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']
The perfect pricing storm; artificial intelligence and hourly billing
Law firms today face increased pressure to do 'more for less' resulting in rapidly growing interest in compelling technology-augmented hybrid offerings: focused on process-oriented work, applied at scale, leveraging technology to produce effective solutions that address the GCs evolving role as manager of legal spend and supply chain risk.
For many law firms, this means fewer billable hours. If AI will allow document review for example, in a fraction of the time it used to take, that's someone's billable hours target out the window. The use of AI in legal service delivery is exciting and represents a great opportunity, particularly for early adopters, but it has a vicious sting in the tail. Something will have to change with traditional pricing models. Read more...
DLA Piper partners with Kira Systems to leverage artificial intelligence tool for M&A due diligence
DLA Piper announced today that it has partnered with Kira Systems to implement an artificial intelligence tool for document review during the due diligence process for M&A transactions.
"We believe that this innovative technology will do for corporate transactional work what e-discovery has done for litigation," said Jonathan Klein, chair of DLA Piper's US Mergers and Acquisitions practice. "It will not only make due diligence faster and more efficient, but will mitigate risk throughout the process, all of which are important benefits for our clients and the firm."
"It's clear that using tools like Kira will transform the way in which we deliver our services to clients. On a recent deal, our knowledge and experience combined with Kira meant that we could deliver to much faster timelines with greater accuracy and efficiency," said Lyndon Masters, Corporate M&A partner in Brisbane. Read more...
5 Algorithms every Pricing Director should know
Peter Sondergaard from Gartner recently coined the term “Algorithmic Business” to state that data volume does not really matter, but what companies do with that data – how they turn it into proprietary algorithms – is a powerful competitive advantage and therefore the cornerstone of business growth.
Most Pricing professionals are lagging behind in the digital transformation, and despite investment in software and data capture, most companies are facing a 'black box' when it comes to understanding how pricing decision is decided and executed.
Mastering the Algorithmic Era in Pricing means creating a glass box situation within the organization, by getting back the control over pricing data and rules and developing and installing sustainable pricing analytics skills. Read more...
Fees at second-tier firms move ahead as dynamics shift, says Deloitte
Average income generated by fee earners in firms ranked from 26-50 has outpaced the average achieved in the top 11-25, according to the latest snapshot from a bellwether survey, highlighting the ‘changing dynamics’ in the sector.
According to Deloitte’s Quarterly Legal Sector Survey, in the year ending 30 April average fee income at the top 100 firms rose by 5.4%. This was enabled by a 2.6% rise in the number of fee earners as well as in average income per fee earner.
In the last quarter of the financial year, average fee income rose by 6% over the same period last year, with fees for the top 10 firms rising by 7.2%. Read more...
Is the billable hour responsible for the legal profession’s supply-demand gap?
The idea that there are “too many lawyers” is a common misperception. In reality, there are too few lawyers but, at the same time, too many lawyers without jobs. This is how, to speak in the broadest terms, the poor generally can’t afford legal representation even as JDs who might otherwise represent them ply their trade as baristas.
This disconnect between supply and demand is largely the result of perverse costs, says Kenneth Grady, a lawyer and “Lean Law Evangelist” at Seyfarth Shaw. Grady, a former law firm partner who spent several years in various high-profile corporate roles, has dedicated his life’s work to helping overcome the systemic inefficiencies that have driven the costs of legal services higher and kept access to justice at bay. Read more...
Law Firms Must Look at Staffing as Part of Pricing and Profitability Models, Forum Panel Says
Law firm staffing is one big way AmLaw 100 firms are looking to increase profitability, a recent panel of C-levels and directors attested. Firms are considering everything from exactly who they staff on individual matters, their overall staff-to-attorney ratios, to whether internal or external attorneys might best handle tasks, and how to use increasingly sophisticated tools and metrics to measure their success at these efforts, panelists said.
The panel, titled “Chasing Profitability: The Evolving Law Firm Staffing Model” was part of the recent 6th Annual CFO/CIO/COO Forum, presented by Thomson Reuters’ Legal Executive Institute. Read more...
Costing is a science, but pricing is an art
Knowing the costs of serving your clients is important, but it’s not the same thing as knowing how to price your services. Costing is objective and tactical; pricing is subjective and strategic. Costing uses formulas; pricing requires judgment.
When it comes to compensation, the misstep professional firms make is mistaking costing for pricing. They are not at all the same thing. One discipline requires scrutiny and analysis; the other requires creativity and innovation. Just because your firm has an outstanding competency in accounting, it doesn’t mean you have a competency in pricing. You may have a Chief Financial Officer, but to maximize your profitability you also need someone that plays the role of Chief Pricing Officer. Read more...
Now proportionality test bites in the Competition Appeal Tribunal
Proportionality has hit the Competition Appeal Tribunal as it capped a defendant’s recoverable costs at £350,000, compared to its budgeted costs of £637,000.
Tribunal president Mr Justice Roth said that where parties were of very disparate means, it may be necessary to limit what the bigger one received in costs if it won.
As reported in the linked story on Legal Futures, the case involves a competition law challenge to the Law Society’s decision to require firms that are members of its Conveyancing Quality Scheme to use its training to maintain their accreditation; previously other providers could offer it. Read more...