With Validatum Pricing Espresso® we aim to bring you your regular pricing 'shot' - the best, most interesting, thought provoking and informative material we can find globally which will be of interest, relevance and help to you in your legal services pricing challenges. [Note: we don't always agree with the content of others that we post but the philosophy of Validatum Pricing Espresso® is shared perspectives, not a personal 'soap-box']
Post Brexit Pricing Strategy: What Now?
Over the last few days, we have had a number of firms asking us what they should be doing about their current pricing strategy. In some ways the question, whilst understandable, is a little premature because for many, it is business as usual.
Having said that, it would be naive for anyone to think that there won't be any impact at all, irrespective of how the ensuing weeks and months unfold.
At the very least, during the period of greatest uncertainty, we can realistically predict a drop in demand for some legal services, particularly those relating to property and M&A to name just two. As with any sudden shift in a market, there are always winners and losers. Hopefully many firms have elements of both at least. Read more...
Procurement and law firms – ‘never the twain shall meet?’
‘Never the twain shall meet’ - a phrase used by Kipling in 'Barrack-room Ballads' in 1892, to lament the gulf of understanding between the British and the inhabitants of the Indian subcontinent. Many law firms that I know would say a similar gulf exists between them and the procurement manager; different language, a lack of shared reference points, opposing goals…
But it doesn’t have to be like that. I’ve spent the last five years as a legal procurement specialist for a FTSE 100 company and can categorically say that it’s possible to have an effective, mutually respectful and successful triumvirate relationship between procurement, GCs, and law firms, provided that all sides are willing to invest time and effort, like any relationship.
All you need is shared understanding. Common goals. Defined responsibilities. Compromise. Emotional intelligence. Investment. Learning. Self-awareness. Mutual respect… These things define any good working relationship. Read more...
Billable hours to always hold a place in law firms
Law firms claim to be modernising, ditching traditional billable hours in favour of alternative fee arrangements, but as remuneration and profits are still reliant on the old structure many have struggled to ditch high targets.
Jones Day and Quinn Emmanuel Urquhart and Sullivan have the highest billable hours targets at 7.5 hours, followed by Baker & McKenzie, DLA Piper and Jackson McDonald with a target of seven hours, according to The Australian Financial Review's Law Partnership Survey.
On average, Australia firms set billable hours targets of 6.5 hours. Read more...
Pricing Uncertainty: The Legal Industry's $60 BILLION Challenge
Recently, the legal industry has been the subject of eye-catching reports involving the arrival of a $2,000 per hour billable rate for elite law firm partners, an increase in first year associate starting salaries to $180,000 and the response of influential legal department executives to this news.
Legal industry economics will continue to make headlines given the magnitude of the dollars flowing through the industry. And things like runaway hourly rates and skyrocketing associate starting salaries will be (mis)characterized by the media as the problem with the industry and its economic model. These headline grabbing topics are just manifestations or symptoms of the industry’s fundamental and most daunting challenge. Read more...
Biglaw Billing News Spells Opportunity for Others
By now, you’ve heard the big stories about billing practices at large law firms. First came the news, via the BTI Consulting Group, that the billing rates of the priciest lawyers in the country have reached $2,000 per hour. Shortly thereafter, Above the Law broke the news that Cravath has elevated first-year associate salaries to $180,000, with many peer firms rushing to follow suit.
You’ve also probably heard some of the reaction to these stories, not all of it positive. With regard to the $2,000 per hour lawyer—the ranks of whichreportedly include David Boies, Paul Clement, and Ted Olson—some have said that lawyers of such quality are worth every penny. But there are also grumblings of discontent. One source told The American Lawyer that the $2,000 per hour lawyer “seems so crazy and out of market”; that speaker, believe it or not, is a leader at a Wall Street firm. The word from corporate clients, unsurprisingly, has been similarly unenthusiastic on the topic of the $180,000 first-year lawyer. Read more...
Pricing lessons from a Big Six pricing specialist
With the ever-increasing debate around hourly billing and alternatives, and savvier and more demanding clients, professional services firms – and in particular, law firms – need to get smarter about how to manage pricing if they are to remain profitable.
It seems inevitable in some areas of law (insurance, property) that it’s simply a race to the bottom when it comes to fees, but there are things all firms can do to shift the focus from price to value, and avoid discounting their profits away.
JMA spoke with Libby Maynard, Head of Pricing and Legal Project Management at Clayton Utz, for some pricing tips and to learn how even small firms can get on top of the pricing challenge. Read more...
To Be A Good Law Firm, You Must Prove Value For Money
The professional services landscape continues to change, and gone are the days when a law firm could rely on a loyal client base returning for their unrivalled technical expertise; their superb client list; their ability to guarantee seamless delivery, hitting deadlines and solving problems.
Today, the power is more squarely with the client and law firms must prove that they have the most relevant understanding of their client’s business, their sector and the challenges they face.
Many law firms of course claim that they have this understanding, so can they ensure they continue to attract new clients and retain existing ones? Read more...
Is the billable hour turning off talented young lawyers?
In an article published in the Globe and Mailearlier this month, Allison Speigel, a commercial litigator with Speigel Nichols Fox LLP, argues convincingly that the billable hour may be at the root of the disaffection of so many recent law graduates with firm-related work.
Among Speigel’s arguments against the profession’s most cherished and wide-spread billing system are ones we have all heard (or should have heard) before:
1) The system rewards time spent over value, creativity and other client-beneficial approaches; Read more...
Independence Day & The Billable Hour
Two things got my attention on Friday. The first was the decision by the UK to exit the EU (so-called “independence Day” by some of the more fanciful politicians and “Brexit” to most of the rest of us). On a much smaller scale, the second was an article in The Australia Financial Review that “Ditching the billable hours case a struggle“. (print edition – NB: online the article title is “Billable hours to always hold a place in law firms“).
With the first of these two items, I have very little to no control over and am left at the mercy of others.
The second on the other hand is absolute rubbish! Read more...
Four Reasons Billing by the Hour is a Competitive Disadvantage
Clients expect much more than a resolution to their legal problems. They expect gold-class service and value. Unfortunately, the billable hour model is handicapping your ability to do this for the following four reasons:
For a while now, clients have recognized that a shift away from the billable hour would increase efficiency and the quality of legal services. Lawyers have been slower to embrace the concept.
Until last year, the vast majority of the family law firms in my local bar turned over disclosure via mail or hand delivery. (And the vast majority of those firms where charging their clients copy costs and paralegal rates to make the copies.) Digital copies of pleadings and documents to clients were the exception rather than the rule. Read more...
Measuring Value Beyond the Billable Hour
Key performance indicators (KPIs), or performance metrics, are receiving some attention in the legal field. KPIs enable businesses to make data-driven decisions, and I, too, believe that KPIs are the next big thing for lawyers and law firms.
Mantras like “measure or perish” have been bantered around many legal events over the past couple of years. However, measuring utilization and profit per partner are not the focus of the new breed of KPI. Instead, the focus is shifting from measuring inputs like available hours to measuring outputs that include value. A few examples of measuring value: Read more...
Firm hails ‘clear message’ to defendants over interim costs
Claimant lawyers have hailed the first written judgment ordering an interim costs payment as welcome news for clients and the wider legal profession.
Sitting at Liverpool County Court, district judge John Baldwin agreed an interim payment of £7,780 – around 55% of the costs bill based on rules amended in 2013.
North-west firm Fletchers Solicitors had brought a clinical negligence claim for damages in Travers v Poole Hospital NHS Foundation Trust and settled the case at £1,500, on the basis that the defendant paid the claimant’s reasonable costs and disbursements. Read more...
Law Firm Leaders Confident Pricing Pressure Will Abate
For the first time in nearly a decade, law firm leaders are feeling positive that the pressure on pricing will ease up, according to Citi Private Bank Law Firm Group.
On Thursday, the consultancy released its mid-year confidence survey. It asks law firm leaders to make projections about the second half of 2016 by answering a series of multiple choice questions about demand for services, hiring and other topics. Based on the answers, Citi calculates a 200-point numerical score for each topic, wherein 200 represents the highest possible confidence and optimism.
For instance, on realization rates, the survey assigned law firm leaders a 102 confidence score. Read more...