Here’s another observation from my recent road-trip vacation.

It seems that the more expensive the hotel, the more likely they’ll charge for Internet access. We spent half the nights tent camping, half in hotels. Every single campground we stayed at offered free Internet access. So did the inexpensive hotels. The mid- upscale hotels all charged for it, except for a Salt Lake City Residence Inn.

It’s annoying to be nickel-and-dimed for something that’s nearly free to supply. (Support does cost money, but access itself, spread across so many “guests,” is a minimal cost.) It would be like charging for towels, or pool access. I suppose it’s a good thing the airlines don’t run our nation’s hotel chains.

So are the economics upside down? Shouldn’t the inexpensive places charge for this service to bring their overall profits up, while the expensive places throw it in as a perk?

Obviously not; the entire hospitality industry doesn’t have it wrong. Rather, the low-end suppliers — camgrounds, EconoLodge, etc. — are competing in a very price-sensitive market where rooms or campsites are commodities and where small amenities such as heated pools or free WiFi can help close the sale. In addition, few people will pay $60 for a hotel room — we’re not talking New York here — and then shell out another $10-$15 for WiFi. However, people paying $300 for a night at a Hyatt, or expensing it, won’t notice another $15 for Internet access, or so goes the theory.

In Legalnomics terms, that’s the difference between commodity work and high-priced “bespoke” lawyering.

At the commodity end, clients want not just a flat price but a certain price. If they’re paying $X per page or per gigabyte for e-discovery processing, they expect an easily calculated total cost. The winners will be the firms — or outsourcers — that stick to that price, that don’t charge extra for WiFi, so to speak.

At the high end, firms have — until recently — had almost carte blanche to charge not just for time but for extras, from faxes to legal research to non-travel dinners.

Who Needs Hotel WiFi?

These days, when I check into a hotel that charges for WiFi, I usually hook up my cell phone to my computer, and I connect to the Internet through my phone. My data plan supports this at an (almost) reasonable rate, and while it’s not quite as convenient as hotel-based WiFi, it’s a lot cheaper. The speed is similar in most cities, too, although the number of iPhone data hogs on AT&T is hurting speed a bit these days.

It’s like the formerly ubiquitous $8-for-water mini-bars. Increasingly, guests resent the excessive charges and realize they have other options.

Read that last sentence again, this time with a minor substitution. Increasingly, guests clients resent the excessive charges and realize they have other options.

I can’t prescribe solutions for the hospitality industry, but I do know what this means for the legal industry. Think of it as a chain:

• Firms need to reel in these charges or risk alienating/losing clients.
• Thus firms need to find other ways to be highly profitable
• Thus firms need to understand exactly what does make them highly profitable (the difference between revenue and profit)
• And firms need to increase the efficiency (= profit) with which they deliver legal services.

Legal Project Management is about both efficiency and profitability. The techniques and tools of LPM offer significant opportunities for firms to realize efficiency without eviscerating profitability.

Are we at a tipping point for Legal Project Management, as some of my colleagues in this field have suggested? I don’t think so, not yet. But we may be at the tipping point for firm cost-efficiency, which is a precursor to that other tipping point¹.

Clients are tired of paying for WiFi at the high end. Wrap it into your charges.

The airlines are trying to eke out profits after years of losses, and so have little space for competitors to undercut their nickel-and-dime-and-$25-a-bag charges. Law firms aren’t in that situation, and clients know it.

If you can’t charge for WiFi², you need to figure out how to serve it up at low cost… and sell that as a benefit.

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¹Aside to Malcolm Gladwell: Are you frustrated yet at the overuse of this term you coined?

²By the way… I don’t think it will be long before clients add “no hotel WiFi charges” to their outside counsel guidelines.