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']
“We’ll have a chat at the end” – a $20 Billion Black Hole
We lawyers detest talking about our fees with our clients. We have worked with over 300 law firms in 18 countries and if there is one common denominator, it is a shared perspective that the price conversation is the most unpalatable and stressful aspect of the lawyer/client relationship.
We will do anything we can to avoid it and for many years, until regulation intervened, we could get away without much of a pricing conversation at the outset or at best, a very vague and abstruse one that kept all our options open. Read more...
LEGAL PROJECT MANAGEMENT
In-house Legal Counsel – the Driving Need for Legal Project Management Skills
In-house lawyers play a pivotal role in not only managing multiple legal matters for their employer, they are also responsible for project managing the coordination and engagement of external lawyers coming into the business for short-term assignments. On top of that, they are often leading the commercial-based portfolio at the same time, and having input on the overall strategy of the organisation.
They often get involved in the selection of external lawyers. Having external law firms providing fixed price legal services (alternate fee arrangements) allows the in-house lawyer to manage their own budget better when engaging external Counsel. To do that, the external firm must be using legal project management practices, which adds the extra benefit of increasing the likelihood that the internal project’s deadlines can be met. Read more...
The Neglected Art Of Planning
Auditing failing projects
In my life outside legal I am often asked to audit failing projects. These are often snap audits, done quickly and without warning. I always ask for three documents immediately: the Project Initiation Document (PID), the latest version of the project planand the last status report.
While first impressions are not infallible, I believe these three documents tell you nearly all you need to know about the project’s intention, the project manager’s attempt to realise that intention, and the current state of that realisation. Read more...
The Life Cycle of a Matter - LPM & Pricing
Over the past decade, following the great recession, client demands for predictability, certainty and efficiency are on the rise. No longer does the billable hour reign nor do invoices pass through with little to no scrutiny.
The new reality revolves around the pressure to reduce legal spend, gain predictability and promote efficiencies. In response, most large law firms have developed pricing and legal project management (LPM) roles or programs. Through every point in the matter lifecycle, there is an opportunity for pricing or LPM professionals to add value and support to the client and attorney team. Read more...
PRICING & TECHNOLOGY
4 Tech Tips for Law Firms with Negotiated Pricing
Lawyers have been moving away from "I'm billing you for this" for almost a decade now. "Most firms of any size today are accustomed to using fee structures that are not controlled by billable hours," according to the Georgetown Law's 2016 " Report on the State of the Legal Market. " A trend since the Great Recession, law firms have made the transition to negotiated pricing models.
Clients and law firms now enter into an agreement and determine a budget up front. Legal workers are now responsible for more precise time management as they no longer have the ability to send unrestricted invoices. Read more...
Technology vs. The Billable Hour
Chi City Legal’s website has the requisite headshots of attorneys in suits. It has the map to its Loop office, the 312 phone number and the jaunty logo. But the firm’s website also lists something many, if not most, Chicago firms wouldn’t dream of: its fees.
The firm, which focuses on eviction services for landlords, isn’t listing hourly rates or retainer fees, but $550 for a one-off eviction, $1.09 per unit for a basic monthly eviction package, $1.42 per unit for a standard subscription or $1.84 per unit for the premium package, which includes complimentary 10-day notices, jury demands, demand letters for lease compliance and motion practice and discovery. Read more...
Why Asking Someone to Work 2,000 Billable Hours a Year Will Kill Their Spirit
According to a post by Casey Sullivan of Bloomberg, earlier this week US law firm Crowell & Moring announced that it would increase its billable hour requirement for associates, from 1,900 hours per year to 2,000 per year. This new target will take effect 1 September 2016, but on the plus side 50 pro bono hours will count as billable.
15 Years ago I would have cried out “all kudos to you”. Back then my yearly billable target for an English ‘Magic Circle’ firm was 1,400 hours and I flogged my guts out to achieve that. So if you can effectively put 50% of billables on top of what I was doing (and trust me when I say I wasn’t going home at least one day a week), then you’re a better person than I (or so I would have said then). Read more...
Clients Eye BigLaw Billing Behavior As Rates Climb
As law firm rates climb, corporate clients are training a keen eye on BigLaw's billing behavior, sometimes opting to hire outside counsel in secondary markets like Cleveland, Miami and Minneapolis to avoid paying hefty bills, a speaker at the Corporate Legal Operations Consortium conference in Las Vegas said Tuesday.
Average partner and associate rates across the industry have been on the rise since 2013 and increased 5.4 percent in 2015 alone, and the hikes are occurring as corporate legal professionals are under increasing pressure to keep... Read more...
US companies dramatically outspend rest of world on legal costs
US organisations are spending dramatically more on legal services per every dollar of revenue than peers around the world - and the Chinese the least by a huge margin.
The average legal spend at US organisations is 0.40 per cent of revenues – 166 per cent higher than the 0.15 per cent average for the rest of the world. Canadians are the second biggest legal spenders accounting for 0.27 per cent of revenues, which is a more modest 17 per cent higher than the average for the rest of the world. Those who spend the least on legal services are the Chinese where legal spending is 87 per cent lower than the global average. Read more...
White Paper — The RFP: Win the Big One
A new white paper, published by Thomson Reuters Legal Executive Institute and available here for free download, looks at the process of evaluating, vying for and eventually winning Request for Proposals (RFPs) for legal services.
The paper, The RFP: Win the Big One, is authored by Rose D. Ors, the CEO & Founder of ClientSmart, a consulting firm that advises law firms and legal departments on forming collaborative, value-driven partnerships. “It’s a maxim that not all business opportunities are created equal,” Ors writes in the paper. “Distinguishing good opportunities from bad is essential.” Read more...
HP legal team flex procurement muscles for diversity (First published on the Law Society Gazette website)
Pitching for new business via a formal tender process is one of the most challenging aspects of business development, particularly when formal procurement rules are involved. Since the recession, in-house legal teams have had the upper hand and have fully embraced their purchasing power as a means of improving the value that they receive from their external law firms.
The whole discipline of legal procurement has developed rapidly to insist on more transparent and creative pricing structures, innovation to enhance the legal service offering and an alignment of values on issues such as diversity or environmental policies. Read more...
Dealing With Procurement? Just Say No
The hue and cry raised by agencies today as they deal with the professional buyers of their services is louder than ever. With each new business win, a short-lived celebration is soon tempered by the demands from client procurement managers who not only seek to negotiate lower pricing (which is their job), but increasingly endeavor to dictate to agencies exactly how they should sell, package and price their services.
Much of the fault lies with agencies, who have become increasingly reactive and risk-adverse in today’s economic climate. Instead of innovating new ways to showcase and sell their value, most firms fall back on the outmoded and misguided cost-plus approach, which leaves the door open for seasoned procurement professionals to drill down on every aspect of an agency’s cost structure. Read more...
Fast response is more important than price, say corporate counsel
Clients are demanding fast responses from their external advisers if they are to win work, according to new research which also reveals the decline of personal relationships.
Corporate counsel are choosing external law firms on their levels of responsiveness and are also prioritising legal technology. The survey of more than 200 in-house lawyers, found that when deciding whether to instruct a law firm, they valued responsiveness (rated 8.8 out of 10 in terms of importance), understanding of the business and its industry (8.6) and deep specialist expertise (7.6) as the most important factors.These factors all rank higher than price (7.5), and highlight where law firms may choose to focus their investment in order to have the biggest impact on client experience. Read more...
As Clients Press for Discounts, Are Firms Too Quick to Show Their Cards?
Are some law firms making a mistake by handing clients their billable hour data despite working for flat or fixed fees?
If the lawyers don't want to face even tougher discount pressure, the answer may be yes. For clients, the information can be used to calculate and negotiate a lower fee when the next assignment comes around.
"Fixed and flat fees are structured in 100 different ways," said Retta Miller, a partner in the Dallas office of Jackson Walker, who chairs the firm's 150-lawyer litigation section and serves on its management committee. Read more...
Law firms lack pricing management skills
Most law firms do not match pricing deals to changes in how work is serviced and delivered.
Only 30 per cent of law firms routinely link discounted, capped and alternative fees to changes in how work is staffed and delivered, according to new research. This lack of management prowess displays a critical misunderstanding of the interdependence of the elements of their business model which include scope, staffing, price, work flows, project management and margin, the survey noted.
The 2017 Law Firms in Transition survey carried out by management consultants Altman Weil revealed how law firms were coping with the erosion of demand for law firm services, price competition and technology. Read more...
Allen & Overy takes client to court over 'unpaid' fees
Allen & Overy is suing a former client for $343,448 for what it claims are unpaid fees.
A few weeks ago in Manhattan Supreme Court Allen & Overy filed proceedings against Qohelet Panama and affiliate Entoria Group over the alleged unpaid fees. The legal firm claims that Qohelet never disputed any invoices it received and made several pledges to pay. However, the actions stated that ‘defendants have failed to pay any amount for the extensive legal services that A&O provided’. Read more...
Act for SMEs
Small to medium-sized businesses are the pulsing heart of the British economy. Size is not an obstacle to investing in growth and innovation, but when it comes to instructing a solicitor they count their pennies. And not without good reason. Their nimbler structure is constrained in the straitjacket of law firms’ hourly billing.
SMEs are no different to private individuals in their dikigorosophobia (fear of lawyers); they dread the solicitors’ clock ticking.
So, it is not a surprise that only 13% of small businesses view lawyers as cost-effective, and when they seek advice, accountants are consulted more often, according to the latest report on the legal needs of small business published by the Legal Services Board (LSB). Read more...
Ignore the cost of production at your peril
Gaining a better understanding of the cost of production in law firms – and how to minimise it – is a must for ambitious leaders and managers as they seek to succeed in a highly competitive and disrupted legal market, writes Neil Oakes.
Not that long ago, law firms were price-setters. They decided what profit they wanted, tallied up the expenses, set a chargeable hours budget and, hey presto, they had an hourly rate to charge. And charge it they did. Profits often met or exceeded budget. Want more profit? Easy, just whack up the rate – job done.
How times have changed. Insourcing, digital disintermediation, commoditisation of repetitive (hitherto high-margin) work, increased client mobility, a shift away from relationship purchasing to professional procurement and the re-entry of the global accounting firms in mid- and top-tier markets have swung the pendulum. For some time, law firms have become price-takers in a competitive market. Read more...