Billable Hours Pricing Disappearing By Tony Wanless This article was previously published in the Financial Post, Toronto Canada, in February 2004 When Markus Cohen left a mid-size law firm to open his own non-traditional law practice more than a decade ago, former colleagues were aghast at his radicalism. Mr. Cohen, of Toronto, opened The Virtual Law Firm, which featured low-cost operating techniques, flexible pricing and outsourcing of legal work. In those days, before the rise of the Internet, the pioneer had to use telephones and faxes to conduct most of his business. Now it's much easier because of his web site (www.thevirtuallawfirm.com) and email. "I like to tell people that I'm not a lawyer, I'm a manager of legal services," Mr. Cohen explains by telephone from Florida, where he is currently on a "working vacation - it really doesn't matter where I am, does it?" In the modern world, it doesn't, especially for small professional service providers like lawyers, accountants, consultants and communications firms, who are increasingly adopting up to date business techniques and in the process transforming what has been a very traditional business sector. Cohen discovered some time ago what many of these professional services providers are tuning into now. That is simply that they operate not just professional operations, but businesses that are client, or customer, driven. And like most businesses, these firms are quickly learning that the modern customer is more sophisticated and demanding. Also, those customers are hard bargainers who want to know what value they are obtaining for their money. This makes the traditional "billable hours" business model increasingly difficult to sustain. So, many service firms are being forced to act like any other business in any other sector that has to find a price and service niche. As the Business Development Bank puts it, clients today are extremely tech aware and service providers, some of whom still don't even have web sites, had better realize that is causing changes. Specifically, it is empowering potential clients to assess a provider's capability before engaging a service. Change is now client-driven, BDC says in an advisory article on e-business. Clients can choose from among service providers all over the world, and they use their experiences with other websites (especially consumer sites) as part of how they assess a firm's competence. "When I left my large firm 12 years ago, I thought even then that the customer was king," says Mr. Cohen, who specializes in franchise law, primarily for a client roster that is heavily weighted to the U.S. "It has taken a long time for lawyers to understand that practising law is not just a profession but a business and that the focus always has to be on the customer. You now have to be a hero to your client."   Back   Next >> (c) 2004, KnowPreneur Consultants