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']
Lex Mundi Global Network Turns to Validatum® on Pricing
A survey of the world’s leading network of independent law firms, Lex Mundi, placing pricing at the top end of the list of critical skills for law firms to develop in the coming years, has prompted the network to team up with Validatum, one of the world’s leading legal services pricing consultancies to address the issue. Read more...
A price increase of 10%: financial suicide, or is it?
If anyone was to suggest to a law firm management team that they should hike their pricing by 10%; new clients with immediate effect and existing clients at the next review, the advice would be viewed with derision and opprobrium.
Many firms genuinely believe that their brand is so weak and their relationship with the bulk of their clients so brittle and so tenuous that the smallest increase in prices will result in a mass charge for the door.
Generally, this is based on little more than gut feel and intuition and whilst these are always helpful, they are no substitute for a more rigorous and analytical approach. Time therefore to introduce into the analysis a concept known as price elasticity of demand (PED). Read more...
THE BILLABLE HOUR
What You Should Be Tracking Instead of Time
Professional firms who have come to terms with the fact they don't sell time still fear the prospect of trying to manage their staffing, workflow, and finances without the information provided by timesheets. They fear they'll be operating in the dark, devoid of the data they need to evaluate and manage their success. But trading hourly billing for modern pricing practices provides the perfect opportunity to start measuring the things that really matter -- effectiveness, innovation, accountability, profit growth, and true productivity.
Ad agencies in particular are notoriously resistant to measuring anything that's not a unit of input (hours, labor rates, time of staff) or a form of income. As ad exec turned professor Brian Sheehan points out, "Most agencies track their revenue increases or declines year over year, but they rarely track workload year over year, and almost never track the basic financial formula that gives a clear picture of the long-term nature of their businesses: revenue divided by workload over time." Read more...
What Timesheets Don't Tell You
Is it possible to run a successful professional service firm without billing for the hours recorded on timesheets? Apparently so, as thousands of the most successful ones have already abandoned the idea of selling inputs and instead focus on outputs and outcomes.
But even those professionals who concede that time-based billing is a suboptimal way to capture value fret that without timesheet data, they’ll lose the essential information they need to run their business. Given that time tracking has become so ubiquitous in professional firms, most professional managers have been brought up to believe it’s the only tool they have to manage their resources and profitability. Read more...
£72,000 bill for £3,000 claim ‘disproportionate’, costs judge insists
A judge has refused to back down after slashing costs for a clinical negligence case where the damages were a fraction of the amount claimed.
Claimant firm Thompsons Solicitors had originally served a bill of costs for £72,320 after settling a case for £3,250.
That costs figure was reduced to £24,600 after a provisional assessment last summer, with Master Simons, Costs Judge, finding that the bill was disproportionate. Read more...
LEGAL PROJECT MANAGEMENT
Legal Project Management in Legal Departments
Good project management helps law departments manage legal matters more efficiently and cost effectively. An integral tool of corporate business units for years, project management has become important to law departments because of expanding client expectations and the evolving role of in-house counsel. Clients now expect more than substantive legal knowledge; they require in-house counsel to have business acumen and to provide legal services in an efficient, predictable, and consistent manner.
Project management helps law departments fulfil this broader role because it engenders more effective planning, cost control, resource allocation and risk management.In general, the same principles used by other business units are applicable to legal projects, but with certain refinements because of the nature of the work. This Quick Counsel provides a brief overview of legal project management. For a more detailed discussion, please see the ACC Primer –Legal Project Management, on which this article is in part based. Read more...
How flat fees ensure profits
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.
Not every practice is right for fixed fee billing and LPM, but it is hugely beneficial for intricate matters that have many milestones and tasks. Even if you have no intention of setting a fixed fee, your firm will benefit from detailed planning. With proper implementation your project plan means you can assess profitability before you ever start and adjust in real time if needed. Read more...
The growing influence of legal procurement
Lawcadia have produced a 5-week series on buying legal services in Australasia, written specifically for PASA. Each week, we are bringing you the next chapter. Here’s the second instalment…
In last week’s article, we introduced the topic of legal procurement and discussed why legal is the final frontier for procurement professionals. This week we dive deeper into legal procurement and explore the driving forces behind this growing area of expertise.
To really appreciate why legal procurement is such a new and interesting concept, it is important to have an overview of the legal industry which we will briefly outline. Read more...
The Big Catch
Tendering for legal work is more common than ever for small to medium-sized law firms. Steph Hogg explains how to handle the bidding process.
Tendering is tough. It’s expensive. It’s time-consuming. Everyone involved has an (often different) view on what great service looks like and how much that’s worth. Let’s face it, it’s a downright painful process. And that’s just the client’s perspective.
Large law firms will, of course, be used to the rigours of tendering. Large corporates have had sophisticated (to varying degrees) procurement functions managing their legal expenditure for many years, and the legal firms which advise them tend to have well-resourced, equally sophisticated bid and business development teams to work with them. Read more...
Moving from conflict to collaboration – procurement is friend not foe
Lawcadia have produced a 5-week series on buying legal services in Australasia, written specifically for PASA. This fifth instalment is the conclusion of the series…
In this final article for PASA on legal procurement, we are going to explore the soft side of working with legal teams and what is required for success in legal procurement.
“The relationship between in-house legal and procurement has too often been far from productive,”1 reports a journalist for GC Magazine, a publication for prestigious legal industry entity The Legal 500. The same article shares that some legal departments refuse to engage with procurement, or have simply kicked them out of meetings. Read more...
Navigating the complexities of billing guideleines
The purpose of outside counsel guidelines, or billing guidelines, ought to be to strengthen the relationships between corporate counsel and law firms. Such guidelines are intended to be a level set that establishes an agreement between client and service provider for legal value – the best possible outcome at an efficient price.
Unfortunately, these guidelines have a tendency to devolve into mechanisms primarily focused on cost-cutting – a long list of things for which clients say they will not authorize payment. Outside counsel guidelines have become a “counterproductive combination of micromanagement and blunt instrument,” according to D. Casey Flaherty, a former corporate lawyer, turned entrepreneur, and an early advocate of fostering technology skills in legal. Read more...
Adoption of E-billing Tools – US versus Europe
Although e-billing is playing a role in the commercial relationship between a growing number of UK/European in-house legal departments and their law firms, there are still many organisations that aren’t yet reaping the benefits of e-billing. It’s often said that numerous non-US organisations don’t “get” the value of e-billing.
I believe, it’s not that they don’t “get it”, rather the e-billing solutions, until recently, didn’t necessarily deliver against the needs of European organisations.
It is estimated that 90% of all litigation work is now e-billed in the US; and a recent study shows that in many mid-sized US firms, around 70% of annual revenue is collected via e-bills. Read more...
Pricing and Profitability Analytics – Part 1: Do You Have an Information Strategy?
I am often asked to implement an analytics solution to solve a whole multitude of issues, with a lack of insight from data; lack of accessibility to data; and a lack of trust in information being the top of most lists.
The concept of ‘business intelligence’ is not a new one. IBM’s Hans Peter Luhn was one of the earliest proponents back in 1958. Over time, the availability of technology has grown exponentially, and yet many firms still struggle to support key decisions with facts. These firms have (at least) one thing in common – they have a very poorly defined information strategy. This article explains why an information strategy is a critical component of improving profitability of a firm. Read more...
Microsoft is Overhauling How it Hires Outside Law Firms - New Trend for Other Corporate Counsel?
Microsoft Corp. is planning to overhaul its so-called “preferred provider program,” its internal system that determines which outside law firms the corporation routinely uses, one of its lawyers said
“We’re about to launch a significantly redesigned version of it over the next 12 to 18 months,” said Lucy Endel Bassli, assistant general counsel of legal operations and contracting at Microsoft.
Although development is in its early stages, the new program will prioritize law firms with expertise in specific practice areas rather than general services, and will experiment with so-called “affinity relationships,” in which expert panels of firms will be asked to provide the company with advice on issues from a variety of perspectives. Read more...