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.