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Tuesday, February 24, 2009
MoneyLawThis has only the vaguest of baseball connections -- the oh-so-common Moneyball analogy -- but I know a lot of lawyers read this blog, so I offer it up anyway:
When asked whether his firm might reduce prices in light of the meltdown, Linklaters senior partner David Cheyne replied, "[Clients] might have doubts as to whether a firm is really able to deliver quality at a suicide rate."
Baseball sometimes gets criticized for being hopelessly behind the times when it comes to business efficiency -- there's a reason why a business writer like Lewis was able to see what was going on in baseball before most people in baseball did -- but it has nothin' on the private practice of law. Thankfully for consumers of legal services, there are some Billy Beanes out there trying to exploit the inefficiencies.
Posted by Craig Calcaterra at 10:36am
Aaron Moreno said...
Stodgy old guys at law firms are behind the times?
No, I don’t believe that.
Posted 02/24 at 11:59 AM
Jason @ IIATMS said...
Sounds like they think legals fees are “Giffen Goods”:
In economics and consumer theory, a Giffen good is that which people consume more of as price rises, violating the law of demand. In normal situations, as the price of such a good rises, the substitution effect causes people to purchase less of it and more of substitute goods. In the Giffen good situation, cheaper close substitutes are not available. Because of the lack of substitutes, the income effect dominates, leading people to buy more of the good, even as its price rises.
Posted 02/24 at 12:06 PM
Jason @ IIATMS said...
or Veblen Goods:
Posted 02/24 at 12:07 PM
I would really like to get away from billable hours as they way to get paid altogether.
Posted 02/24 at 12:51 PM
Legal outsourcing is really closer to getting Steven Spielberg’s nonunion Mexican equivalent than it is to exploiting a market inefficiency. Some clients like outsourcing, some don’t, but wait until a privileged document gets produced by someone in Bangalore and all the clients come running back to the US.
Posted 02/24 at 12:56 PM
After years as a practing attorney in law firms and corporate legal departments, I now work for a LSO headquartered in Bangalore. Having seen the colosal discovery screw-ups in practices in Atlanta, Boston, Charlotte, Denver, combined with billing practices that would make a whore blush and trial strategy designed not to optimize results but optimize attorney retirement packages ... I am not particularly worried about clients going running back to the US over a privileged document being improperly revealed. Faster, better, cheaper. It works in baseball. It works in legal services outsourcing.
Posted 02/24 at 01:37 PM
This works in regards to education, too. By raising tuition you can attract better applicants, since people equate price with quality. Thus the smart thing to do is raise prices and provide a lot of financial aid, essentially offsetting the difference in real CoA.
Posted 02/24 at 08:46 PM
Roger Moore said...
I sometimes wonder if this isn’t because baseball is really less efficient, but because it’s more transparent. We can make informed criticisms of baseball player moves precisely because we know a lot about projecting player performance and we know about the available alternatives. We don’t know nearly as much about the decisions and alternatives available to other companies, so we’re simply less able to point out their mistakes.
Posted 02/25 at 12:21 AM
Jason B said...
“Legal outsourcing is really closer to getting Steven Spielberg’s nonunion Mexican equivalent than it is to exploiting a market inefficiency.”
Posted 02/25 at 12:38 AM
I think baseball has more inefficiency because there is a tremendous amount of satisficing taking place (something Boras is the unquestioned master of exploiting). Dredging out every last ounce of efficiency is a lot easier when a company deals with cordless phones or frying pans than baseball- there is a much less significant chance of emotion clouding rationality. Zito type contracts don’t happen as much in these markets.
Posted 02/25 at 04:58 AM