The Attorney Was a Wimp!

I am just a simple student of value pricing and I just never thought this would happen to me. I mean these things just don’t happen around here.

I have heard the stories from my older student members and I just thought they were….well you know….fibbing. Now I have had to change the names so I protect the guilty (I mean pleasures like this just shouldn’t be allowed {maybe it was pain – pain…pleasure….oh aren’t they so connected? well better get back to my story}).

There I was, invited to this board style meeting with all the big players. You know, the Silicon Valley type start-up team: entrepreneur, successful (now retired and former) entrepreneur, smart management type from a SOX type company, and the super talented lawyer from the pedigree law firm.

We went through the traditional meet/greet/niceties followed by the detailed power point slide show. The very talented lawyer was demonstrating that the pedigree was both earned and diserved. And then the moment of truth. The CEO asked the lawyer: “So, what will your charges be to help us achieve our mission?”.

Lawyer “Well… know we charge by the hour – like all of the firms here (so silly of me to think to myself “Not MINE You Moron”) and well, you know, it depends upon well….how long other people talk. I mean you know….it all really depends.

CEO: “So, what is your rate structure?” (Good CEO – doesn’t like to pay hourly rates – hasn’t paid me like that for years. Actually teaches this student how value pricing works in his firm…but I digress)

Lawyer: “Well we have a team approach. There are a lot of rates. Paralegals are like $175/hour and gee, my rate…well it is $600/hour (I blink and think well that is a great looking suit she is wearing….oh yes I was digressing again) You know, she continues, it is like all the firms charge and if….well…if I were on my own…well I would charge a different rate (oh oh oh bad bad bad I think – I remember a class once taught by this guy I know….where is that pink crayon copy I have somewhere maybe I can throw it at her….bad brain. bad brain. back to the meeting. You aren’t the one talking at the moment. Listen you fool you’ll learn something {maybe}).

CEO: “So…..what will this cost? I mean this is important and you are interested? Right?”

Lawyer: “Yes, yes. Well…you know we have this clean up stuff…Not very expensive, then the well the Series A…..well you know the introductions….how long they talk…..well yes yes $35 thousand maybe $40,000 (note to self – write down $40k {she could have asked my budget…but oh yes, I am merely a student here and well she missed a few classes at Taylor University Law School or wherever her Pedigree was from and just for chuckles probably could have doubled it and well I wouldn’t have blinked – different story Dan – not now….Shhhhhh. – don’t blink and give it away…She wouldn’t notice too impressed with the hourly rate of $600/hour. Shhhhhh. Shhhhhhh. Quiet – back to story).

CEO: “So that is it then? – 35 – 40k?”

Lawyer: “Well you know Yes, that would be my invoice. Unless there is something strange and well….you know that would have a slight change…but hey I would tell you that so that you understood of course.”

Former Lawyer now CFO type: “Wow, I remember when I worked at the firm, my rate was like $225/hour” (table chuckles)

Simple VP Student: “hey, Mr. CEO doesn’t like hourly rates. I haven’t had an hourly rate for like a decade. Mr. CEO and I have had a number of chats about how bad hourly rate structures are. Maybe at lunch I could illuminate it to you” (She sneared at me like…..well like she had no desire to lunch with me…hey I would have paid the tab {but not her rates….I mean for $600/hour well….you know……})

Lawyer: “That is well, how all the firms who do this do it. Mine is consistent” (Oh how I wanted to just attack…..back down. Bad dog…Bad dog. No barking or biting the invited guests).

Lessons from today. Big law firm – who has done this type of deal…well about as many times as PWC has done an audit….could only spout hours and talk about time. She had no curiosity about value. Never asked. Clearly left 100% on the table. Never asked what or how we would measure success. Didn’t think about that she was hand picked by two board members. She never wanted to understand that maybe I was there for a reason. We weren’t shopping and no one cared about hours or rates. Just results. While stuck in her hourly rate paradigm, she cost her partners at least $40k of pure profit but will feel proud about her hourly rate (hope to god she never audits my effective pricing strategy as well…I might actually feel guilty at times – but not really – this post isn’t about me. It is about her).

Well her mistakes saved my shareholder’s money and well that is good for us/me as more for me to plan around. She simply had no idea that she and her firm were the chosen ones for this project and their value had already been established. She merely never considered to ask what it was.

So I feel lucky. To live through that which my older and wiser fellow students have told me about. The stories are true. The world is full of idiots focusing inward efforts and not outward values. Costing themselves a Mercedes a day in lost value and never even know about it. I ain’t telling her for sure and I bet she’ll never read this post so I am safe, for now that is to live again and learn some more.

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