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Is the Billable Hour Killing Your Legal Marketing Effectiveness?

Hate to say it, but most lawyers are doomed from the moment they step out of law school.

They instantly become immersed in a workplace culture that exalts all the wrong things. And it’s rigged to make them work excessively for diminishing returns.

For some reason, our industry considers working long hours to be a badge of honor. I know I felt that pressure, from the very first job I had. Bill those hours, associate. Because you're being measured on them.

And with that lesson learned, we all take to our own practices, now as business owners, with all the wrong priorities.

The billable hour forces you to trade time – your most precious resource – for money. But it’s not just about time.

The billable hour forces you to trade your life for income.

Time is the one thing you can’t make more of. You can make more money in less time if you set up your business the right way, but not when you're trading one for the other.

No, our training means we give away the one thing you have that’s truly scarce, in exchange for something you can acquire in other ways.

Most lawyers who are just getting started don’t even think about this. In fact, most lawyers who've been practicing for decades haven’t thought about this. It took me over a decade to have the "aha" moment.

But once the idea takes hold, it's impossible to shake. Why are we - lawyers - exempt the economics of every other industry? They don’t trade hours for dollars. Not the ones that create true equity, and value for the customers and owners.

Companies in other industries find ways to create value that don’t involve an increase in labor. That’s because profit should come from the delivery of value to your client, not labor.

Well, unless you’re a member of the Marxist economics fan club.

[Note to Practice Alchemy coaching members: see the Flat Fee Formula trainings for how to get your practice off the billable hour.]

The Folly of Applying this Model to Your Marketing

Many lawyers take this fundamentally flawed dollars-for-hours mentality and apply it to their marketing, too. Arrgh.

They don’t know how to differentiate their practice because they’re selling the same thing – time.

They turn to marketing clichés, like "High quality service at cost effective rates!" (yes, I used that one too until I realized it was hurting the business).

Legal marketing effectiveness goes down the toilet when you resort to selling on price, and using the same clichés that every other business on the face of the earth uses in their marketing.

At the end of the day, if that's how you sell, then that's what they'll buy. Time. And then your income is determined by two things – the amount of time you put in and the dollar-figure you can attach to that time.

This reduces profitability instead of increasing it. It means that you're only profitable while you, yourself, are working. And the minute you stop working, you stop earning. Yuck.

Shifting the Discussion to Value

Selling by time forces the discussion to focus on time, rather than the thing that really matters: value.

Getting away from the billable hour and selling value instead of time is an art form. Because we can’t sell or promise results (curse you, ethics rules!), the discussion becomes completely different. It’s no longer about how many hours you put into something. It’s about how much value you can deliver to the client.

And of course, lawyers that we are, most of us say "but I can't define value!"

But here's the secret. It's not for you to define. It's for your clients to define. Then, and only then, can you create a service that delivers that value at a premium price ... and look for ways to reduce the cost of delivering that value.

Everyone wins. The client gets value. You create a defined service that delivers it. You get higher profits, which you can re-invest into higher levels of client service.

But it all starts with the client. And articulating value in their language, not yours.

If it sounds complex, it isn't. It's just new to you. It's a matter of taking the time to think it through.

You Shouldn’t Be Paid for Showing Up Like a Factory Worker

You're in the business of intellectual capital. And you should be paid for it. For the intangible, but extremely important analysis and expertise you deliver.

Others in the intellectual capital business, from software developers to movie writers, do the same thing. They create value and reduce the cost of delivery.

That’s where profits come from.

John Grisham is a lawyer, but if he got paid by the hour to write his books, he wouldn’t be a multimillionaire. He captured his intellectual capital, packaged it in a way that delivers value, and sold it.

Start by Doing This

Reconsider whether everything in your practice has been infected by concepts born from the billable hour.

That doesn’t mean your legal expertise needs to change, but it does mean you should challenge your business practices. Determine how you could be operating if you weren’t charging by the hour.

Think about what it would mean to have a practice that delivered amazing value, and rewarded you for it.

And my challenge to you? Do something about it. I did it in my practice. Our coaching members have done this again, and again using the same formula I used. In every practice area. In every part of the country.

Which means you can do it.


Featured image from Gratisography.

Raj Jha