Holland & Knight’s Lobby Division Trashes Timesheets

Nearly ten articles have been published on Holland & Knight’s Lobby Division saying bye-bye to the billable hour.

Actually, they are saying bye-bye to timesheets, as most of the revenue from H&K’s lobbying group was already on a fixed-price basis.

The first article was in Politico on December 13th. It quoted Rich Gold, head of H&K’s public policy and regulation group:

I think if you look out 10 years, this will be a very large trend…and we could either lead or follow.

Our favorite line from this article is from Ivan Adler, a headhunter with the McCormick Group:

This has the potential to be a real game breaker in law firm recruiting because it opens up a new vein of talented folks who have previously shunned law firms like a fruitcake at a Christmas buffet because of the billable hour.

Another telling fact from the article is:

Several former aides-turned-lobbyists said they opted for consulting firms and lobby shops over law firms for two reasons: Nonlawyers are treated like second-class citizens at firms, and they didn’t want to have to keep track of their time.

One of the issues that must be addressed when moving away from timesheets is how will the firm allocate revenue per person going forward if there are no timesheets.

Another article, dated December 14th, from The Washington Post explains how H&K will account for revenue:

Now, instead of billing hours to a matter, Holland & Knight will allocate upfront a portion of the monthly or yearly retainer to each individual working on the matter, based on estimates of how much they’ve charged in the past.

Ed Kless and I were privileged to be involved with H&K’s transition, working with Rich, Friedrich Blase, and several other partners from the PPRG group.

The group innovated the “Client Value Share” KPI. Since the price to the customer is already fixed, this KPI is a way to allocate, prospectively, that value amongst the team members who will work on the matter.

The beauty of this KPI is it forces the team to collaborate, upfront, on who will handle what, and decide what the value contribution will be from each person.

Someone may bring incredible value to the engagement but have relatively low billable hours. The CVS KPI will now account for that discrepancy.

And since the CVS is decided upfront, there will be less conflict regarding write-downs and allocations that are a normal part of the timesheet culture.

If someone on the team doesn’t pull her weight, the CVS can be adjusted, and reasonable people should be able to agree on that process.

This is a momentous change within the culture of H&K, and we applaud the vision, leadership, and courage of Rich, Friedrich, and the other partners, who understand what an enormous competitive advantage this will bring to the firm’s ability to attract top talent, while providing a better level of service to its customers.

It is one more data point that the naysayers, who believe it’s not possible for a law firm to eliminate timesheets, will have to contend with.


  1. Great work Ron!

    Next question – what makes them think they have to allocate revenue to individuals? Is it a firm, or is it office sharing? Seems to me that it’s this assumption that revenue attaches to individuals that causes so much of the problem in the first place. It reminds me of the quote “It’s amazing what you can accomplish when you don’t care who gets the credit.” I’m not saying pay everyone equally – just lose this notion that revenue must be attached to an individual. Most businesses could not operate that way, but the legal industry ties itself into knots to perpetuate the fiction that every lawyer has to have a number attached to their initials. I predict it will take some serious discipline to prevent the emergence of “shadow” timesheets or other proxies for time when the time comes to adjust revenue allocations (and compensation).

  2. Hi Tom,

    I couldn’t agree more! I think allocating revenue per person is a big mistake. No Fortune 1000 company does it, why should a PKF?

    It’s a symptom of the partnership model, which we here at VeraSage cannot stand anymore than the billable hour and the timesheet. It’s a consensus model, not a leadership/innovative model.

    After we bury the billable hour and timesheet, it’s on to the partnership model!

  3. Tom & Ron:

    Tom & Ron:

    In the spirit of an open sharing of ideas and views here are a couple of reactions to your very valid comments:

    We do not allocate “revenue” but the value that an engagement generates. The two may, but need not be the same. And the difference allows us to manage – as a firm – the investment we are making by agreeing to the engagement. It happens all the time in PKF’s but that investment is hardly ever managed at the collective level. This system allows us to do that.

    I am prepared to bet you that there will be no “shadow” timesheets. Yet what you will see is a lot of folks if not everyone paying MUCH more attention to being effective and increasing the value they can bring to the work we do for clients. And that is what internal review conversations will focus on.

    McKinsey’s Lowell Bryan in “Mobilizing Minds” argues for more of a partnership culture at the top of corporations. Incidentally, he also introduces a measure called “profit per employee”. I don’t mean to convey that therefore the partnership approach is the solution, but I do question whether the corporate model is any better. Beware the assumption that the grass is greener “over there”.

    The step of moving off timesheets in the PPR practice is a significant one for our firm and we expect to learn an enormous amount from it. Having Ron and Ed part of this process was tremendously valuable and exciting (Ron and I had spoken about this for years).

    Our new approach will be influencing other practices and situations where we have engaged with clients beyond “billing by the hour”. We also look forward to sharing experiences with the VeraSage community and hope that other explorers will do the same. After all, this is a migration that will require – to borrow the term coined by Malcolm Gladwell’s intriguing account of Steve Jobs in The New Yorker (11/14) – many tweakers. I hope my comments are useful in that way.

Speak Your Mind