity, analytical skills and professional skills to solve legal problems. And often, it's difficult to quantify the utility of one's services. It's sort of like a doctor charging varying rates, depending upon the severity of the illness- not a good idea. But unless we understand the business implications and the value equation in our service, we risk having unsatisfied clients. And remember, a satisfied client is likely a lifetime client. And certainly, as with the other professions, it's about more than just client value. It's about becoming a trusted advisor. It's about serving others. And it's about being able to help people when perhaps no one else can.
I wish you much success in your legal career.
