On Making Law, Sausage and Legal Bills

Monday, June 8, 2015 - 16:14

You’ve heard the quote. Popular with reporters and politicians, it’s generally attributed to the 19th century aristocrat and statesman Prince Otto Eduard Leopold von Bismarck, Duke of Lauenburg, prime minister of Prussia, architect of German unification and aphorist extraordinaire, who said: “Laws are like sausages, it is better not to see them being made.”

Or did he?

Otto usually gets the credit, but some say Mark Twain first linked sausage-making with lawmaking when, poking a stick in the eye of Congress, he quipped:  “People who love sausage and respect the law should never watch either one being made.”

Then again, the inimitable Fred Shapiro, a longtime fixture in the library of Yale Law School, where he labors under the grossly inadequate title of associate librarian for collections & access services, has another thought. Shapiro, editor of the Oxford Dictionary of American Legal Quotations, among other lexicographic expeditions, debunks Twain and the Iron Chancellor as the original source.

So who said it first?

The earliest-known source is the American poet John Godfrey Saxe, who, according to Shapiro, was quoted in the Daily Cleveland Herald on March 29, 1869, as saying: “Laws, like sausages, cease to inspire in proportion as we know how they are made.”

All of which is by way of an over-the-top intro to a discussion of ViewaBill, a “cloud-based transparency tool that allows clients to view their bills in real time – prior to invoicing.”

Sounds like a high-tech window into sausage-making, no?

Actually, it’s a deceptively simple – even ingenious – approach to legal billing. At first, it got the cold shoulder from law firms. You want us to do what? We buy an app from you so our clients can watch our lawyers enter their time? Seriously?

But at least one lawyer, Alan Dershowitz – yes, that Alan Dershowitz, youngest full professor of law in Harvard history and defender of the rich and reviled (O.J., Claus von Bulow, Patty Hearst, Iron Mike Tyson) – got it. "A lot of tension grows because of misunderstandings over bills and time," Dershowitz told Fast Company. "I just like the idea that everything in the relationship between lawyer and client should be open and transparent."

Dershowitz, a cofounder of ViewaBill, is hardly a closet coder hunkered over his keyboard swigging Schmilk. Throughout his career he has relied on a decidedly low-tech time-entry system – a little black book crammed into his back pocket. Sure, he gets top billing as celebrity cofounder, but the inspiration behind the opacity-attacking app came, appropriately, from a lawyer-client duo: David Schottenstein, a serial sartorial entrepreneur behind Astor & Black, custom clothiers, and Swiss Stays, maker of extendable collar stays, and Robbie Friedman, a former Akin Gump associate who, tired of billing in six-minute snatches, went home to Ohio and hung his own shingle. That’s how he came to represent entrepreneurs such as Schottenstein, who admits he can be hell on his lawyers. "Every time the bill came, it was like having a pit in my stomach," he told Fast Company. "I had no idea what I was in store for. I heard Darth Vader music in the background."

That’s when Friedman’s view of billing changed. As an associate, he was “scrap metal” – a term used by former chief justice William Rehnquist when he famously nailed big firms for treating associates “very much as a manufacturer would treat a purchaser of one hundred tons of scrap metal.”

“If you use anything less than the one hundred tons you paid for,” he said, “you simply are not running an efficient business.”

Time and billing wasn’t always that way. An excellent little piece by Niki Kuckes ran in Legal Affairs, a kind of New Yorker for the law, in 2002. The article is titled “The Hours: The short, unhappy history of how lawyers bill their clients.” Kuckes, now a professor of law and assistant dean for strategic planning at Roger Williams University School of Law, set out to explore how the billable hour became so entrenched given its many drawbacks, especially for associates. Even those who hang in there for the long haul enjoy no respite. “It’s like a pie-eating contest,” she quotes one as saying, “where the first prize is all the pie you can eat.”

Early in the country’s history, Kuckes reports, states kept a tight leash on lawyers with maximum fee laws. Such regulations soon fell out of favor however, and billing was, for a spell, all over the place – task-based fees, annual retainers, contingency fees (approved in 1908 as ethical by the ABA), and a discretionary “eyeball” method, as Kuckes calls it, which smacks of a rough-and-ready version of value-based billing. Hourly billing was almost unheard of, she wrote. 

In the 1930s and 1940s, the state bars jumped in to prop up lawyers with minimum fee schedules, backed with threats of disciplinary action for underbilling. (The ABA’s model ethics code made it unethical for a lawyer to undervalue services.) The U.S. Supreme Court nixed fee schedules as price-fixing in 1975, and the bars started to encourage lawyers to become more businesslike – including, especially, with their timekeeping. And before long the billable hour ruled the legal roost.

Friedman, the newly minted Ohio solo, says it was the first time he had to really think about billing as it relates to clients. Part of it was survival – he wanted to get paid for his work – and part of it was his desire to have good relations with his clients, including Schottenstein, who was a friend on a tight start-up budget. "As a solo, I had to think about what the billing process means to client relationships," he says.

He came up with a strategy. "Every day I’d send clients an email that said this is what I did yesterday, this is what I’m working on for the next few days, here’s what I need from you, here’s the time I’m spending. Every day. It was a daily opportunity to readjust everybody’s expectations."

There was, however, a problem. “It was a lot of work,” he says. “I put a lot of effort in because I wanted to be super clear. I was using it as my way of doing client service. And I could bill and get paid 100 cents on the dollar. It was a logical way for the two sides to interact.”

He looked for a solution – maybe some off-the-shelf software he could adopt and adapt. He came up empty.

Friedman and Schottenstein had seen how the emails helped both their professional and personal relationship. They got to talking, and, with that, ViewaBill was born.

Not surprisingly, law firms didn’t exactly break out the hats and hooters and celebrate the launch. As the ViewaBill guys urged clients to encourage their law firms to adopt their app, the firms quietly went to clients and suggested there was something untoward about the whole thing – maybe even unethical. “It was very uncomfortable for the firms,” Friedman says. “They’d go back to clients and scare them. No, you don’t want to use that. You might lose ownership of the data. Total red herrings.”

Soon, however, firms realized their clients would keep pushing. Just as importantly, they started to see benefits for themselves: fewer uncomfortable billing conflicts, and, most importantly, better time-entry hygiene and associated metrics.

It turned out ViewaBill was a kind of behavior modification machine – a machine that could have a direct impact on the bottom lines of both lawyers and clients. “Firms need their lawyers to get their time entries in,” Friedman says. “It’s always going to be a challenge. If there’s a client on the other side, we know that time goes in more contemporaneously – significantly more.”

But couldn’t firms do this this themselves? Sure. And they’ve tried mightily over the years. It doesn't work. “They tell us they have all sorts of dashboards and metrics, but can’t get anyone to care,” Friedman says. “It’s not a matter of providing dashboards and metrics that don’t mean anything to the lawyers. It’s a matter of making people care.”

Amazingly, as more than 100 firms have dipped into ViewaBill, the sky has not fallen. In-house lawyers aren’t using it to beat up on outside counsel, as many predicted would happen. Rather, it’s led to less tension and lots of positive interaction between lawyers and clients. “A lot of that happens offline,” Friedman says. “The person in the legal department might see something and talk to their lawyers. They can see real-time accruals whenever they want without a lengthy process and all sorts of attorneys giving estimates. Time is fresh. It’s the same way they get info internally and from other industries. Running the legal department like a business is the mantra we try to instill.”

So, is it possible that legal bills are not at all like laws and sausages? Maybe we need a new twist on the old quote:

“Legal bills, unlike sausages, inspire in proportion as we know how they are made.”

 

 

Joe Calve, a former editor, publisher and columnist for ALM, leads business development, marketing and communications for an Am Law 100 law firm.