As Summit Law Group, a 40-lawyer firm headquartered in Seattle, approaches its 20th anniversary this year, it is ﬁnding itself uniquely challenged.
Long an innovator in pricing – pushing pricing transparency and the use of creative pricing models even as much of the legal industry held tightly to the hourly billing model – Summit Law is now facing an industry waking up to client demands for alternative pricing and mimicking some of the innovations that Summit has used for the past two decades.
Rod Younker, the firm’s CEO, sat down with Forum to discuss the firm’s unique approach to pricing, managing growth and how it plans to remain innovative in a legal environment that is pushing law firms to be cheaper and faster.
Forum: You’ve just returned to your role as CEO, is that right?
Rod Younker: I have – I came back to the role just this summer. I had a previous tour of duty of about four years that ended in 2014, then after a two-year break, I’ve come back to the job.
At Summit, we strive to put a practicing lawyer in the CEO’s chair, and that can be a challenge in a firm of our size. I have a busy practice (in labor and employment law) alongside my management functions, so the combination can be taxing.
Forum: Summit Law was launched 20 years ago this spring. Tell us where you are now at 20.
Younker: That’s right – it was launched on St. Patrick’s Day, 1997. At that time, we were frustrated lawyers in the big law firms around Seattle and the West Coast. About a dozen of us came from the now-defunct Heller Ehrman White & McAuliffe, which had more than 700 lawyers at the time. Other lawyers joined us from other firms like Davis Wright Tremaine and Perkins Coie.
We shared the common belief in the business case for Summit, articulated by Ralph Palumbo, one of our founders:
We believed then (and still do now) that most law firms had a tin ear when it came to their customers and their customers’ needs.
So, we set out to build a law firm designed completely around the principle of customer service. We looked through that lens for everything – how the business was to be organized, the offices we inhabit, the staff we hired and the way that we charge for our services.
For example, back in that era, it was the rule that law firms layered in additional overhead charges for things like legal research, phone calls and photocopying. We knew from real-life experiences with clients that those kinds of nickel-and-dime charges, which do add up, made them crazy. We got rid of that practice and said, “Our overhead is our overhead, here’s our rate.”
We also got rid of the distinction between partners and associates. We felt that whole partnership track created a huge amount of negative energy in law firms. It also caused a whole lot of very inefficient behavior, with young lawyers doing things to please the partners that may not be good for the client or a good use of resources. We wanted everyone to be focused on client service, not serving other lawyers.
Forum: Summit became known for its unique approach to pricing, such as the open posting of your pricing levels. Is that something that’s a differentiator for you?
Younker: To answer that, you’d have to look at the billable hour, which I believe unfortunately is still a very attractive pricing model to law firms, because it rewards inefficient behavior. It places the attorney’s interests and the customer’s interest at odds.
We try to be innovators in pricing, whether it is figuring out how to do defense-side litigation on a contingent-fee or on fixed-fee budgets, or in my line of work, labor and employment law, creating an employment law hotline that allows a company with many locations to get all of the advice they need without incurring incremental charges for each call.
On the corporate side, we did some transaction work for stock rather than for fees, and took equity positions in our customers. These kinds of fee structures have allowed us to be more profitable, but have also aligned our interests with those of clients. If our customers succeed, we succeed.
And from our first month in business, we pioneered something called the value-adjustment line. It’s been a feature on all of our invoices for 20 years. The last line on our invoices is blank. We tell our customers that they have the unilateral authority to adjust the invoice up or down on this value-adjustment line if they think that the value of our service and what we have proposed to charge for it, are not in alignment. We did that as a way to put our money where our mouth was about our ability to deliver great customer service.
And from our launch through today, we’re ahead by more than a six-digit number on that value line.
Forum: Finally, law firms are starting to catch up to the need for this kind of flexibility on pricing, and Summit may see its tactics mimicked by a lot of other firms. So how do you keep the innovation fresh?
Younker: As I keep reminding the firm, that’s a question that we need to keep asking ourselves. The ideas we were talking about in the 1990s were heretical. Today, alternative pricing is something that everybody talks about, whether they are able to do it or not.
But we are still coming up with some new innovations. For example, some of our litigators created a tool that allows us to budget litigation matters with sufficient confidence that we can actually charge for defense-side litigation on a ﬂat-fee basis, with some safeguards in both directions.
Sometimes, in the crush of what we are doing, we have to remind ourselves that the wolves are at the gate, and we have to keep working at it. One of my renewed initiatives, coming back to the CEO chair, is to crack the whip again on our pricing innovation.
Forum: Looking down the road, where do you see Summit in five years?
Younker: We knew right out of the gate when we launched Summit Law that it was a lot easier to do some of the things that we were talking about with a smaller organization.
Our challenge has become what do you do with a firm that has a growing business but wants to stay small? We laughed that problem off early on, but we still encounter it. We’ve arrived at our current size not necessarily by a strategy of growth but rather by opportunity and by adding pieces that we felt fit.
We are in the process of adding another practice group that will fill the spaces between ones we have now. We don’t want to be a full-service firm, but our customers have needs that lie in an empty space between some areas we do really well. The addition will put us at 40 attorneys, and while I can see us getting a bit bigger, I would be surprised if we hit 50 attorneys. We’ll try to stick to a strategy that works at that size.
Internally, we’ve talked about managing growth and its impact on our culture. We continue to believe that our method of practicing – which is a key piece of who we are and what we do – is still best suited to a firm in the size range that we’re at now.
Meet the interviewee
|Rod Younker has been representing employers with their labor and employment law needs for more than two decades. He spends a significant amount of his time helping employers formulate their labor-relations strategy, and representing those employers in labor negotiations with their unionized employees.|
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