Another
week,
another
interesting
BigHand
survey.
This
time
the
BigHand
team
tackled
pricing
and
budgeting
issues.
The
bottom
line:
every
client
wants
budgets
and
financial
transparency,
but
few
lawyers
want
to
do
it.
(At
least
those
in
law
firms.)
The
survey
is
pretty
comprehensive.
It
looked
at
data
points
from
five
years
of
surveys
and
then
added
the
responses
of
some
800
senior
legal
finance
professionals
in
the
US
and
UK.
For
the
first
time,
BigHand
looked
at
law
firms.
The
Survey
Findings
Let’s
start
with
what
the
survey
says
about
what
clients
may
want:
-
47%
of
the
firms
surveyed
say
clients
are
increasingly
demanding
budgets
and
50%
say
clients
want
greater
transparency. -
The
same
percentage
(47%)
say
clients
want
more
alternative
fee
arrangements
(AFAs). -
48%
of
the
firms
surveyed
say
clients
want
more
technology
driven
efficiencies.
Remember
that
these
findings
are
not
what
clients
are
saying
but
what
law
firms
are
seeing
from
clients.
That’s
what
makes
the
survey
results
about
what
are
law
firms
doing
startling:
-
53%
of
the
firms
mandate
budgets
on
most
but
not
all
matters. -
37%
say
the
driving
factor
in
doing
budgets
is
if
the
client
requests
it. -
But
70%
say
they
get
increased
billing
realizations
when
they
do
budgets. -
Only
4%
give
updates
to
the
budgets
throughout
the
life
cycle
of
all
budgeted
matters.
A
little
over
30%
of
the
firms
give
updates
in
21-40%
of
matters. -
Many
firms
report
only
“moderate”
use
of
AFAs.
So
in
short,
clients
want
more
and
better
budget
and
financial
transparency.
But
most
firms
are
not
giving
them
that
at
least
consistently.
That
immediately
raises
the
question,
why?
Why
aren’t
firms
budgeting
better,
reporting
better,
and
doing
more
with
AFAs,
especially
when
they
would
get
better
realizations.
Lawyers
Are
Dumb
When
It
Comes
to
Running
a
Business
The
survey
makes
clear
there
is
a
real
opportunity
here
that
lawyers
should
be
seeing
and
acting
on.
But
by
and
large
they’re
not,
at
least
according
to
the
Survey.
The
first
reason
for
this
mismatch
is
that
a
lot
of
lawyers
in
law
firms
don’t
really
know
how
to
run
a
business.
And
if
that’s
not
bad
enough,
they
think
that
they
do.
In
many
firms,
you
advance
both
in
terms
of
compensation
and
leadership
by
bringing
business.
Bringing
in
business
and
servicing
their
legal
needs
requires
a
lot
of
skills
but
it
doesn’t
necessarily
mean
you
are
a
good
businessperson.
Only
about
30%
of
the
firms
provide
any
formal
training
to
their
lawyers
on
things
like
profit,
sound
billing
practices,
pricing,
key
performance
indicators,
and
the
like.
According
to
the
survey,
only
about
30%
of
the
firms
bother
to
train
their
associates
on
financial
performance
metrics,
the
lifeblood
of
the
business
of
the
firm.
Is
it
any
wonder
that
law
firms
are
not
meeting
the
financial
expectations
of
their
clients.
We
see
this
hubris
when
it
comes
to
hiring
folks
who
are
businesspeople
like
financial
analysts
and
data
scientists.
According
to
the
survey,
only
about
30%
of
the
firms
have
these
resources.
And,
as
I
have
written
before,
even
when
they
do
hire
these
kinds
of
people,
they
often
don’t
listen
to
them.
Lawyers
Don’t
Like
Doing
Budgets
Lawyers
don’t
like
doing
budgets
because
it
holds
their
feet
to
the
fire.
There’s
nothing
worse
than
blowing
through
a
budget
and
then
having
a
client
look
at
you
and
say,
“What
happened?
You’ve
got
some
explaining
to
do.”
Yet
despite
how
uncomfortable
this
is,
lawyers
don’t
update
clients
as
much
as
they
should
about
where
they
stand
on
the
budget,
mainly
because
the
budget
has
been
exceeded.
Why?
The
truth
is
a
lot
of
lawyers
don’t
know
how
to
do
budgets.
Their
standard
practice
is
to
try
to
determine
how
many
hours
a
matter
will
take
plus
how
many
hours
can
we
pad
to
give
us
leeway.
As
the
survey
reflects,
on
most
matters,
lawyers
don’t
include
a
breakdown
of
the
cost
of
allocated
resources
when
pricing
a
matter
(only
4%
provide
this
on
most
matters).
And
even
the
padded
hourly
estimate
is
often
wrong
because
the
lawyers
either
don’t
have
or
don’t
capture
the
data
to
know
how
long
something
will
really
take.
Only
49%
have
dedicated
pricing
and
budgeting
software
that
might
allow
them
to
better
mine
the
data
they
do
have.
What
business
in
the
world
these
days
has
nearly
half
of
the
providers
with
no
pricing
software???
Data
resides
internally
at
many
firms,
but
it
is
buried
away
and
not
accessible.
There’s
a
wealth
of
public
data
that
can
be
mined
with
things
like
litigation
analytics.
But
it
too
often
goes
untouched.
Without
data,
the
budgeting
process
becomes
little
more
than
a
wild
ass
guess.
I
know,
I
tried
it.
It
would
be
interesting
to
survey
what
percentage
of
firms’
budgets
are
blown?
But
it’s
likely
nobody
would
be
telling.
AFAs
AFAs:
everyone
talks
a
big
game
but
not
many
firms
want
to
do
them
for
all
the
reasons
set
out
above.
Most
AFAs
are
still
determined
the
way
budgets
are:
how
many
hours
do
we
guesstimate
it
will
take
and
how
much
cushion
can
we
get
away
with.
And
the
result
of
that
process
is
the
same:
a
fee
that’s
not
realistic
and
which
gets
blown.
Lawyers
often
say
we
can’t
do
a
flat
fee,
particularly
in
litigation,
because
there’s
just
too
much
uncertainty.
The
truth
may
be
that
there’s
uncertainty
because
factors
like
overhead
and
time
value
aren’t
considered
and
the
data
to
reduce
the
uncertainty
goes
untouched.
A
Wake-Up
Call?
Or
an
Opportunity?
The
BigHand
report
ought
to
serve
as
a
wake-up
call
for
firms,
but
it
may
not
be
as
long
as
most
every
firm
is
like
so
many
of
those
surveyed:
giving
only
lip
service
to
what
clients
want.
But
for
those
firms
that
do
seize
the
opportunity,
the
report
shows
a
path
forward
to
achieving
greater
client
satisfaction
and
increased
profitability.
As
the
report
puts
it,
“the
gap
between
client
expectations,
internal
capabilities
and
implementation
remains
one
of
the
biggest
challenges
but
also
one
of
the
biggest
opportunities
for
forward
looking
firms.”
Stephen
Embry
is
a
lawyer,
speaker,
blogger,
and
writer.
He
publishes TechLaw
Crossroads,
a
blog
devoted
to
the
examination
of
the
tension
between
technology,
the
law,
and
the
practice
of
law.