In-house counsel, tech experts and law firm Leaders discuss: how to price for profitability

Are law firms behind the curve when it comes to pricing their work? Are alternative fee arrangements the way forward? Can technology and data management become the pricing model differentiators firms want them to be? These questions cut to the heart of the debate on profitable legal pricing, as well as the discussion among panellists in Briefing’s 18 May 2021 webcast: How to price for profitability.

Chaired by Briefing’s editor-in-chief Richard Brent, we heard from law firm leaders, as well as technology and in-house legal experts:

• Kate Burns, former general counsel and company secretary, notonthehighstreet.com
• David Gilmour, head of business architecture and design, RPC
• Greg Saulinskas, chief financial officer, Troutman Pepper
• Fraser Mayfield, head of EMEA, Iridium Technology

Collaboration with clients

Can pricing be a collaborative process between law firm and client? Yes, said Burns – and the key to successfully fostering that collaborative process is showcasing the business value in a given pricing structure, she added. Also crucial is putting billing information upfront: general counsels, Burns said, want pricing information upfront, including a final cost, followed by regular updates. “Transparency and predictability are key watchwords. Billing information isn’t boring – it’s just as important as the legal matter itself – and it’s not a dirty subject.”

Counting the costs
On the law firm side, Gilmour sees trends emerging around clients wanting more control over how legal work is performed, whether that’s based on location or who is performing the work. “Clients want to know more about the components and tasks involved in a piece of legal work and will challenge us to do it at a lower cost.”

Legal project management – one buzzword potentially connected to more profitable pricing – is, in Burns’ view, something clients may want to see evidence of, though it doesn’t necessarily deliver value in itself. “It’s not for me to ask how a law firm does its job – but, if there are warning flags or issues, I will want to see more detail and check how the work is being undertaken.”

Data time
Though he doesn’t see evidence that hourly rates are about to disappear, Gilmour said conversation is turning more to value-pricing – which means a greater focus on innovation, technology and being more data-driven. Collecting and harnessing that data is both a technology and a behavioural problem firms will have to address, he said – a point of view Saulinskas echoed, who said the legal sector has made little progress in this area in the last four years.

Many law firms would benefit from a closer look at their existing datasets, added Mayfield, both for pricing future work and arming partners for conversations with clients. “A lot of firms make the mistake of going straight to what they expect to bill, instead of finding out the cost of delivery. Comparing internal scenarios, in terms of cost to deliver as well as billing structures, can help firms develop better proposals for clients.”

Questing further
Other questions put to the panel by the audience included:

• How can firms move to fixed-fee billing and ensure profitability?
• How should firms position and market alternative fee arrangements?
• Will chief data officers start to appear in law firms of the future?

Find out our panel’s answers to these questions, and more, in the full video.

Want to watch the video on YouTube? Click here.