With Validatum Pricing Espresso® we aim to bring you your morning 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']
Price of Law: City firms
Rarely does a story about law firms top the web traffic chart of the Financial Times.
But a report on City legal rates – asserting that some partners are now billing clients more than £1,000 an hour – caught the attention of the national press this month, receiving widespread coverage in the FT, Times, Independent and other papers.
Top City firms stand accused of inhibiting access to justice by charging record fees and failing to be transparent about costs. Read more...
Pricing: The Abort Ultimatum
Of all the dubious pricing strategies the legal profession has capitulated on, the so-called 'abort fee' must be right up there in terms of its disconnect from rational economic behaviour, its fairness, and its capacity to materially misalign the clients' and the firms' interests
It is a toxic legacy that has been with us for a long time but which became the aggressive 'norm' during the GFC when law firms systemic inability to differentiate themselves or communicate a compelling value proposition was brought into stark relief and saw most in the profession respond with pricing creativity that did not extend much beyond 'count the ways we can discount and throw money away'. Read more...
Pricing strategies: what lawyers can learn from the Romans
The Latin term for price is 'pretium'. However, closer investigation reveals that pretium also means 'value'. In other words, the Romans had the same word for price and value: pretium = value = price; something that is at the core of every economic transaction.
Value is the most important aspect of price, price management and pricing policy. Or, to put it more precisely, the value perceived by the client. The willingness of clients to pay and therefore the price targeted by the firm are always just a reflection of the perceived value or benefits of the advice and service being provided – nothing more and nothing less. Read more...
Law Institute of Victoria Comes Out in Favour of Contingency Fees
Until now, there has been no overt and organised advocacy from a state law society or institute in favour of contingency fees.
The Victoria State Government is conducting an enquiry into Access to Justice and the Victoria profession (through LIV) will be submitting a proposal in favour of contingency fees.
In a previous enquiry, the economists at the Productivity Commission recommended adopting contingency fees as outlined in their September 2014 Access to Justice report. Read more...
Corporate Lawyers Say They Are Spending More In-House
Chief legal officers at corporations in 41 countries say they are spending more — and hiring more staff members — in-house, according to a new study by the Association of Corporate Counsel, a legal professionals membership group, that asked 1,300 corporate lawyers and chief legal officers.
The rise is being driven by more government regulatory scrutiny as corporate dealings become increasingly multinational, according to the group’s report. One-third of those responding said their companies had been the target of regulators in the last two years. Read more...
The 3 Red Flags of More Law Firm RFPs
The volume of law firm RFPs are at a 15-year high according to market research firm BTI Consulting.
“56% of corporate counsel issued RFPs for law firms in 2015, up from 45% in 2014,” wrote Michael B. Rynowecer noting the majority of clients have turned to RFPs for law firm hiring.
At face value, this could sound like an indication the legal business is picking up, but there’s a cautionary tale for professionals in law firm business development (BD), says James Paterson, vice president, LexisNexis Large Law Practice Management Solutions. Read more...
The role of pricing in an organisation
Pricing is a C-level topic
Much too often, pricing is seen as an operational task for experts, however, C-level involvement is crucial if a company wants to achieve sustainable profitable prices for its excellent performance. When C-levels are involved in pricing, their companies generate on average 25 percent higher EBITDA margins than their competitors.
An executive’s most important tasks are to give the price strategy a clear direction (e.g. volume growth vs. margins), create a pricing organization and instill a profit-oriented mindset among employees. A model example of this is Porsche. Pricing is one of the highest priorities for its C-levels.
They take an active role in pricing thereby contributing significantly to an ROS of over 15 percent – an unusually high figure for the industry. Read more...
Little is left untouched by Legal Procurement
Legal Procurement’s influence is quickly becoming ubiquitous. In many companies, it has become common and ordinary practice to involve Procurement when selecting outside counsel.
But just how common? And what does Procurement do? To find answers, the legal procurement trade organisation Buying Legal Council launched its 2016 Legal Procurement Survey. We are still analysing, but here is a sneak preview: Read more...
RFPs: Ripe For the Picking
A Primer for the Right (and Wrong) Steps for Responding to Requests for Proposals in Professional Services
Anyone who has worked on a proposal in response to an RFP knows that they require thoughtful, thorough, and timely information. These are not “copy and paste” documents. In professional services, today’s RFPs are very specific. No two are alike. The RFPs ask for much information and documentation. The issuers want responses only to their questions. Read more...
Legal services struggling to grow profitable revenue
Legal firms have identified the difficulty of maintaining profits in the current environment as their major challenge, according to Pitcher Partners’ latest survey results.
Last week, Pitcher Partners released the results of its 2015 Legal Practices Survey.
Respondents flagged maintaining and growing profitable revenue as one of their key concerns, along with retaining quality staff/generational change, client fee expectations and pricing, technology changes and succession of practices. Read more...
What will it take to boost Pricing maturity?
Yet another study shows that a majority of companies operate at a low level of pricing maturity and that they also deeply underestimate the effort and capability it will take to be best in class in pricing. Duh, what else is new?
I’ve been in the pricing business for 10+ years and it’s become our mantra that pricing is the most profitable lever companies can, and shall, influence. Pricing, done right, will get you the best ROI and will also be a key enabler for future profitable growth. Read more...