From the Crain's Chicago Business article on September 20, 2010
Sensing the legal market was ready for a shake-up, Nicole Nehama Auerbach and others left big law firms for Valorem, which promotes alternative billing.
John R. Boehm
On Valorem Law Group's Web site is a photograph of a smashed clock and the phrase: “The billable hour is dead.”
This is the motto of the Chicago-based firm started in January 2008 by a collection of “Big Law” attorneys unhappy with the traditional billing model and the demands to bring in ever more money.
“There was tremendous unspoken pressure, and people started to panic if they had a down year,” says Nicole Nehama Auerbach, 44, a Valorem attorney who spent almost 15 years at Katten Muchin Rosenman LLP in Chicago.
Ms. Auerbach and the three attorneys who founded Valorem, Patrick Lamb, Hugh Totten and Mark Sayre, left large firms before the wave of layoffs hit the legal industry in mid-2008. They sensed the market was ready for a new business model.
“I'd like to say we were ahead of the curve, but we're not that smart,” Ms. Auerbach says. “But we were in a good position once things started to change.”
Valorem promotes alternative billing arrangements, such as fixed fees and performance bonuses, although the lawyers still do some work billed by the hour.
Their rates are lower, typically $400 per hour, compared with the $500 to $600 rate they earned with their former firms.
“Our fee arrangements, to be profitable to the firm, naturally create incentives for us to lower costs,” says Mr. Lamb, 54. “Fee arrangements also provide clients with cost certainty.”
The market seems to be responding, Ms. Auerbach says. Since starting less than three years ago, Valorem has grown from four attorneys to nine, and 2010 revenue is running 50% ahead of last year's $2.5 million, the firm says.