Penny Wise

This is a true story about a law firm in another universe, far, far away. The names have been changed to protect the innocent, if there were any innocents.

The third item on the partners’ meeting agenda was “Letterhead”. Innocuous enough, one would think, but not to the eighteen men and women around the table. In reality, the senior partner cleared all the other items off the agenda, knowing that “Letterhead” would be a lengthy and, well, shall we say “spirited” discussion.

It wasn’t so much the design of the firm’s logo or the format of the masthead, or the quality of the paper, or even the precise tint of off-white. It was whether or not to change suppliers. A national printer had made a pitch to supply all the firm’s letterhead, business cards, and other printed materials at a price about 25% lower than the current supplier, and to guarantee to hold the rate for at least two years.

To be sure, most of the younger partners did not use much paper in their work, nor did most of the associates and juniors. It was mostly the older partners who still dictated their correspondence to their “girls” who would then “type” letters, notes, memos, or whatever. (Sorry for the terminology, but I’m just quoting.) Even e-mails were printed off for the partner to read and file. One or two of these fellows had computers in their offices, but mostly to play solitaire.

Bill Schweitzer, the oldest partner at 79, opened with, “We’ve been using O’Reiley and Thompson now for over fifty years, they’re good to us and give us the highest quality paper and printing. Besides, they’re our clients, and they refer us some good work. I don’t think we should be nickel and diming on this.” Bill’s hourly rate, by the way, was $575.

“That’s all true, Bill,” responded Marybeth Robichaud, “but historically we spend about thirty thousand a year on stationery. A 25% discount would put another three hundred dollars or so a year in each of our pockets.” Marybeth’s hourly rate was $425.

“What are you dinosaurs talking about?” injected Denis Lemire, the youngest of all the partners. “This is the twenty-first century, in case you hadn’t noticed. Everything is electronic, and nobody younger than ninety uses business cards any more! If I need ‘letterhead’ it’s part of the Word document. Let’s get serious, here.” Denis was a bit of a smartass, but with his reputation as a rising star in the courtroom, he was given a lot of slack. His hourly rate was $390.

Ernie Telford, patrician and aged 75, stirred from his slumbers, cleared his throat, and in his finest advocacy voice began, “I remember when we used to use fully-embossed letterhead and actually typed the envelopes before these window-envelope aberrations. Real postage stamps, not these noisy, expensive machines! Good legal letters were an artform, back in the day when people knew how to spell and use the Queen’s English!” (Hourly rate: $550)

Denis cut him off, “Ernie, in case you hadn’t noticed, we have a king, now.” Denis rolled his eyes and dear old Ethel patted Ernie’s hand to calm down before he had a heart attack.

And then Albert injected, “Maybe this is a good time to change our whole look and feel of our entire brand. Maybe we should get a consultant.” (Hourly rate: $525). Well, then everyone began talking all at once, and if you’ve never seen eighteen lawyers trying to talk over one another, you’ve missed one of life’s great adventures.

After an hour and thirty minutes of rhetoric around the table, it was decided that the matter should be adjourned to the spring retreat where perhaps good food and good wine in a pleasant setting would help resolve this serious matter.

But not before an hour and a half had passed. An hour and thirty minutes, eighteen partners. Average billing rate $480 per hour. To discuss a potential savings of $7500 per year across the entire firm, regarding an expense everyone knew was diminishing simply by virtue of less and less usage.

And Bill left the meeting looking angry and muttering something about “young whippersnappers”.

Let’s do the math, shall we? $480 X 18 X 1.5 = $12,960. To discuss a potential $7500 and diminishing annual savings. And still not resolved.

Now, none of this is to say that partners shouldn’t manage, nor that it’s not important to keep an eye on costs, nor even that everyone’s input is not valuable. But what we see is a bunch of high earners spending significant professional billable time on a “nickel and dime” issue, in this case one of diminishing importance.

Do you recognize any firms like this? Maybe we need to talk.