With the Virtual Pricing Director Pricing Espresso® we aim to bring you your pricing 'shot' - some of the most interesting, thought-provoking and informative material we can find globally which will be of interest, relevance and help to you in your firms' pricing challenges.
Eight steps to pricing transformation
Many law firms have in recent years begun pricing improvement initiatives. However, many have failed to realise the full potential for profitability. And inevitably some firms have slipped back into old habits, losing all of the gains originally achieved.
The fact is that shifting to a new way of doing things is hard. It takes leadership and consistent focus, but the spectacular rewards completely justify the effort involved.
Below are the eight steps to follow, with eight links at the end to the original (more lengthy) guidance. Read more...
Fee income still holding up at top 100
Elite law firms are still defying the climate of economic uncertainty, according to the latest snapshot of the sector. PwC’s 31st Law Firm Survey reports today that fee income in the top 100 UK firms grew by an average of 9% in 2021/22. The top 10 achieved fee income increases of 10.2% - more than double the 4.5% they predicted.
When it came to profits, 65% of top 100 firms recorded growth year on year, the Big Four professional services firm reported.
Practices performed strongly across the suite of services, from high levels of M&A activity through to litigation, employment, refinancing, restructuring and insolvency. This uplift has been accompanied by savings on property costs as hybrid working continues, although pressure on salary costs remains. Read more...
Clio’s 2022 Legal Trends Report Finds Lawyers’ Business Growing But Fees Fail to Keep Pace
At its annual Clio Cloud Conference today, the law practice management company Clioreleased the 2022 edition of its annual Legal Trends Report – its seventh year of the report.
It finds that law firms are seeing an average 10% increase in the growth of new business, but that their fees are 3% below where they should be given recent trends in inflation.
It also finds a profession grappling with work-life balance, as many lawyers are changing jobs in search of work-life balance and 49% say they would rather work from home. Read more...
A Plaintiffs Bar Divided? Some Say the Fragmentation Is Leading to Bad Case Law, Lower Fees
From battling for MDL leadership, to positing one-off arguments on precedential matters, to undercutting fees, senior members of the plaintiffs bar warn colleagues on the need to be more unified.
For plaintiffs bar firms there’s a lot at stake when litigating cases given the contingency fee based business model. “We risk our own money every day,” said DiCello Levitt founding partner Adam Levitt in a recent conversation with NLJ. That makes competition fierce and unity, at times, lacking.
When litigating high-stakes mass torts or class-action cases, plaintiffs firms can be “competitors in any sense of the word,” said Napoli and Shkolnik partner Hunter Shkolnik. When it comes to landing a leadership role in a multidistrict litigation, it is likely for “the knives to come out, like ‘I’m the better leader,’” Shkolnik said. Read more...
8 Ways to Convince Your Organisation to Invest in Legal Tech
All law firms and in-house legal functions know that legal tech is the future. Law is fundamentally about information – laws, precedents, documents – and therefore data. Apply tech to data to manage it efficiently and you give yourself and your clients an edge.
But what technology? And once you find a solution, how do you persuade your organisation to adopt it?
We have been tackling this head-on at CreateiQ, and in particular looking at ways to help our future customers manage the process of getting their wider organisation on board once they’ve identified us as their preferred solution. Read more...
Billable hour works against women, lawyer argues
The billable hour fosters a culture of presenteeism and inherently discriminates against female lawyers who go on parental leave or have caring responsibilities, according to a lawyer.
Speaking to Lawyers Weekly ahead of the inaugural Women in Law Forum 2022, Her Lawyer founder and principal lawyer Courtney Bowie said that the billable hour and the budgets associated with it work to the detriment of women in the legal profession, particularly those who have caring responsibilities or take career breaks.
“The billable hour just has so many problems,” she said. Read more...
Practice Innovations: Law firm pricing as a strategy, not a utility
Law firms would be wise to see their pricing function as less about money and more about how they define their value as a firm to their clients
During my first semester of university, I distinctly recall a professor who asked me to read My Kinsman, Major Molineux. I returned to class puzzled, wondering why in the world anyone cared about how an 18-year old was observing all manner of chaos in colonial Massachusetts.
I then read the words on the page, purely for the utility, and my professor bluntly made sure my entire class knew it. What I took away lacked any substance. Simply, I had missed the point. Read more...
Lawyer profitability declines for third consecutive quarter as demand wanes and expenses rise
Firms may face increased pressure to cut headcount this year to reduce costs, Thomson Reuters says.
Global law firms saw lawyer profitability fall for a third quarter in a row in the three months to the end of September, according to a new report by Thomson Reuters.
Profit-per-lawyer fell 2.9% to just under an average of $320,000, having been roughly $340,000 in the final quarter of 2021, according to Thomson Reuters Q322 Law Firm Financial Index (LFFI). That was the lowest level since the first quarter of 2021, though 17.6% above pre-pandemic levels. The index – which indicates the direction of law firm profitability – remained at its lowest level on record, having previously declined for four quarters in a row. Read more...
Gunderson Associates Out of a Job After Dip in Billable Work
Two rounds of cuts affected about 30 associates this fall at Gunderson Dettmer, according to sources in contact with affected individuals, as demand falls for emerging companies and venture capital work.
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian cut a group of associates in New York and Bay Area offices in September and this week due to a decline in billable work, according to four people with direct knowledge of the two rounds of cuts.
Coming on the heels of the firm’s deferral of associate start dates until January 2023, the layoffs at Gunderson affected about 10 associates in late September and about 20 more this week, according to sources in contact with affected individuals. Many of the associates recently let go were onboarded in recent years’ rush to hire corporate lawyers, only to be let go shortly after joining the firm. Read more...
More Cuts, Higher Billing Rates Could Be on the Horizon for Big Law
Average law firm net income fell by 7.3% and profits per equity partner was down 8.5% through the first nine months of 2022, according to a new Wells Fargo report.
Layoffs may not be extensive yet. But with several financial indicators continuing to trend downward, personnel cuts will likely remain Big Law’s biggest focus through the end of the year, according to a new report.
“Firms are reluctant to shed recently recruited lawyers, but reliance on natural attrition and repurposing associates has not provided satisfactory results; thus, we’ve begun to hear of more demanding performance reviews to manage utilization,” wrote Wells Fargo Legal Specialty Group in its nine-month survey report, published this week. Read more...
Big Law Defies Economics as Firms Prepare Record Rate Increases
The world’s largest law firms are set to defy basic economics again, which is a reminder of an old lesson: Never underestimate Big Law’s ability to raise rates.
Big firms plan the largest rate hikes on record next year, even as the “law” of supply and demand suggest prices should be declining.
Let’s start with supply. Big Law has more lawyer time to sell than ever. Headcount is up nearly 5% through nine months this year, according to Wells Fargo’s Legal Specialty Group survey of more than 120 firms. Read more...
How law firms use Third-Party Managed Accounts (TPMAs)
Third-Party-Managed Accounts (TPMAs) have been around for a while. They are a new version of what are commonly known as ‘escrow accounts’ or ‘designated accounts’. These have long been used for construction, property, corporate and finance transactions.
In the past these solutions were expensive and time-consuming to set up, which made them unsuitable for use in lower value transactions, or transactions where monies were only held for a short period of time.
Technology has changed that. Accounts can now be set up in 48 hours, easily, with the benefit of full transparency of the funds for the law firm and its clients. Read more...
Fixed costs extension rules ‘not ideal’ - but almost ready for sign-off
The timetable for implementing the extension of fixed recoverable costs remains on schedule, with rule-makers set to give their final approval before the end of the year.
Minutes from July’s meeting of the Civil Procedure Rule Committee, published this week, reveal that drafting of the new rules will be completed this autumn and approved in time for implementation next April.
Fixed recoverable costs will apply across the fast-track and to most money cases worth up to £100,000, although not to clinical negligence claims which are being considered separately. Read more...
Belsner: Lawyers win in crucial costs recovery ruling
Lawyers have won their appeal in a court ruling that will come as a massive relief across the personal injury market.
Judges in the Court of Appeal ruled in Belsner v CAM Legal Services this morning that the firm’s personal injury client had made fair and reasonable deductions from her damages. The deductions were therefore lawful and did not need to be paid back.
But the ruling also stated that the solicitors may not have complied with the SRA code of conduct in that they 'neither ensured that the client received the best possible information about the likely overall cost of the case, nor did they ensure that the client was in a position to make an informed decision about the case'. Read more...
Belsner: CoA orders £155,000 costs within two weeks
The costs fallout from the high-profile Belsner case began today with the losing claimant being ordered to pay £155,000 within two weeks.
The Court of Appeal today ordered that Darya Belsner, represented by checkmylegalfees.com, should pay costs on account of £130,000 after its ruling was handed down last month.
The claimant must also immediately repay the £25,000 she was awarded on account after initially winning her personal injury case in the High Court. Read more...
CPRC to give ‘early notice’ of fixed costs rules
The final procedural rules for next April’s extension of fixed recoverable costs to civil claims worth up to £100,000 will be made public as soon as possible, Lord Justice Birss said last week.
Birss, who is deputy head of civil justice and a member of the Civil Procedure Rule Committee, told the Association of Costs Lawyers’ (ACL) conference on Friday that the CPRC hoped to be able to publicise the rules after its December meeting, without needing to wait for ministerial signoff.
The judge said: ‘It’s well understood that we need to give everyone as much notice as possible of the changes, and so we’re working on early notice after the December meeting. The difficulty with that is normally the Rule Committee doesn’t publicise rule changes until they’ve had ministerial approval. But we can do it “subject to ministerial approval” – we’ve done it in the past, and this is a plain case for trying to do it on this occasion.’ Read more...
Lawyers charging £800 an hour told to revise costs budget
The High Court has told lawyers charging far in excess of the guideline hourly rates that their costs budget is ‘disproportionate’ and they should reconsider who is asked to carry out work.
Following a costs and case management conference in Associated Newspapers Ltd v Buckingham Group Contracting Ltd (Costs Budgeting), Roger Ter Haar KC, sitting as a deputy high court judge, indicated that the claimant’s estimated costs should be reduced by around 15%.
He declined to allocate reductions on a phase-by-phase basis but offered the claimant, whose solicitors Baker McKenzie charged £801 per hour for a Grade A partner, a chance to come back with a revised budget taking his views into account. Read more...
MoJ makes late U-turn on how to extend fixed costs
The government appears to have significantly altered its plans for implementing the fixed recoverable costs extension just weeks before the rules need to be signed off.
Newly-published minutes from last month's Civil Procedure Rule Committee meeting show that the government has changed its mind about introducing a separate ‘intermediate track’ for claims worth between £25,000 and £100,000.
The proposal for an intermediate track was put forward by Sir Rupert Jackson in his 2017 report which heavily influenced the government’s approach to fixed costs. But despite adopting his recommendations for cases up to £100,000 to be subject to fixed costs, the government’s consultation response said there was no need for introducing a new track. The Ministry of Justice said there was ‘simplicity and consistency’ in retaining the existing tracks and expanding the fast track to include those cases that Jackson identified. Read more...
Fixed costs extension delayed to October 2023
The Ministry of Justice has confirmed that fixed recoverable costs will not be extended until October next year.
In a speech to the Civil Justice Council national forum today, Lord Bellamy said the government wanted to give the legal sector more time to adjust to the new regime. The plan had been to extend fixed costs from April but it has proved logistically difficult to redraft the rules in time.
Bellamy said: 'Extending FRCs requires an extremely complex set of reforms… So I’d like to offer my sincere thanks to the CPRC, and its costs sub-committee, chaired by Mr Justice Trower, for its tireless work here. I know it hasn’t been an easy task. I know that these reforms have particular implications for housing cases, and I am grateful for the constructive input of housing providers which we continue to consider. Read more...