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']
Most Favoured Nation Price Clauses: Barking Mad & Potentially Unlawful?
Most favoured nation (“MFN”) clauses, sometimes known as ‘price parity’ or ‘best price’ clauses, are agreements whereby one party promises another to always offer its best rates or terms for a product or service.
They are commonly found in a wide range of commercial agreements from long term industrial supply to distribution arrangements. However, increasingly they have been adopted in the on-line world through agreements for online travel agency sites, price comparison sites and online marketplaces where the site operators wish to ensure that they can offer the lowest price on the market.
More recently they have begun to appear in law firm panel appointments and renegotiations. In other words, the client is assured of always getting the best deal that the firm grants to any client, now or in the future. Read more...
THE BILLABLE HOUR
Joining Other Firms, Bryan Cave Asks Tech Team to Start Billing
At a growing number of law firms, the back office is getting pushed front and center.
Bryan Cave on Thursday launched a new consulting service staffed by data pros and software programmers who solve law department operational problems, becoming the latest firm to transition an existing team of internal professionals into a standalone, client-facing service.
Branded BCXponent, the new Bryan Cave initiative is a formal marketing effort designed around an existing 31-person team at the St. Louis-based firm that includes data analysts, software programmers and project management pros. The team has already helped legal departments develop software tools that help manage contracts, track legal spending or conduct and manage RFPs to hire law firms. Read more...
Are all your team meeting their billable hour targets?
Do you or any of your team work hard, and seemingly efficiently - but still struggle to meet billable hour targets?
Capturing time should be easy: you do the work, your record the time it took you, you bill the time. Easy.
Unfortunately, it’s not that easy - a number of practice and individual issues get in the way. Part of the productivity challenge is to work out why your productivity is below where it might be – and then how to address this. Read more...
The Truth about the Billable Hour
One important aspect of law firm life that is nearly impossible to avoid is the “billable hour.” Most law firms make their money by billing their clients by the hour. In order to be profitable to your firm, you must make enough money from your billable hours not only to cover your salary and your overhead, but also to generate revenue for the firm. It’s not a complicated equation – the more hours you bill, the more revenue for the firm.
Firms “average,” “target” or “minimum” stated billables typically range between 1700 and 2300, although informal networks often quote much higher numbers. The NALP Directory of Legal Employers (www.nalpdirectory.com) contains billable hour information in the “hour and lifestyle” tab, although many firms choose not to share their data. Read more...
PRICING AND ECONOMICS
Law Firm Billing: Is This Essential Function Becoming an Overhead?
Running a law firm as a business takes time. Therefore, the total of the partners’ worked hours is a mix of the billable and non-billable activities. And this is only natural, as non-billable activities are a necessary part of every organization.
However, not all non-billable activities bear the same value. Some activities, like business development, networking, etc. have a huge potential return on investment (ROI). Other non-billable activities, though necessary, can sometimes be regarded as an overhead. Read more...
Why Understanding Economics is the Key to Law Firm Profitability
“One of the biggest flaws with alternative fee arrangements (AFAs) not succeeding in law firms, is most law firms don’t understand their economics,” says Frederick J. Esposito, Jr., CLM, executive director of Long Island, New York and New Jersey based regional law firm, Rivkin Radler, LLP.
Mr. Esposito believes law firms focus too heavily on rate setting. By contrast he suggests, firms need to take into account law firm expenses. In other words, focus not just how much the firm charges clients, but how much it costs the firm to produce the work and keep clients happy.
“Right now it’s a client’s market, cautions Mr. Esposito, clients want focus and value, they want their law firms to work more efficiently and they want to pay less.” Read more...
LEGAL PROJECT MANAGEMENT
Legal Project Management: The Innovative Way to Manage Legal Services
The Rise of Legal Project Management
Recently, I spoke to a close friend and attorney who told me that her firm lost a very large corporate client that grew frustrated with increasingly high fees and ambiguous billing practices. Well...those weren't her exact words – no firm wants to admit to such practices -but that’s what became clear from our conversation.
Instead, this corporation wisely chose to go with another firm which utilizes project management principles to make the rendering of legal services more efficient and “client friendly.” Because of the amount of business this client brought to her firm, the firm had to lay off 20% of their attorneys and support staff - all of the ones who were hired almost exclusively to attend to this mega client! Read more...
Legal Project Management Defined
Despite the ubiquity of the term, many lawyers still don’t have or have a limited understanding of legal project management (LPM). It is therefore not surprising that the uptake of LPM in the profession has thus far faired better with marketing groups than practice groups.
In short, LPM is the application and adaptation of professional project management tools/techniques to managing matters in the practice of law. So what does that mean? Read more...
7 Things Lawyers Should Know About Project Management
About 25 years ago I was having drinks with the GC of a F10 company whose business would later send my daughters through school. Over a second drink, as we peered out at the skyscrapers soaring above us—we were on the 42nd floor—he said, “So Mark, do you really think that litigation can be done on a fixed-price basis?” “Bill”, I replied, “you see those buildings out there? They were all built on a fixed price in the middle of Chicago, so don’t you think a litigation matter—or portfolio—can be billed that way?”
It has taken nearly a quarter century, but the urban myth that litigation is “too unpredictable” to budget meaningfully and deliver on a fixed price is now being debunked. We know the “why”: because clients are demanding more efficiency, transparency, and accountability from their law firms. Read more...
Scrum for the Agile Attorney and Legal Project Management
Perhaps as an attorney, paralegal, or other legal services provider you have an appreciation for the efficiency and order that are derived from project management principles but you’ve been turned off by the rigidity of project management believing that it cannot effectively be applied to a law firm or other legal organization the way it is used in the industrial sector (i.e. construction, engineering, architecture, manufacturing, and real estate development).
If this has been your perception, you are partially correct. Legal project management (LPM) is not the same as industrial project management. Read more...
Due process: project management in the new litigation landscape
Litigators are generally good lawyers. Most choose litigation because of the enjoyment and intellectual rigour of arguing law and facts. Few become litigators because they wish to be project managers yet, at least with high-value complex litigation, that is what they essentially become.
Litigation is a project: time and cost frame the planning, coordination and monitoring required to meet unique objectives. It has not always been seen as such; we do not need to look back as far as Bleak House to see that. The last 20 years have seen exponential change in the litigation landscape; new factors adding to increased pressure on ever-present variables. In this new world of dispute resolution, success is delivered through dynamic design. Read more...
How to Make a Strong Legal Team with Agile Project Management
Legal Project Management is a hot topic nowadays, and understandably so. Done right, it can make your legal team the leader among your peers. Clients are also requiring their legal service vendors to prove they know how to manage projects, before they even decide to engage them.
Since legal project management became a fine line between being hired or not, it is very important that you dive deeper into this subject.
In this article we focus on Agile project management method, and you can read the following: Read more...
Legal Buyers Are Kicking Old Habits
Mark Twain said, ““Nothing so needs reforming as other people’s habits.” So, can big business kick its habit of retaining law firms to handle a majority of its legal matters?
The litany of law firm gripes is long and familiar: exorbitant cost and rates, overstaffing, budget unpredictability, IT and process deficiencies, and limited knowledge of clients’ business. One would think that law firms would be responding to all this—they read and hear about it every day. So why are legal consumers—not law firms—driving change in the legal marketplace? Simple answer: most large firm partners have yet to feel the financial consequences of stasis and are staying the course so they can “run the table." Read more...
Five Techniques for Selecting and Managing Outside Counsel Without Upsetting the Applecart
Altman Weil and LegalShift regularly partner on law department strategy and operational efficiency improvement projects for legal departments — of all sizes. Our work also spans large and small law firms and solo practitioners.
Our team observes that general counsel struggle to manage outside lawyers while still preserving value and responsiveness alongside cost-effective results. While there are no “silver bullets,” we have listed five techniques for selecting and managing outside counsel without upsetting the applecart.
We find that there are a variety of “good” practices and even more “bad,” but we’ve listed some of our favorites in order of ease, duration, dollar investment, and value. Read more...
How to Find a Great Pricing Job #lookbeforeyouleap
Last week a pricing specialist called me. He wanted a chat about his career options. He was working in a strategic pricing role in the manufacturing sector. He ‘d been promoted internally to the position from a role in sales (a not uncommon story), so he’d never actually sought out a strategic pricing role before.
After 3 years in his role and 6 years with his employer he wanted a change. He was wondering about a move into the professional services sector and had seen that a few law firms were starting to advertise strategic pricing roles. He’d read my article on The First 90 days and wanted to get my perspective. Read more...
Shell Legal – Reverse Rate Auctions and the Durable Billable Hour
Hypocrisy is the tribute vice pays to virtue. While it’s not quite hypocrisy, there have been several decades of more talk than action on appropriate fee arrangements (AFA), let alone the attendant analysis of the relationship between inputs, outputs, and value.
The death of the billable hour keeps being reported. Yet the actual data — some of which indicates that the percentage of total corporate spend on AFAs remains in the single digits — borders on suggesting that the billable hour is immortal. Even where the billable hour has receded somewhat, the underlying compensation models and the associated behavior often remain.
The durability of the billable hour, coupled with a law firm’s embedded expectation to see gains in collected hours year over year (with target calculations as rudimentary as previous year plus some arbitrary percentage), only increases the disdain in which the current system is held.
The conventional wisdom is that the billable hour is the root of many of the problems that plague the legal industry. The conventional wisdom is right. But the conventional wisdom can be right without being complete. Read more...
Annual Law Firms' Survey 2016
We've taken the opportunity in this 25th anniversary edition to look at the results of the current year, look back on previous years and, in the 'firm of the future' section, forward to the challenges firms are likely to face in the future.
Watch our overview video as David Snell, head of our Law Firms' Advisory group, and Kate Wolstenholme, our UK Business Services leader, consider the results. You can also explore historic data using the interactive tool, download the executive summary and register for full access to all of the findings below. Read more...