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']
Pricing and Salivating Dogs
This is not the first time that we have written on this topic but two items that crossed our desk in the last week have galvanised us into raising the topic again. The first was an article appearing in The American Lawyer’s Am Law Daily that looked at some of the reasons contributing to the demise of King & Wood Mallesons.
Most of us are familiar with Pavlov’s classical conditioning experiments. It is therefore obvious to most that the best way to get the behaviour you want is to provide reward for doing so, or at least refrain from punishing people for it. The flip side is that you must make sure you’re not inadvertently providing reward for behaviours you’re trying to discourage. Read more...
How Much Would You Pay For The Very Best Lawyer?
What is the billing rate for the best attorneys in the country? Though some may be loathe to divulge that information, it is a fascinating glimpse behind the veil of Biglaw — hell, half the folks working there don’t know how much their firms rake in for an hour of their work. So when BTI Consulting Group puts out the results of its annual survey getting into the nitty gritty, it is a fun time for all.
The good news, at least if you’re a Biglaw fan, is that the high-water mark went up 20 percent over last year’s top hourly rate. Law360 has the details: Read more...
Billing Transparency: What Legal Procurement Really Wants From its Law Firms, Part 2
I recently required the services of an attorney. I must admit that when I received the bill I was shocked — it was double what I expected. The attorney attached all the documentation to my invoice; included time spent on voicemails, emails, etc.; and provided the backup information needed in order to understand it. I reviewed it carefully; and sure enough, he was right.
Given this, I was happy to pay the invoice immediately and have recommended him to several of my colleagues. I might also add that the bill was sent to me immediately once the work was completed. That way, there was no memory lapse as to the value of the service he provided. I suspect that the same principle applies to most law firm clients. Read more...
3 Types of Legal Tech Startups Undercutting the Billable Hour
Many predicted that technology would bring the downfall of the billable hour, yet the payment model has showed continued strength throughout 2016. But while the billable hour has kept a pretty tight hold on the legal industry, alternative fee agreements (AFAs) have grown substantially in the last few years.
Now, startups are finding ways to help clients cut time spent on delivering legal services and move closer toward flat fee structures. Here are three types of legal technology startups pushing traditional law firms to think twice about their commitment to the billable hour. Read more...
'Trophy' Clients: Be Careful What You Wish For!
We all like a ‘good client’, whether it is an existing client, or a big one we hope to land. But what exactly are the attributes of a good client and what do we do about them if they aren't as good as we thought they were? When working with partners on pricing strategy...
When working with partners on pricing strategy, an exercise that involves amongst other things, pricing client files that are active at that time, some of my pricing suggestions can be greeted with, “oh, I can't do that, this is one of my good clients!"
And a good client looks like what? Read more...
Mergers and Their Orphan...Pricing
Law firms contemplating or in the throes of a merger, ignore or pay scant attention to harmonising the merging firms pricing cultures, governance, analytics and execution at their peril.
The trend towards law firm mergers, particularly in the UK market, continues apace and there is no reason to believe that it will slow down. Quite the opposite one suspects.
Synthesising two law firms represents a huge challenge, even if the balance sheets and P&L accounts are relatively harmonious. The challenges associated with blending culture, values and behaviours are well understood. Read more...
The Billable Hour
Billable hour pricing is effectively dead because of budget caps, report says
Most law firms say they use the billable hour model for pricing most of their work, but the reality is different, according to a new report.
Largely because of budgets and caps imposed by clients, 80 to 90 percent of law firm work is done outside of the traditional billable hour model, according to the 2017 Report on the State of the Legal Market. The report (PDF) was released by Georgetown Law’s Center for the Study of the Legal Profession and Thomson Reuters Legal Executive Institute, according to this press release. Read more...
"The death of the traditional billable hour": Managing Risk Requires LPM
You may have missed it. Georgetown Law's Legal Executive Institute pronounced the death of the billable hour last week in its 2017 Report on the State of the Legal Market.
For the last ten years Georgetown Law has analyzed the quarterly Thomson Reuters Peer Monitor Report data submitted by law firm leaders. Each January an annual report of the health of the industry is published interpreting the current year's economic data.
In 2017 a ten year longitudinal study was published and analyzed by Georgetown's Legal Executive Institute. The data is stunning. The interpretation is dire. Read more...
Will technology bring an end to the billable hour?
Law firms today face the challenge of clients spending less with them than before as a result of alternative service providers who are aggressively reentering liberalized markets using emerging technologies to disrupt the tasks typically done by lawyers. For many law firms, it means fewer billable hours.
Technology has been used to displace lawyers from their profitable roles in areas such as documentation review, e-discovery, legal form drafting and patent applications. An International Data Corporation report estimated e-discovery services to be $8.2 billion in 2015 and to reach $14.7 billion by 2019. In terms of the next wave of disruption, there are already several dynamic firms growing fast which employ cognitive computing to offer entirely new types of legal analytics to empower lawyers. Read more...
Legal Project Management
What is Legal Project Management?
Legal project management can be defined as the “application of project management principles and practices to enhance the delivery of legal services”. Whilst both the legal profession and the project management discipline are neither new, there has been a global wave of interest in legal project management practices.
So what is the sudden catalyst for law firms to take a project approach to legal matters? It simply comes down to client market demands for fixed priced legal services. This is a historic shift from a lawyer progressing work and charging for their time as they go, to a model where an accurate quote can be given upfront. Clients are now wanting to better understand the legal costs and limit their risk of high expenses for legal work that could lead to their financial loss even when they win the legal case, making better informed decisions about whether to pursue a legal pathway or not. Read more...
Lawyers Are Ignoring a Vital Business Development Tool
When we teach and discuss Legal Project Management (LPM), we stress that the last of LPM’s five basic steps, Post Project Review, not only is every bit as essential as the first four steps, it can be an extraordinarily powerful business development lever, as well. Sadly, this message falls mostly on deaf ears.
Frankly, lawyers tend to be resistant to all LPM methods and processes, but in today’s client-driven legal environment, most will at least acknowledge the evident benefits four basic LPM food groups: 1) better project scoping, 2) more comprehensive project planning, 3) more effective management and control of legal work, and 4) rigorous progress measurement and actual-to-budget monitoring.
With greater or lesser amounts of coercion from their firms’ management committees, many lawyers seem willing to at least sample these four food groups, because they are learning the hard way that clients want what LPM delivers: Read more...
Is 2017 the Year of LPM Adoption?
The pundits, academics, futurists and traditionalists all seem to agree for a change. When no less than the ABA convenes these various voices and a singular message emerges, something must be happening to our staid profession. And they say that 2017 is the year
Just before the end of the year, the ABA posted an interview by Ari Kaplan with seven legal luminaries from across the spectrum of our industry about the future of law in 2017. They are: Read more...
Bidding to Win: Brand & Strategy - Do You Know Where You’re Going To?
Hello again. Recently I’ve found myself thinking increasingly about brand and strategy – more specifically, about what happens when a brand loses direction and strategy appears to go horrendously wrong. The legal press can’t get enough of the CMS/Nabarro/Olswang merger and the collapse of King & Wood Mallesons. Then we have Theresa May and her Brexit strategy, Donald Trump and his media strategy (I’ll stop there) and the beleaguered Jeremy Corbyn being pushed to uncover a clearer stance (dare one say strategy?) on key issues. Headlines are full of it.
Here’s a sobering quote from The Lawyer Leader (28/11/16): “Fifteen years ago the name Olswang meant something … the idea of Olswang being subsumed into a European behemoth would have been unthinkable. Back then it may have been small compared with its rivals, but it had an outsized brand … a well-deserved identity. For the past decade or so it’s been a very different story. Missed opportunities, a loss of focus and strategic splits have led to the one-time trailblazer going the way of all diminished brands: a takeover.” Interestingly, but not coincidentally I’m sure, The Lawyer then devoted a fair few pages to the “march of technology”, and we all know what that will mean for firms who fail to catch on. Read more...
New Year, new procurement goals – are you ready?
I must be one of the very few people that loves this time of year at work, hugely looking forwards to the excitement and uncertainty of the challenges that the year will bring. Planning my work for Q1 this year with Richard, we were reflecting on how we could help law firms better anticipate their clients' procurement strategy in 2017:
· Will they go out to market?
· Are they going to consolidate their panel?
· How much are they going to spend? Read more...
Legal services: the final frontier for 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 first instalment…
The past ten years has seen the procurement profession transition from a focus on buying goods, machinery and ingredients to strategic sourcing across every category in an organisation. Except for legal. Procurement have successfully assisted organisations with sourcing for their sales, marketing, IT, management consulting and accounting requirements, but until recently, the legal department has remained off limits. Read more...
The Worst of the Worst Pitches
The last we checked RFPs issued by clients were at an all-time high. This means a peak in presentations by law firms. A small number were truly excellent—blowing clients away and gaining new work for these law firms. Clients describe most as between acceptable and numbing. But, these potential clients saw a number of law firms embarrass themselves. You can understand why based on the experiences these top legal decision makers shared with BTI:
“In the middle of the presentation a slide appeared out of nowhere; it took me a minute to get oriented, but the slide showed the view of a football field—which they then told me is from the firm’s box. They told me at least one playoff game would come with these seats if I hired them.” Read more...
Corporate Law Departments Rank Financial Metrics Most Important
A new LexisNexis CounselLink study conducted in partnership with the Corporate Legal Operations Consortium (CLOC), indicates corporate legal operations professionals rank financial metrics as most important to the legal department. Participants were asked to rate 15 key metrics on a scale of 1 to 10 based on their level of importance to the business.
Each key metric outlined in the study supports one of the following three legal department objectives:
- Financial Control
- Outcome and/or Risk Management
- Operational Efficiency Read more...