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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']



Buying Legal Council Conference 2017


‘All the world's a stage, And all the men and women merely players; They have their exits and their entrances, And one man in his time plays many parts…’

William Shakespeare, As You Like It

One of my favourite plays sprang to mind on the train home from the Buying Legal Council 2017 Conference in London. Delighted to have been invited to present on forecasting, I came away musing on how the worldwide stage is expanding for procurement professionals as our role changes, matures and embeds year on year. Read more...


Increased Legal Spending Favours Global and Top-Tier Law Firms

Australia Flag

Australia's biggest consumers of legal services have dramatically increased their spending on legal advice with the big winners being global and top-tier law firms.

The increase in spend in considerable with in-house legal departments upping average spending on legal services by 34 per cent since 2015 $4.3 million - up from $3.2m two years ago. The bulk of this spend, some 60 per cent, is going to law firms and other external providers compared with 56 per cent two years ago. Read more...

Pricing Legal Work is a Two-Way Street


Collaborative pricing

In a continuous improvement culture, key personnel from the law department and law firm convene to first identify and then implement efficiencies in all of the areas in which they collaborate. This means breaking down how things are done today, e.g., process mapping, and then pursuing a rigorous DMAIC (Define, Measure, Analyze, Improve, Control) method to establish new ways of operating. From this comes a detailed quality scorecard. By establishing best practices for how critical tasks must be performed, the law department shifts from relying on law firm “brand strength” as a proxy for quality to a more precise and consistent measurement of quality.

A key component of process improvement is defining the value of doing something well, so the law department now has guidance to inform its procurement of legal services. Read more...

Narrowing the Disconnect Between Law Firms and Their Clients


A much commented upon legal survey report from LexisNexis UK and Judge Business School at the University of Cambridge has highlighted the continuing disconnect between law firms and their clients.

The report, ‘Amplifying the voice of the client in law firms’, focussed on the U.K’s top 50 law firms. It found there are three main causes of client disconnect: Read more...

Reduce Price Pressure: Focus on Value

Yellow Camper Van

Companies are increasingly finding that their traditional value proposition is falling short. The strength of their brand has less value in the buying process, and competition is intensifying from well-resourced established players and emerging niche players. Pressure to reduce prices is now the norm. So, margins are deteriorating and profits are shrinking.

Do you offer your top B2B customers value and if so, what does that mean? More importantly what matters to the senior executives in your top customers? Are they willing to pay more for the 'value' you deliver? Read more...

Profitability of UK Law Firm Partners Hits Seven Year High


Average profits per equity partner have topped £136,000 across UK law firms with rising fee income and control over overheads twin drivers.

Profitability at UK law firms jumped to a seven-year high last year, driven by robust fee income growth coupled with tight control of overheads. Net profits generated by equity partners rose by 8.5 per cent to an average of £135,979 in 2016, compared with £125,340 in 2015. Fee income increased by an average of 5.8 per cent, well above current inflation levels, meaning that firms are seeing strong growth in real terms. Corporate/commercial work, commercial and residential property, and probate and estates were among the practice areas seeing strongest growth. Read more...

Use Billing Best Practices to Strengthen Client Relationships

Billing Metrics

Today’s large corporate legal and insurance claims departments are learning from their peers in purchasing and HR how to leverage technology. And they are training a new category of professionals to better manage the business of law. These legal operations professionals are under intense pressure to drive efficiencies and keep costs down while maintaining valuable relationships with outside firms.

Billing is one area that’s ripe for improvement. Many large corporate legal departments process millions of dollars in monthly legal expenses. Despite sharing robust billing guidelines with their law firms, some departments still have little influence and even less transparency when it comes to how their funds are spent — or the value of the services received. With dozens of outside firms to manage, billing discipline is often inconsistent across and even within law firms. Using in-house lawyers to review and manage the charges reflected in hundreds of monthly invoices and thousands of line items drains and misuses in-house resources and expertise. Read more...


5 Steps to Effective Legal Procurement

Pavement Arrow

With a history stretching as far back as 3000 B.C. and the construction of the pyramids in Ancient Egypt, procurement’s hardly the new kid on the block. But despite its longevity, for many industries – legal in particular – it’s considered a process for the sourcing and purchasing of physical goods and materials, not professional services.

However, when you consider the legal definition of procurement as ‘The entire process of purchasing goods that includes the purchasing decision, the selection of the goods, and the payment made by the buyer to purchase the goods’, using it to procure professional services makes perfect sense. Read more...


LPM 102: Eight Critical Tools for Legal Project Management


Effective communication is essential to for successful Legal Project Management, says Aileen Leventon in the second of a two-part series; she recommends eight critical communication tools.

Change is inherent in the nature of legal work. As a matter progresses – whether it is a transaction, litigation, regulatory or any other matter – new facts, circumstances and l­­­­­egal issues emerge.

The prevalence of uncertainty leads lawyers to deem planning impractical – or to abandon plans in the face of change. Legal Project Management (LPM) keeps bringing the team back to a shared planning framework to confirm working assumptions about the matter. Read more...


Law Firms in Transition: A Future Dependent on Change


The billable hour is dead…

Law firms as we know it can’t survive…

All the power is in the hands of clients now, with law firms at the mercy of alternative fee arrangement demands that will destroy profitability as we know it…Read more...

Important Considerations for Defense Law Firms Regarding Non-Hourly Billing Agreements

Time Is Money

As a result of increasing client demands for efficiency and cost control, many law firms are considering ways to offer non-hourly fee pricing to clients. Some of the friction causing some law firms to remain hesitant about implementing a non-hourly billing approach include:

  • An hourly culture and mentality;
  • Fear of losing money;
  • Fear of changing existing client relationships;



Improve RFPs With Data Analytics


Many law departments use a request for proposal (RFP) to choose outside counsel to represent them in a major matter, for a portfolio of matters likely to start over a period of time or on a panel. Typical RFPs describe the bidding protocol, expectations of the department and background facts for the firms. These facts generally include work that will likely need to be done, the annual number of similar matters in the past, the distribution of law firms used, fees paid, outcomes achieved, etc. RFPs are a comfortable, familiar tool, often involving the procurement function, but they are quite often heavy on text.

They would be improved if law departments incorporated more data in them and prepared better analyses or visualizations of that data. Based on my own experience as a consultant guiding RFPs for law departments as well as submissions from law firms, I see three phases where data analytics can improve processes. Read more...

Why Metrics Are The Key To Managing Costs In Discovery

Cloud Computing

Data drives decisions in business. It’s that simple. And the same is true in the discovery of ESI.

When a client has multiple matters over any period of time, there are basic metrics that can be captured that will help the client to budget, make decisions about resolving a matter, make a case for proportionality, or make larger decisions about information governance.

There are, of course, always facts about a matter that will skew metrics in a certain way – the bulk of the data was large image files vs. email, the matter was a broad-reaching government investigation, etc. – and those need to be taken into account when reading the metrics and relying on them. Read more...

The Marriage of Price Efficiency & Matter Management


In-house legal departments are coming to the conclusion that many traditional law firms aren’t getting the job done, especially when it comes to pricing. It’s something we’ve noticed for years – and recent research bears it out. As a result, companies are taking a hard look at traditional legal spend and whether they are getting the best value from the law firms that have served them for decades.

But many law firms, remarkably, still haven’t made the necessary adjustments. Just 39% of respondents to the recently released Altman Weil’s annual survey of law firms, said they had significantly changed their strategic approaches to pricing. Another 17% said they were considering such a move. Read more...

How Firms Should Be Measuring the Profitability of Matters


Matter profitability matters. Yet most firms struggle to measure it in a manner that is accurate, focused on the levers partners control, and inclines partners to take action. Using margin per partner Hour (MPH) to measure profitability delivers on these objectives

The MPH measure enables assessment of profitability on matters with widely varying realization and leverage in a directly comparable way. It also allows you compare profitability consistently across clients, practice groups, and partners. But, from discussing the measure with law firm leaders, I know that the reasons the measure works aren't intuitive, so let me start with some principles and then turn to the particulars of MPH. Read more...


Legal Departments Do Not Trust Law Firms on Billing


Law firms are not consistent on billing with few following guidelines and questions over quality, say clients.

Less than one third - just 31 per cent - are satisfied with outside counsel’s compliance with their guidelines and not a single respondent completely satisfied, according to a new Wolters Kluwer’s ELM Solutions study conducted in partnership with Gartner. Furthermore two in three respondents said they do not know who takes responsibility for overseeing compliance with guidelines at each firm. Read more...

What GC Thought Leaders Experiment Is About (Hint: Not Cost)

Business Development

The publication of An Open Letter From 25 General Counsel on July 11th has led to an outpouring of responses and reactions from different corners of the legal profession. We're excited to see it—one of the aims of the Thought Leaders Experiment was always to create debate and dialogue.

A fair bit of the discussion has been about the goals of the experiment—what's it really for? This has become a bit of a Rorschach test for the whole legal profession: we're all looking at the same inkblot, but we're seeing (sometimes entirely) different things. Some of the discussion presumes the experiment is a billing review or cost analysis. It's not, so we thought it would be helpful for us to clarify what it is. Read more...

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