Leveraging Mediation to Increase Revenue and Broaden Your Client Base
Source: Daily Business Review
Date: November 2017
| | DAIL Y BUSINESS REVIEW Leveraging Mediation to Increase Revenue and Broaden your Client Base by Gary Birnberg, Esq. The GC of a corporate client calls regarding a complaint that was served on his com- pany. Litigation will be long and complex. Your chances of prevailing are modest, and the damages awarded could be considerable. Your team and you have the potential for investing consid- erable billing hours into the dispute: it could be a very lucrative case for your firm. Moreover, you believe that you may be in a position to argue successfully for some measure of lower damages. Although your client wants to defend his claim, he is pre- occupied with the many costs of litigation. Particularly, the extent to which discovery, preparation for trial, and trial itself will create internal stress and occupy senior manage- ment’s bandwidth. Litigators know this situa- tion well; there is nothing atypical about it. What is con- founding is the fact that we in the legal profession, grounded in an hourly billing formula, are failing to recognize a pri- mary client concern: the value that he places on a rapid reso- lution. This value typically is considerable. The principle methodology proposed herein for accelerat- ing dispute resolution is medi- ation. In the hands of a capable mediator, the success rates of mediation are astronomical: reportedly upwards of 70 per- cent globally. Moreover, medi- ation is very quick, extremely price effective, can be con- ducted in parallel with other proceedings, and can be repeated, should it fail to pro- duce resolution on any given round. On its face, recourse to medi- ation clearly is in the client’s best interests in the great majority of commercial cases. But, what about your practice, grounded in the traditional hourly-billing model: could enthusiastically embracing mediation, with its implicit compressed timeline, under- mine the profitability of your firm’s litigation activities? Not necessarily so. Consider restructuring your compensa- tion model based on a flat fee. Many corporate clients already are demanding the same. Then, working off a reasonable flat fee baseline, build into your retainer a bonus for rapid resolution. Awarding a bonus for rapid resolution may seem counterin- tuitive: you will be compensated more for working less. But, the economic analysis required here is based not on valuation of expended resources. That is irrelevant to the client: it is a red herring to him or her. What is really important to the client is utility (of resource deployment): what does the cli- ent get for his/her investment. All other things being equal, the client’s core economic concern is the marginal value of early resolution in relation to “nor- mal” resolution. Typically, this is of considerable value: value for which a rational business person will be willing to pay. In this case, what is an eco- nomic red herring for the cli- ent is a golden egg-laying goose for outside counsel. Man-hour productivity goes through the roof when decreasing the hours dedicated to a case simultaneously with increas- ing the revenue (in the form of a bonus) generated by it. Moreover, introduction of a heavy dose of mediation into your litigation portfolio inevi- tably will shorten the average case duration of that portfolio and, thus, will allow the firm to handle more cases. This has not just obvious financial ben- efits but also the strategic ben- efit of creating an opportunity to fill the scheduling void with new clients, thereby broaden- ing your client base, leading to greater stability of your strate- gic model. Moreover, leadership in the area is strategically significant. The firms that get first to market with this concept will be identi- fied as the market leaders in it: augmenting the firm’s reputa- tion for furthering client needs. The proposed billing model, with its tacit endorsement of the efficiencies offered by mediation, can have a signifi- cant impact on income and productivity, as it allows you to serve a broader portfolio of clients. In the classic jargon of mediators, this model presents a win-win opportunity, both for clients and their counsel. Gary Birnberg, Esq. is a JAMS panelist based in Miami. A member of dispute resolu- tion panels of 10 institutions in Brazil, France, and United States, his practice is primar- ily focused on international disputes. He can be reached at email@example.com. Reprinted with permission from the 0/00/00 edition of the DAILY BUSINESS REVIEW © 2017 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. Contact: 877-257-3382 firstname.lastname@example.org or visit www.almreprints.com. # 100-11-17-15  A priori, the bonus could be consid- erable for resolution within a number of weeks, then taper off as resolution stretches into months or years.