Business first, law second

Jay Shepherd believes that lawyers shouldn’t hold themselves up on a pedestal. As far as he’s concerned, lawyers are, first and foremost, businesspeople: “We’re no different than any other business. Sure, we’re licensed, but so are hairdressers. Holding the profession up to a different level than any other business is ridiculous to me.”

Nothing ignites Jay’s passion more than changing the business of law – and improving client service in the process. According to Jay, the legal profession’s old standby – the billable hour – is a large part of the problem: “The billable hour is a terrible thing and causes huge problems for lawyers and clients. The focus is on the lawyer, not on the client. But pricing is determining value – not your value, but value to the client.”

Saving the world from lawyers (and saving lawyers from themselves)

It’s a theme that Jay returns to, time and time again – lawyers need to come back down to earth. “Lawyers, as a group, tend to take ourselves too seriously with our puffed-up egos, let me put ‘Esq.’ behind my name,’” explains Jay.

Jay believes that lawyers need to leave their egos at the door, embrace their function of being “knowledge workers,” and price their services accordingly. Lawyers are in the business of selling knowledge, not hours, and their pricing schemes should reflect that. According to Jay, “Businesspeople have to focus on the customers, and lawyers have to do that as well. My goal now is to help as many lawyers and other professionals learn how to price the knowledge they have so that they can make their practices better and more fun. If we can embrace the good things about being a good lawyer, and cut out the fear and risk aversion (which is why people hate them), we can do it.”

Small-firm employment lawyer

Jay concedes that his small-firm career was the result of fortuitous happenstance, as was his focus on employment law. After his first year, a career in BigLaw wasn’t an option: “I didn’t do well my first year, and stumbled into employment law after I graduated without a job and lucked out getting a job at a boutique firm. I basically lied about wanting to get into employment law, but I’m glad I did.”

Jay has never looked back. Employment law is a great fit with his personality: “If, like me, you like dealing with people, every single case is like a soap opera. It’s never boring.”

He has no regrets about the course of his career: “I wouldn’t last six seconds at a big firm – I don’t have the personality. I wish I had known about small firms in law school. I wish someone had said ‘big firm life isn’t for everybody.’ I ended up inadvertently going small, but if I knew then what I know now, I would’ve ended up here on purpose.”

Jay acknowledges that starting a small-firm isn’t easy, noting that he couldn’t have done it without his wife, also an attorney, and the stability of her position at a large firm: “My wife has been incredibly supportive of me. I wouldn’t have been able to start a small firm if she wasn’t at a big firm.”

Their different career paths make family life challenging at times. Fortunately, small-firm life gives Jay the flexibility that he needs to make it work. He explains, “I am fortunate having my own firm so that I have more flexibility so that if a kid’s sick, I’ll work from home, something that is a lot harder for my wife. So you make sacrifices and balance. It drives me crazy when people aren’t serious about work-life balance. There’s nothing harder than being a parent.”

For Jay, with his innovative spirit, small-firm life is a perfect fit: “The real advantage for smaller firms is that they can be more nimble and out there. Technology has leveled the playing field, so I can run my practice from my iPad. I’m in a nice downtown office space, but I don’t need to be. I can be anywhere.”

Practicing what he preaches

For Jay, pricing legal services is a way of life. Jay’s firm first experimented with fixed pricing for cases in 2006, in part because tracking time just wasn’t a good fit: “I stink at tracking my time – I don’t think that way. I’ll have an idea suddenly in the shower and it doesn’t really translate well into a timesheet. So I wanted to figure out how to do that with employment litigation.”

The fixed-price experiment worked so well that in 2007, the firm permanently switched from hourly billing to fixed pricing. The move was a tremendous success. Revenue tripled by the end of 2007 and the trend continues to this day.

Jay admits that, in the beginning, the media exposure didn’t hurt, but attributes the vast majority of success to the improvements that flow from fixed pricing: “The system is so out of whack – people at hourly firms spend time doing stuff they don’t need to do. You work differently when you’re pricing because it doesn’t matter who is working on the case – we’ll sit around and brainstorm with everyone and come up with an answer right then and there. It’s much more effective, whereas an hourly shop is going to be very linear, so you end up focusing your time, efforts, and knowledge differently when you are pricing. You save money and can charge a premium.”

Changing the business of law for the better

Jay’s passion is to change the way that law firms do business. To make that dream a reality, he’s started a consultancy, Prefix, LLC, with the goal of teaching lawyers how to price their services. As he explains, when it comes to alternative billing: “There is not a lack of interest, just a lack of knowledge. People always ask me the same questions, so I thought, ‘This is a real business opportunity here.’ What Prefix does is help law firms figure how to price services and make changes to get the benefit of it. We coach them to help them figure out the best way to do it. The other side is going and talking to clients (that is, in-house legal departments), and teaching them how to talk to their lawyers to get more value from outside counsel.”

When asked about his greatest strength, Jay laughs and replies, “My biggest strength is that I always think you can find a creative solution to something and am always looking to find that.” And how does he want to be remembered? “What I don’t want my tombstone to say is, ‘He was really good at noncompete covenants.’ I’d rather be remembered as someone who helped fix the practice of law.”

--

This photograph of Jay Shepherd was taken by Mike Carroll in Boston, Massachusetts.