From the 2012 article on AmericanBar.org
“What drives me nuts is when lawyers aren’t buying into my business objectives and adjusting our approach accordingly. Many have their risk meter set at zero. I have to monetize all my risks and then take some. Either the lawyer gets that or doesn’t. Valorem definitely gets this.” -–David Graham, senior counsel, DSW Inc.
In 2008, when Patrick Lamb and three partners thought about starting a new kind of law firm focused on clients and value, they knew that a critical framework would be in pricing their services in a radically different way than their predecessor BigLaw firms (and most law firms) did. When they started setting fixed prices for their trial and litigation services, they realized that they needed to focus on the cost of providing those services—or they would never be profitable. Things would now have to be done faster, more efficiently and better than before. These are the cornerstones of Valorem’s business model:
From the outset, lawyers took typical cases and produced process maps to delineate each step in the process. For example, before lawyers start to do any discovery on a case, they talk to the client first to establish an approach that is consistent with the client’s desired outcome. The focus is on a full case assessment first, which dictates the fee, but more importantly, the value proposition and the winning strategy. The Valorem Toolbox provides tools for trial, budgeting, fee estimating and decision trees.
Client David Graham of DSW explains the process: “First we sit down and discuss the business case and objective. At every turn, we determine whether and how an approach would deliver value to the business. Throughout the three years up to trial on a recent case, at each juncture we wrote down all the tasks and pieces that would be involved in the next chunk of work, evaluated the objectives, then priced it accordingly.”
Internally, the firm operates in a family-like setting. Ideas and new approaches are welcomed and expected through biweekly “collab-o-storms” with all lawyers and staff. Because profitability through leverage is not an issue, several experienced lawyers strategize on every client matter. “Our best work comes when we are together, from the impromptu brainstorming,” says Lamb. As confirmed by firm client Karen Klein, GC of Kayak, “Valorem understands that going to trial is not always the best solution. They are very practical and work with us to align their legal strategy with our goals. I want the lawyers I hire to get to know my business and become a part of our business team.”
After every matter, the Valorem team does a self-assessment. Then the team sits down with the client to provide its assessment, seeks feedback and also discusses approaches that will improve the process the next time around. Lamb makes bimonthly calls to clients to see how things are going and to identify any small issues or questions client have; this facilitates continuous feedback and improvement. He also spends a lot of time on planes to have face time with clients. The Valorem Advisory Board serves as a critical sounding board.
Eighty to 85 percent of Valorem’s revenues are generated using alternative fees (primarily flat fees with a hold back, plus premium based on milestones). Their Value Adjustment Line allows clients to pay them more or less than the invoice. To date, only two clients have paid them less (only due to a billing error), two have paid a little more, and one client paid a significant markup based on the result. Doing this lets clients know that there always is an option to pay less than the invoice if they don’t feel they received the expected value. It also guarantees that the firm has every incentive to make clients exceedingly happy. Given its lean lawyer team, Valorem has teamed with Novus Law for document review and other post-e-discovery services.