A post yesterday by Patrick Johansen, CLM, CPP, National Practice Manager at Seyfarth Shaw (on his ‘Patrick on Pricing‘ blog) alerted me to a newly published White Paper by the Association of Legal Administrators (ALA) titled “The Client Cost Conundrum: Legal Service Pricing in a Post-Recession Market“.
To start with, if you are going to publish a White Paper titled “The Client Cost Conundrum: Legal Service Pricing in a Post-Recession Market“, then, in my book, you have licence to write an absolute cracker.
Add to that your intent that:
“This white paper will identify economic factors that influenced relationship changes between clients and law firms after the Great Recession; pinpoint current legal service pricing best practices; highlight pricing strategies that can attract and retain clients; and help law firms learn to address efficiency and other factors that may affect many pricing scenarios.”
and throw in quotes from some of the industry’s leading pricing consultants – including Patrick himself, Colin Jasper of Jasper Consulting, Toby Brown of Akin Gump and Timothy Corcoran of Corcoran Consulting Group, and you’ve grabbed my attention.
So what did I find?
A very disappointing read, that had me both wondering what decade I had woken up in and really questioning whether the industry could survive for much longer.
What do I mean by this?
Well, judge for yourself: here are just some of the quotes from this paper:-
- “Sixty-eight percent of law departments say they received discounts from firms in 2015. The number of law departments that received a discount of more than 10 percent has increased 4 percent in the past two years; the amount of firms receiving a 6 to 10 percent discount grew by nearly 9 percent”
– Discounts are not a pricing strategy, period.
- “In an effort to strengthen client relationships, some law firms are working to better understand their clients’ needs. Approximately 29 percent of firms say they’re working to identify each client’s unique pricing preferences to support the firm’s overall pricing strategy.”
– 29% of firms are working to identify each client’s unique pricing preference. Seriously, what are the other 71% doing: throwing darts in a dart board and hoping for the best?
- “To better comprehend what clients want, 85 percent are initiating direct conversations about pricing and budgets.”
– “initiating direct conversation”: as opposed to what exactly, being told?
- “Twenty-two percent of firm leaders say they thoroughly understand their top 20 clients’ business models, earnings and growth strategy”
– I have no idea what the other 78% are thinking of, but I’m suddenly very glad I cannot invest [financially] in a law firm.
- “29 percent of firms say their knowledge of their clients’ business and client relationships give them a key competitive advantage”
– what is the key competitive advantage for the other 71% I wonder?
- “Sixty-one percent of firms say overcapacity is diluting their firm’s profitability.”
– that’s too laughable to even be laughable. I mean seriously, are the other 39% saying it’s the Friday Night Drinks that’s the issue…?
And on that note, I shall end this post with this: read the White Paper, it is really well researched and a look at the Index itself is worth the download; just don’t expect to be blown away with how progressive the industry has become towards pricing.