Pricing and LPM: It’s all about value.aderantuser
One of our favorite clients in Australia recently said something very prosaic at an Aderant event and we’re going to shamelessly co-opt it from him. He said, “The legal industry is experiencing thirty years of change compressed into five, and we’re two years into the cycle”.
There has been so much change in the last two years that we could all be forgiven for wincing at the thought of yet more structural change to the industry. In this new age of “Client is King”, the most successful firms are going through an evolution – or in some cases, even creating a revolution – in order to deliver value to a client.
Each client’s determination of “value” is wildly different and firms with the ability to manage processes in order to meet or exceed expectations, will be the winners. This ability stems from process, process stems from resources and resources stem from strategy.
Most clients would see value delivered when a matter is successfully resolved in the agreed timeframe and budget. Delivering within a specified timeframe and budget is the expected practice in every other industry and is now being applied to selection and retention processes by clients. Delivering on time and to budget means truly understanding how to price and manage a matter: through legal project management.
Some firms have initially begun this journey by hiring a Pricing Director but this is just one part of the legal project management solution. The “Pricing Director” trend picked up steam in late 2013. Last November, the ABA published “Law Firm Pricing: Strategies, Roles, and Responsibilities,” co-authored by Toby Brown (of firm Akin Gump and the “dean” of law firm pricing directors) and Vince Cordo (of Reed Smith). In May, mainstream publications like Washington Post published articles on the topic.
Over the past few months, these findings have been validated many times over in meetings with senior staff at our client firms. One CFO of a midsize firm (130 attorneys) shared that he was looking to hire a full-time pricing director. When asked why, he said, “We have one attorney here that can successfully price a matter. We call him ‘The Oracle.’ Everybody else is guessing, and guessing badly.”
This CFO’s next comment got to the heart of why firms need full-time resources devoted to strategic matter management, and through management, pricing: “The #1 cause of write-offs and write-downs at our firm is a blown budget due to poor planning.”
Poor matter management kills efficiency and firm profitability. In an environment of bewildering fee arrangement options, procurement departments, and reverse auctions, it’s time to see legal project management as a viable, long-term solution to delivering value.