Tuesday, February 2, 2010

Alternative Billing Arrangements - To The Disruptors Go The Spoils

"Disruption is a positive force. It is the process by which an innovation transforms a market whose services or products are complicated and expensive into one where simplicity, convenience, accessibility, and affordability characterize the industry."

Harvard Business School professor Clayton Christensen (in the text "Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns" co-authored by Michael Horn and Curtis Johnson) stated the above without direct reference to the legal industry (it was the education system in the United States that was the focus of numerous references in his book), but how apt is the text when read over and over with your law firm management hat on.

A useful summary article from the ALB on the trend towards the desire by corporate counsel for more standardisation in alternative billing arrangements, with a case study of the innovation and leadership shown in this space by Gilbert+Tobin (specifically in relation to Telstra).

In the article, Gilbert+Tobin's Managing Partner Danny Gilbert sums up the win-win scenarios available through such innovation saying that "When you've got clients that just want to win all the time on pricing, it just won't work. Where you've got clients who just want to absorb your entire margin either through discounts or fixed-price arrangements then nobody wants to do their work - the relationship can't blossom in those circumstances".

In a sign that Gilbert+Tobin's innovation mojo is still in tack, Telstra General Counsel Will Irving nicely defines the G+T approach not only as innovative, but also makes suggestions towards the power of 'disruptors' in determining the future of the long term market.

"You bring a disruptive player into any market and you will change the economics for the whole lot, and you will give people the incentive to find better ways of doing things" Irving states in the article.

Irving and Gilbert stand validated as news comes in that the Department of Defence has called for similar styles of billing arrangements during its current panel review - stating that they are likely to be the first of many federal government agencies to go down this path.

The Harvard Business School has a nice piece on the power of disruption from 2007 entitled "Jumpstarting Innovation: Using Disruption to Your Advantage" here.

Full article from the ALB re Telstra and Gilbert+Tobnin

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