The Power of Irrational Pricing

When presented with a range of pricing choices, are client’s more likely to make a rational or irrational decision? In recent years behavioural economists have generally supported the concept of ‘homoeconomicus”; buyers characterised as powerful, calculating decision-makers who base their decisions on rational, objective and consistent preferences.

For over a decade, we have taught the law firms that we work with, the concept of providing clients with pricing choice. This manifests itself in a clear articulation of several discrete pricing methodologies to the client at the outset of the matter. The pros and cons of each of them from the client's perspective are also clearly articulated and the client is then invited to select the best one from their perspective. Read more...

"Because I'm Worth It!"

In our conference presentations and consulting work, we have often made reference to the fact that when it comes to pricing, we lawyers could do worse than take inspiration from the often far more sophisticated pricing strategies of other industries and professions. We have for example taken and adapted some of the best pricing ideas and practices from hotel chains (yield management), airlines (customer segmentation and price discrimination), and fast food franchises (bundling) to name a few.

We came across another excellent example recently in Malcolm Gladwell's bestseller 'What the Dog Saw' (Penquin). It centres on the clash of the women's hair colour titans – Clairol and L'Oréal. Clairol was the dominant incumbent in the US market for many years with its product called Nice 'n Easy. In the mid-1970s French company, L'Oréal decided to launch an attack on that dominance, an attack that was spearheaded by its product, Preference. Read more...

Client-care letters in the spotlight as LSB urges lawyers to use plainer English

Greater prescription of how client-care letters are framed could follow a Legal Services Board (LSB) report yesterday that said “inaccessible language” used by lawyers prevents consumers from accessing legal services.

The report showed them how other sectors have developed guides, logos and customer information which made buying services less daunting for consumers.

According to the LSB, inaccessible language and communications, lack of trust, and a failure to cater for the needs of vulnerable consumers are three key non-financial factors that contribute to unmet legal need. Read more...

Lawyers urged to re-examine disputes costing model

As alternative dispute resolution becomes more popular, law firms may have to re-think their approach to client billing, a mediator has warned.

Stephen Lancken, a mediator and director of Negocio Resolutions, suggested clients increasingly expect their lawyers to seek alternatives to expensive litigation.

"[A firm's] business model is based on traditional litigation, which is preparation, discovery, evidence, affidavits - clients are recognising that's very expensive," he said. That's not a criticism of lawyers, it's just the cost of litigating.” Read more...

Branding: Leading with price

There are a lot of definitions of what a brand is, but I'm more interested in what a brand should do. In my mind it should do the following: provide a set of cognitive shortcuts to its audience. Contrary to what we may think, its audience doesn't have to just be those who are in its potential market. Strong brands send a message to everyone, both lovers and haters.

Often, a brand needs to also send a strong message to those who will never use, buy or consume it. And this is most important when it comes to the extreme edges of pricing. Yes, products and services that live in the deep ends of luxury and, let's say, 'value' get an advantage brands that live in the middle ground never get. They get to tell a story of what the brand means before any other interaction has even been had with it. Brands with extreme pricing get the best cognitive shortcut of all: a free and immediate one. Read more...

City law firms charging up to £1,100 an hour

Partners at top City law firms are charging clients more than £1,000 an hour, according to a Conservative thinktank which condemns fee rises for restricting access to justice.

The unusual critique of the UK’s largest commercial solicitors’ companies by the Centre for Policy Studies (CPS) follows calls from the justice secretary, Michael Gove, for a levy on City lawyers’ profits to improve the UK’s “two-nation” justice system.

The CPS report, entitled The Price of Law, points out that the top seven firms in the City, including those in what is known as the Magic Circle, employ tens of thousands of people and bring substantial tax revenue into the country. Read more...