With Validatum Pricing Espresso® we aim to bring you your morning 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']
UK 100 Pricing Strategy: Only 13% 'Strongly Aligned'
Our experience over the last four years of working with larger UK law firms has been that there is often a significant dissonance between the firm’s pricing strategy on the one hand and its broader strategic objectives/plan on the other hand. Indeed, it is rare to actually see any reference to pricing strategy at all in a firm strategic plan document.
In our breakfast briefing - Validatum Pricing Forum® - we have introduced live on-screen voting for participants as a way of stimulating discussion and debate. It has been very successful. During a recent forum attended by 38 of the UK top 100 firms, we asked participants to rate their firm against the statement, "My firm's clearly defined and widely articulated pricing strategy is closely aligned with and reinforces our broader strategic objectives." Read more...
Five Things Lawyers Hate to Hear Clients Say
In situations involving you and your client, the adversarial system is your worst enemy. The only win is a long-term client relationship that is sustainable, and a short-term victory gained by your legal swordsmanship almost guarantees a failure on that score. Although certain things clients say are sure to get your dander up, I respectfully suggest you put the sword away and try a response designed to maintain the relationship
Below are five examples of conversations most likely to test your client relationship skills, along with possible responses. Of course, I offer these possibilities assuming you always offer unsurpassed quality, give solid value for your fee, really care about your client and are prepared to provide excellent service. The options are meant to be catalysts to help you think through responses in your own natural style and language — these are not scripts. Read more...
Perspective: Law Firms Must Adapt to Market Segmentation
Intending to be full service and meet the broad needs of clients, most Big Law firms provide a broad set of offerings, with some represented focus on industries and the areas of law they practice. Those that do specialize still offer a wide range of services, and there is still that temptation to take what comes in the door and flex to do it. This is the nature of legal training and of law firms.
A tour of Big Law firm websites is enlightening. We reviewed a small sample of Big Law firm websites to see how they listed industries, geographies, and services:
• The number of services listed ranged from 40 to over 95, the latter including detailed sublistings.
• The number of industry practices listed on any law firm website ranged from 5 to more than 18.
• The number of geography focused practices ranged from 6 to more than 10. Read more...
New Approaches to Pricing and Legal Procurement
In the long wake of the recession, outside counsel face a rising tide of legal procurement requests as corporations continue to seek to reduce spending. According to a recent BTI Consulting Group report, client RFPs have hit a 15-year high, with “56% of corporate counsel issuing RFPs for law firms in 2015, up from 45% in 2014.” With the increased involvement and sophistication of procurement in the sourcing of legal work, lawyers and their firms must seek alternatives to the traditional playbook of a) quoting hourly rates; and then b) discounting those rates 10 percent or more.
Some lawyers have equated dealing with procurement to “bringing a knife to a gunfight” and many firms are now turning to a new breed of pricing and legal project management (LPM) professionals to level the playing field. These individuals are trained and experienced in negotiation tactics and in the scoping and costing of legal work, skills which are required to meet these RFPs head-on. For smaller firms or those without the same resources, a growing literature and training on these disciplines has become available. Read more...
Survey reveals pricing and competition are the biggest challenges facing law firms in EMEA and Asia Pacific
LexisNexis Enterprise Solutions’ survey of over 100 marketing and business development professionals in law firms reveals optimism about growth in 2016, but reveals that pricing and competition pose the two biggest challenges
LexisNexis Enterprise Solutions’ report, Law Firms in Transition: Marketing, Business Development and the Quest for Growth (available here),is based on the findings of their survey of law firm marketing and business development professionals across the UK, mainland Europe, South America, Africa, Asia, and Australasia.
The survey has revealed that 57 per cent of law firms across the surveyed regions are optimistic about growth in 2016, but pricing (for 52 per cent) and competition (for 46 per cent) pose the two biggest challenges to achieving this goal. Read more...
Has your firm made any of these 4 critical pricing errors?
It is not often that I am shocked. But this was one of those conversations where my eyebrow was permanently raised.
It was one of those innocuous conversations that don’t seem to be going anywhere. Then we got onto the topic of pricing and how to decide on fee levels. We talked about fee levels and then the first confession came:
- I often undercharge the fees stated on the website.
But that wasn’t the only revelation to come out. When I asked what basis the firm’s fees were based on, I was told:
- We always aim to under cut our main local competitor.
Study: AFAs Proliferate for P&C legal matters
Alternative fee arrangements (AFAs) use is rising among property and casualty (P&C) insurance carrier legal and claims departments, according a new survey, the third such survey in a series, by the LexisNexis® CounselLink® team. The use of AFAs moved up from 69 percent in August 2015, to healthy 76.9 percent.
In other words, nearly 80 percent of this segment of business is actively engaged in some type of AFA, and these numbers are only anticipated to rise. Survey participants cite controlling litigation costs while balancing value as their number one challenge and motivation for using AFAs: Read more...
Win the Legal Services RFP—The Evaluation
It’s a maxim that not all business opportunities are created equal. Distinguishing good opportunities from bad is essential. Making this distinction is particularly vexing for Requests for Proposals (RFPs) for legal services. Why? Because in a law firm evaluating an RFP for legal services is fraught with competing interests and approaches — just ask a group of law firm marketing and business development professionals. Some will tell you their firms have an informal evaluation process, others will share they have little more than a “let’s just do it” approach.
But whatever the existing approach is the ultimate question is the same — can our firm win the business? You can’t answer that question with certainty. However, you can estimate the chance to win and, even more importantly, if the win is good business. Read more...
Focusing your prospecting and pitching on what matters most to clients
To win work, you have to convert clients from consideration to purchase, in other words you have to focus your prospecting and pitching on what matters most to clients. This requires effective business development, with prospecting and pitching that is more persuasive than your competitors who are also being considered.
This means focusing on what matters to clients and demonstrating your potential value.
Our Beaton Benchmarks analysis of what drives client consideration and purchase shows that the attributes that clients value fall into two areas: Read more...
AFAs Soar to an All-Time High
The votes are in. Clients are loving AFAs. And we’ve got the data* to show just how much:
Alternative Fee Arrangements (AFAs) now account for $21.3 billion of outside counsel spending in 2015, up from $13.1 billion in 2013. AFAs are the biggest growth market around—registering a 19.8% compound annual growth rate for the last 3 years.
Outside counsel spending under AFAs jumped to 35.6% of total spending in 2015 up from 21.7% in 2013. The surge is coming primarily from larger spending clients.
The number of companies using AFAs shrank to 68.4% from 72.4% in 2013, as a smaller number of clients spend substantially more on AFAs. Read more...
Procurement to Play Bigger Role in High-End Legal Work
“Legal delivery has gone from ‘In a relationship’ to ‘It’s complicated,’’ said Mark Cohen, founder and CEO of Legal Mosaic, during the Buying Legal Council Professional Sourcing and Management of Legal Services conference.
Attorney, legal tech writer and CodeX Fellow, Monica Bay, recently reported Mr. Cohen’s insights for Above the Law. She noted procurement is about to play a bigger role in the purchase of high-end level corporate legal work.
Ms. Bay, who received an advanced copy of Buying Legal Council’s procurement study, also revealed for Bloomberg BNA, procurement now influences purchasing decisions of 45% of corporate clients’ high-end level legal work. Read more...
P&C Insurance Carriers Favor Flat Fees; Not All AFAs Apply
Property & Casualty (P&C) carrier legal and claims departments prefer using flat fee-based alternative fee arrangements (AFA) over any other type of alternative billing method, says a new survey, the third in a series conducted by the LexisNexis® CounselLink® team.
Eighty-two percent of P&C carrier legal and claims departments say flat fee AFAs are most effective in terms of helping the carrier legal and claims departments lower costs, increase predictability and manage matters.
“Better able to budget,” said one study participant, plainly, in an open-ended question about predictability. Read more...
Chasing RFPs? There’s A Better Way To Drive Law Firm Business Development
Law firms are chasing RFPs at unprecedented rates yet industry data shows these new business efforts may not pack the profitability punch law firms want or need.
The average law firm now handles 200 RFPs a month, to the tune of 10,000 hours of work annually. The very best firms have a win-rate of about 30%. This means a great deal of time and money – upwards of 7,000 hours a year – is being invested in efforts that lead to nothing.
The reality is law firms are facing an evolving business landscape. BTI Consulting reports clients dropped 11 more clients from their law firm panels, last year, hitting a 15 year low. A dwindling client base is only a small part of the problem. Read more...