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']
I used to think I was indecisive but now I'm not sure
Pricing improvement initiatives in law firms are unfortunately often characterised by confusion and indecision over why the initiative is required, what the initiative is intended to achieve and therefore what it should look like.
The reason for this is that there are two ways in which to view the pricing function and pricing activity in a law firm; as a standalone and insular activity confined to what you might call, ‘the home straight’. That is the interaction between partner and client or perhaps the bid team and procurement. Read more...
Legal Procurement Having ‘Profound, Lasting’ Impact, Survey Says
New findings from the United States show the substantial impact of legal procurement on the bottom line of a business.
Procurement is having a “profound and lasting impact” on the purchase of legal services for the world’s largest companies, according to the US-based Buying Legal Council.
Launching its new survey, the 2018 “Buying Legal Services Survey – Insights into Legal Procurement”, the Council examined the purchasing behaviour of 153 legal procurement professionals, focusing on purchasing decisions, cost control, analyses and trends. Read more...
'We Lost on Price' - Post Hoc Ergo Propter Hoc
Post hoc ergo propter hoc is a logical fallacy that states, "Since event Y followed event X, event Y must have been caused by event X." And that pretty much sums up our response to missing out on a piece of work or appointment to a panel. “We submitted a price, we missed out on the work therefore we must have lost on price.”
However, even if you have been told that that is the reason why you missed out on the work, appearances can be deceptive.
It is worth taking a closer look because things are not always as they seem. Read more...
Procurement and The New Legal Buy/Sell Dynamic
Procurement is changing the legal industry. It is driving another nail into the legal guild’scoffin by altering the long-standing practice of lawyers selling corporate legal services to lawyers. This is not simply a change in the corporate legal buy/sell dynamic; it is compelling evidence that law is not solely about lawyers anymore. The myth of lawyer exceptionalism has been debunked. Lawyers no longer determine what’s a “legal” matter–that only they can handle, nor do they dictate fees (“for services rendered”), control supply and buy sides of their labor-intensive business model, or insulate themselves from “outside” competition by self-regulation.
The emergence of legal procurement signifies that the legal profession is now the business of law in the eyes of those that matter most—buyers. Procurement speaks to a growing sophistication among legal buyers as well as new engagement criteria. This portends further changes in law—by whom, when, how, from what model, and at what price legal services are bought and sold. Read more...
General Counsel Need to Seek Flat Fees More, Research Finds
In the first key finding of its GC Thought Leaders Experiment, AdvanceLaw assesses whether flat fees generate better or worse law firm performance on legal matters than do hourly fees.
We have all heard a lot about how various fee arrangements, especially flat fees, are going to overtake the legal industry. In recent years, several sophisticated legal departments have largely committed to using alternative fees with their law firms. Yet flat fees are not close to unseating the ingrained law firm practice of hourly billing. If flat fees are clearly better—as we’ve been hearing from advocates for 15 years or more—then why is hourly billing so alive and well? Read more...
Legal Departments See Cost-Controlling Value in Technology
The 2nd Annual Study of Legal Spend Management found that legal departments still have room to mature in how they measure and control their legal spend.
As legal departments move to build out their internal operations, many recognize the value of legal technology tools and processes in helping them control their spend, according to the 2nd Annual Study of Legal Spend Management, a survey of 59 in-house legal professionals conducted by The Blickstein Group and Exterro.
The survey found that, this year, almost the same number of legal departments are increasing their outside legal spend as decreasing it. More legal departments, however, are increasing their inside legal spend, rather than decreasing it or keeping such spend steady. Read more...
Pricing Roles in the Legal Profession 2018
I am delighted to announce the publication of our in-depth report into pricing functions in the legal sector - offering insights into latest trends in this fast-developing function and providing practical advice in setting up and developing successful pricing teams.
The pricing function is still fairly new in the legal sector, but its fast development as a standalone discipline is a particularly notable shift of recent times. While law firm management teams may be aware of the rise of pricing teams, it is more of a challenge to understand exactly how pricing departments have developed so far and what team structure and recruits make for the best firm-wide pricing capabilities. Read more...
The Law Firm Disrupted: In Heavyweight Bout, It's Clients v. Law Firms
The Legal Marketing Association's P3 Conference in Chicago was the scene of a robust debate about legal service delivery and more than a few body blows.
In this week’s Law Firm Disrupted, we go ringside to narrate a bare-knuckle brawl over a single question: Who is to blame for a lack of change in the legal service delivery model?
In one corner, coming in with a combined $91.4 billion in gross revenue; boasting average profits per partner nearing $2 million; and still billing by the hour whenever they can, it’s the world’s most prestigious law firms. Read more...
5 Arguments Against the Billable Hour
The name Beyond Billables pretty much gives away our opinion on the billable hour paradigm. So, the title of this article will come as little surprise.
The thing is, we’re far from alone in holding this dinosaur of an economic model in disregard. On a recent episode of the Beyond Billables podcast, we spoke with Tim Corcoran – a consultant specialising in helping law firms embrace change, up their efficiency and become more profitable. Tim is on the front line of how the practice of law is evolving, and he had this to say: Read more...
Racking Up Those Billable Hours? This Michigan Lawyer Has You Beat
The Howard & Howard IP lawyer billed 3,600 hours in 2017— the equivalent of almost 70 hours a week every week of the year.
Ever wonder how your billable hours measure up? Consider this: Daniel Bliss billed 3,600 hours last year.
That’s almost 70 billable hours a week for 52 weeks. That’s 10 billable hours a day if you work seven days. That’s nearly 12 billable hours a day if you decide to take off one day a week. Read more...
Elements of Pricing, Invoicing and What Not to Miss
For our second installment we've invited Richard Stock (Catalyst Consulting) who will give the keynote address at the Buying Legal Council EMEA Conference in London coming up soon on June 12th to give us a preview of his presentation. Enjoy!
THE 8 CRITICAL ELEMENTS FOR SUCCESSFUL NON-HOURLY PRICING
Companies have managed legal sourcing processes for more than 20 years. A great deal has been achieved. There is less improvisation about who gets the work. There is more predictability in pricing. And in many instances, convergence in the number of firms has come along nicely – to the point that some organizations have announced that their panels of law firms are stable and that they will no longer be issuing RFPs. Otherwise put, “the work is the firm’s to lose”. Read more...
Hourly Rate Gap Widens as Top Billers Leave Others Behind
It's easy to be impressed by individual partner rates approaching $2,000 an hour, but the widening gap between whole categories of law firms may mean more for the industry's future.
With outsized billing rates making even mainstream news reports—a Kirkland & Ellis partner’s $1,745 hourly rate in the Toys R Us bankruptcy recently caught the attention of The New York Times—there’s no question clients are watching the numbers closely.
But are they balking? It depends who you ask. Read more...
Efficiently Make Your Time Matter Wherever You Go
Accurate timekeeping is crucial to productivity, client satisfaction, and even more important, getting paid. However, the drudgery of this chore often causes timekeeping to become an afterthought and it falls to the bottom of the to-do list. The problem isn’t just time entry, but how time is entered. Many of the existing time-tracking processes cause a bottleneck for the team. But the job must get done for bills to be sent. So, staff then reconstruct a week’s—or even a month’s—worth of work, which can lead to a lot of forgotten billable hours.
When time can be entered easily as soon as the billable work is complete, you ensure compliance and, in turn, improve your firm’s bottom line. The advances in technology make it even easier to stay on top of billable hours in real time. According to the American Bar Association’s 2017 Legal Technology Survey Report, 96% of lawyers surveyed indicated that they use smartphones for law-related purposes while away from their office.1 Legal professionals now have mobile capability to access and enter information from anywhere at any time. Read more...
Rethinking Law-Firm Productivity Measurement for the Post Billable Hour Era
The traditional definition of “productivity” in law firms is seriously messed up. A few days before I sat down to write this piece, Joshua Lenon of Clio made the case much better than I could in a brief tweet storm on Twitter.
The [2018 Report on the State of the Legal Market by Georgetown Law School and Thomson Reuters Peer Monitor] defines “law firm productivity” as “the number of billable hours worked by lawyers divided by the total number of lawyers.” Productivity in business is units of output divided by unit of inputs. Peer Monitor seems to think that lawyers’ hours are outputs, and the number of people working are the inputs. Read more...
US Legal Business Improving, But Firms Under Pressure
Research in US suggests firms are under greater pricing and operations pressure depsite improvement in business environment.
The legal business climate is improving but law firms still feel pressured on pricing and operational efficiency, according to a new study published today by Aderant. The 2018 Aderant ‘Business of Law and Legal Technology Survey’ found the top five challenges facing law firms are: pricing, cybersecurity, operational efficiency, technology adoption and competition. Among respondents polled from US firms, cybersecurity jumped from sixth place in this survey the previous year to tie for the top spot with pricing in 2018. Read more...
Fixed Fees Hitting Firms in the Pocket Already, Survey Finds
Cash-strapped firms must adjust to the ‘new normal’ of fixed fees and low margins for work, new research has concluded.
The annual survey by professional services firm MHA said fixed fees have been a factor in an income drop in 2017 experienced by smaller firms. The report said price competition is already a regular occurrence and is forcing firms to reduce quotations to win work.
Karen Hain, head of the professional practices group at MHA, said firms must juggle adjusting prices while ensuring profitability. ‘Efficiency will need to be a key planning theme for 2018, so that all work is done following the quickest and most accurate procedures, by the lowest costing individual,’ said Hain. Read more...
Half of Firms Miss Billing Goals and Majority of Partners Resist Change, Says New Survey
A rapidly changing and more competitive legal market means half of U.S. law firms are not meeting their billable hour targets and nearly seven in 10 partners resist efforts to change, according to a new survey from Altman Weil.
While largely rebounding from the recession 10 years ago, the 2018 Law Firms in Transition survey says firms are now met by “a more volatile marketplace characterized by client demands for greater value at lower prices, non-traditional competitors taking market share and new technologies disrupting the status quo.” Read more...
LEGAL PROJECT MANAGEMENT
The Profitable Benefits of Legal Project Management
Legal Project Management (LPM). It’s a buzzword you hear a lot in the legal industry as the “next big thing.” In fact, managing a matter as a lawyer is as old as the profession itself. What’s different now are the tools available to manage your matter more efficiently and even achieve higher profits. Properly planning a matter ahead of time will also allow you to move towards charging fixed fees, a highly desirable thing for many clients which ultimately will strengthen your relationship.
So let’s look at the profitable benefits of LPM and five tips to successfully implement. Read more...