Karla Vehrs, Minneapolis managing partner of Ballard Spahr, says the law firm is getting good results for clients and itself with its client value program, which is a response to the continuing pressure from institutional clients to lower legal costs.
Such costs can run to $800 or more an hour for senior lawyers at big Twin Cities firms. Minneapolis, with about 110 attorneys, is the second-largest office of Ballard Spahr, after the Philadelphia headquarters.
Minneapolis provided an entree to the Midwest for Ballard Spahr through its 2018 acquisition of Lindquist & Vennum. Ballard Spahr had profits per equity partner of $620,000 on 2018 revenue of $415 million from more than 600 lawyers, according to Law.com.
Vehrs, 40, is a business litigator who specialized in disputes involving securities. She said about 60% of legal matters that go through the client value program are billed under an “alternative fee” arrangement, compared with about 20% for the industry.
Q: What is the client value program and why did Ballard Spahr invent it?
A: We created Ballard Spahr’s Client Value and Innovation Program several years ago in response to dramatic changes in the legal industry driven by client demands for transparency and efficiency from their law firms. The program is focused on improving our internal operations and making the connection between the value and innovation we deliver to our clients. The team … provides value-based pricing that shifts our focus away from the billable hour, focusing instead on [legal-matter] management and technological innovations that benefit clients.
Our team … includes more than 20 business professionals with a unique blend of skills and perspectives. The team has experience in law, accounting, finance, business management, legal project management, computer science … and database management.
Q: How has Ballard Spahr achieved client savings of over $100 million in legal fees since 2018? Is it price-discounted work or are you using more associates or contract lawyers instead of partners when possible in consultation with clients?
A: Our [Philadelphia-based] chief client value and innovation officer said the $100 million cost savings are relatively straightforward. We calculated this by taking our total fees at standard rates divided by our fees collected over the last two years since Jan. 1, 2018. The savings take into account all planned discounts off hourly rates, value-based fee arrangements and time of billing discounts and write-downs. We’ve saved our clients additional money by implementing efficiency measures.
We take a holistic approach to delivering cost savings to our clients. That often includes a combination of value-based fee arrangements, well-leveraged teams and the use of technology.
At the outset of each matter, we talk to our clients about their needs and expectations. We assemble diverse teams … characterized by the right blend of skills, clearly articulated responsibilities, budgets, and work plans that align with client priorities and utilize their in-house capabilities to maximum advantage. In situations where we don’t have the right firm resources, we work with alternative legal services providers.
Q: How expansive are these alternative-fee initiatives?
A: Roughly 60% of our matters involve value-based fee arrangements. We often give our clients several fee-arrangement options they can choose from.
We meet with them to review those options. Once the matter is underway, the key is to make sure we are managing it properly and giving the client regular status updates. Finally, we utilize Ballard360, our proprietary suite of cloud-based technology, which allows teams to share documents, track progress and proactively communicate. Ballard360 provides real-time reporting so clients have both greater transparency and predictability. This allows them to better manage their spending and make real-time decisions to keep things moving.
Ballard360 DocBuilder leverages document automation technology to enable quicker and more accurate creation, review and revision of complex documents.
The tool dramatically reduces the time spent manually drafting documents by automating revisions throughout the entire collection of documents that relate to a transaction. Documents can be drafted in less time by legal assistants.
Q: Your billable rate range is something like $200 an hour to $800-plus an hour. Why is this client-value program good for the firm?
A: It’s a buyer’s market. But it’s not all about cost savings. Our clients are under tremendous pressure to … control legal costs. They want their outside counsel to be transparent about the legal work they are doing and to be efficient in the way they do it.
These are things we needed to do to deepen client relationships. It’s a “value add,” not a “loss leader.”
We feel this has led to deeper strategic partnerships with our clients, which is the key to the long-term success of the firm.
The client has benefited from increased efficiency and cost savings. We have benefited from an increased volume of transactional work and a deeper relationship with the client.
It has been a win-win for both parties.