pricing

Does your firm use data as a profitability management tool?

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I’ve just finished reading the latest Altman Weil ‘Law Firms in Transition 2020‘ report.

With all things COVID the Report (as it has done in any event for the past decade) makes for interesting reading.

But, the response(s) to one of the questions in this year’s Report  I found particularly concerning.

When asked:

“Which of the following statements describes your firm’s use of profitability data as a management tool?”*

16.2% of respondents replied:

“We don’t want to use the data because it is potentially controversial or divisive.”

16.2% of respondents believe sharing and using data in 2020 can be ‘potentially controversial or divisive.’

I find that rather sad.

And don’t even get me started on how it is possible that over 13% of respondents don’t even know how to use the data!

As always, the above just represent my own thoughts and always interested to hear the views of others.

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* see page 50 of the Report

[This post first appeared on my LinkedIn feed Thursday 2 July 2020]

Survey: Production returns; Billings fall; Firms need to find new ways for clients to pay

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Having reported a cliff-fall in new matter instructions post-COVID in its Legal Trends Report Briefing #1 in May of this year, June’s updated Briefing #2 by Clio shows a subsequent significant upward spike in new matter instructions that have, effectively, netted out year-on-year the number of new file matter instructions.

While, at first glance, a return to quasi-normal file opening matter numbers look to be good news for law firms, as the latest Briefing numbers also shows, if you scratch the surface you’ll soon see (diagram below) a far bigger underlying problem is starting to emerge – namely clients’ inability (or possibly unwillingness) to pay!

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While the above wheel-chart is, at first glance, alarming, it’s also worth keeping in mind that a client’s ‘ability‘ to pay a legal fee pre and post the pandemic is not necessarily the same as its ‘willingness‘ to pay that fee. Which is to say there may be (and likely are) other underlying reasons as to why clients are saying they are not willing to pay fees – including a re-evaluation on the part of the client in respect of the perceived value being provided.

Of more concern to law firm management, however, should lie in the second of these two charts, namely the fact that rather than chasing fees 25% of firms are electing to forfeit the revenue.

Again, there could be a whole raft of underlying reasons why a firm may decide it would rather forfeit some of its billed revenue, and without undertaking a root-cause analysis we left to guess these (including my favourite – trying to preserve the relationship), but we should be left under no illusion that discounting and write-offs will have the biggest impact on profitability*.

A willingness to look at alternative payment methods

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For me, a somewhat surprising take-out from the latest Briefing was the statistic that 72% of consumers would prefer to pay their legal fees via a payment plan. Again, the term “consumer” isn’t defined and so we are left wondering if this is B2C or B2B; but even then, that only 53% of firms are equipped to offer payment plans seems odd.

Take away?

So what’s my top 3 take outs from this latest Briefing from Clio?

  1. Once things settle down, law firms will be as busy as ever,
  2. Cashflow will be king and clients are struggling with their own cash-flow, so
  3. Think outside of the box when it comes to pricing and how you ask clients to pay and you should be okay.

As always, these just represent my thoughts and always interested to hear your views.

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* N.B. If hourly billing is the way you work and you want to get a better understanding of the effect that discounting/write-offs has on your firm’s profitability, take a look at this post by Patrick Johansen that profiles Stuart Dodds’ ‘1-3-4 Rule

 

Survey: Top 5 Reasons Clients Switch Firms

If you’ve recently lost a client to a competitor and have been wondering how that happened, wonder no longer. The recently published ‘2020 Future Ready Lawyer Survey: Performance Drivers‘ by Wolters Kluner has the answer.

Surveying 700 in-house and private practice lawyers across the US and EU in January 2020, this is probably the most comprehensive survey post COVID (although most of us were not entirely sure what this meant in January so I look forward to a survey report that has been conducted post March this year).

The Top 5 reasons cited as to why a client might leave your firm are:

  1. The client no longer trusts your firm can meet their needs,
  2. Your firm doesn’t specialise in the area of law needed by the client,
  3. Your firm failed to communicate its value proposition properly,
  4. Your firm did not demonstrate efficiency and productivity, and
  5. Your firm’s leverage was/is all wrong.

And three of these are essentially because you messed up on sourcing, communicating and delivering on your pricing promise.

Take-away top tip: want to make sure you keep clients and keep them happy – make sure you (and your team):

  • understand(s) your value proposition and are able to communicate this,
  • get your team’s leverage right [hint: don’t hoard work at the top end just so you can meet budget this year!], and
  • understand the scope of what you are being asked to do and project manage both the scope and the client expectations (especially if out of scope creep occurs).

Manage this well, and you’ll be three-fifths of the way to keeping your client happy!

Demonstrate Efficiency

As a bonus, think about how you demonstrate efficiency to your client.

  • Is this by saying you have the relevant expertise/experience so that you can do this faster than others,
  • Is this by saying you have the appropriate IT systems that allow you to get the job done faster, or
  • Does efficiency even really matter – should the conversation not be about being an effective lawyer?

As always, these just represent my thoughts and always interested to hear your views.

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Now is the time to focus on your existing relationships


I read an article on Inc.com last week by Damon Brown in which Damon writes that if you run a business in a post COVID-19 world ‘You Need More Customers, Not Higher-Paying Ones’ – which [as someone with an interest in pricing] caught my attention.

There is no doubt that right now the appeal of diversifying your customer base and revenue stream is going to look appealing. As Damon writes, “your business needs varied and multiple customers” for essentially three reasons:

  1. Diversify income streams
  2. Lessen the over-dependence effect – security in numbers
  3. Protect your business against Black Swans

My mother would have called this: “avoid putting all your eggs in the same basket”.

But while insulation from risk is undoubtably core to a lawyer’s heart, right now – appealing as it may seem – would be the wrong time to be looking to expand your client base. And I say this for the following three reasons (in inverse order to Damon’s):

  1. This is a pandemic, not a Black Swan, event: in that none of us have a clue how we got here or how we will get out of it – we are not here because of strategic issues.
  2. Pareto: notwithstanding how large your client base is, the facts are in -: 80% of your revenue comes from 20% of your clients. Expanding your client-base isn’t really going to have much beneficial impact on this, rather it’s going to suck-up much needed diminishing resources.
  3. Diversify income streams: isn’t a customer-based issue in professional services firms. If you truly want to diversify your income stream you don’t need to expand/diversify your client-base, you need to expand/diversify your product offering. That’s a whole different problem (and one which could be achieved).

In short, you don’t need to be expanding your client-base, what you need to be doing is focussing and developing your relationships with those top 20% of your clients.

Or, as Ron Baker has written: “It’s one thing to get more business, it’s another thing to get better business”. And while predictability and certainty of revenue is great:

“…if you bring in those customers at the wrong price, you have done nothing but add layers of mediocrity to your firm”.

Some thoughts to consider before you start chasing rabbits down holes…

Again, these just represent my thoughts though and always interested to hear your views.

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Tribes, Teams and Pricing the ‘New Normal’

The goal isn’t to find people who have already decided that they urgently want to go where you are going. The goal is to find a community of people that desire to be in sync and who have a bias in favor of the action you want them to take.

Seth Godin

TRIBES

In around 2009 I recall reading Seth Godin’s, then recently published, blockbuster ‘Tribes: We Need You to Lead Us‘ and thinking this would have a profound impact on the way clients engage law firms. To give this thought some context, it was around the same time as we had started talking about a new fad called ‘unbundled legal services‘ (which would later also become known as ‘limited scope representation‘ – see ‘The great unbundling of legal work‘ in the Australian Financial Review). It was also a time when ‘disaggregation‘ and the rise of Legal Process Outsourcing (LPOs) (predominately in India at that time but later this would extend to South East Asia and South Asia) would have many of us who worked on bids and tenders discussing issues around disruption of the legal services supply chain – if for no other reason than clients were asking us to provide answers to these questions in their requests for tenders.

A cold wind, amounting to real structural change, in the way clients purchased their legal services was coming (Pfizer Legal Alliance).

THE ‘NEW NORMAL 1.0’

Fast forward a decade and probably the only person who still talks to me about Seth’s Tribes is my good friend Julian Summerhayes, and it is never within the context of an RFT or legal services more broadly.

Nope, in short tribes, disaggregation and unbundling, while definitely remaining vogue, never really had the impact and penetration that I – and I would suggest many others – thought they would.

The ‘New Normal 1.0’ had, to all practical purposes, failed.

KRYPTONITE TO THE ‘NEW NORMAL’ – TEAMS

Probably the biggest obstacle to the growth of tribes post 2009 has been the role that teams have historically played within the legal profession.

Since the times of Dickens a junior apprentice lawyer has worked with, and been mentored by, their senior (supervising) partner. It has always been thus, and with it has come an almost umbilical cord tie between lawyers who have worked in the same team.

Many an in-house General Counsel has sat at the foot of the table of the private practice partner to whom they send instructions. A relationship that has been forged within the confines of a team structure.

TRIBES REBOOTED – TRIBES 2.0

It’s my opinion that one of the biggest likely outcomes COVID-19 will have on the profession is the re-emergence of tribes – tribes 2.0!

There are a number of reasons why I think this might be the case, but probably the biggest is that in-house counsel have, over the past three months, become used to working with remote teams.

It should not, then, be too far removed to say that in-house counsel will be happy working with subject matter experts across firms who can enable them to achieve their objectives rather than with an individual firm that might get them across the line.

In short, on the right deal, in-house counsel will be happy to work with a group of lawyers from various law firms rather than one firm – a tribe over a team.

THE CHALLENGES

Moving from teams to tribes is not a foregone conclusion, it faces challenges.

High among these will be:

  • How is risk allocated?
  • Who wears the professional indemnity risk?

My own view is that these can be overcome with:

  • properly scoped Engagement Letters
  • proper use of Legal Project Management
  • a good understanding of Workflow Process Methodology

But that still leaves the issue: How do we price the ‘New Normal 2.0’?

HOW TO PRICE THE ‘NEW NORMAL 2.0’?

The cynic in me says that many law firms will not have the first idea how to price the New Normal 2.0. This presents a significant problem because if they cannot price it, then they cannot sell it (pricing still remains the principal form of credentialisation despite, or rather because of, whatever experience you claim to have).

ONE ANSWER – THE ROLE OF SCOPE PRICING IN THE ‘NEW NORMAL 2.0’

Scope pricing will play a critical role in the pricing in the ‘New Normal 2.0’.

Unlike a fixed fee, capped or fee estimate pricing, scope pricing does it exactly what it says on the tin – it prices to the scope of work being undertaken by the relevant lawyer. This means that proper use of scope pricing should allow in-house to teams to unbundle the legal work within their project – either between the role the in-house plays and the role the private practice firm plays; or, in the case of this post, the role that multiple lawyers with subject matter expertise from various firms play in a project.

And, if done properly, the biggest upside to scope pricing over any other type of pricing of legal services is that, by definition, there really shouldn’t be any scope creep – what you see [in the tin] is what you get!

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‘Imposter syndrome’, how it effects your pricing, and what you can do about it

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Imposter syndrome‘:  “The persistent inability to believe that one’s success is deserved or has been legitimately achieved as a result of one’s own efforts or skills.”

For some time, sparked through the conversations I’ve had on the topic with Katherine Mountford, I’ve been interested in the concept, theory, and roll that imposter syndrome plays within the legal profession.

My interest was given a nudge over the past week by a LegalSpeak podcast that included some great thoughts by both Albert Farr and Jay Harrington, who talked about their experiences with imposter syndrome in the early part of their legal profession [noting that Farr is actually just starting out his career in law] (Calming the Imposter Monster: You Don’t Know Everything, And That’s OK.) and a post by Susan Harper on the issue of ‘What is Imposter Syndrome and How May It Be Affecting Your Leadership?‘ which looks at the broader implications of imposter syndrome at a more advanced stage of your legal career.

Read together they give a pretty good balance on some of the major crisis of confidence issues that can plague lawyers.

What am I worth?

While I am in no way qualified – nor do I profess to be – to talk to the diagnosing and/or treating of any medical conditions associated around imposter syndrome, or mental health issues in the legal industry more broadly, with over 20 years’ experience in the industry, I have no doubt whatsoever that most lawyers wake up in the morning and ask themselves (if no one else) ‘What am I worth?‘ – ‘What is an hour of my labour worth?‘.

Adding to these frustrations, and doubts, is the fact that, in private practice, in most cases, a lawyer’s intrinsic value is not determined by them. Nor, importantly, is it determined by their clients in recognition of their craft.

No, more often than not, a lawyer’s worth is determined by the Accounts Department and/or a Senior Management committee who have worked out [this should probably read, “been told”] how much the capital [equity] partners want to be paid this year (including bonus). Having determined this we then work backwards and determine the number of hours that will need to be worked in order to achieve this, taking account of historic realisation rates, and minus any leave, and then looking at the relevant leverage and required multiplier needed to ensure that the required amount is met.

All of this is then wrapped around a completely meaningless ‘industry survey’ that costs a fortune and suggests your law firm’s hourly rates are 10-20% less than your competitors and you really should be doing a better job!

If this sounds convoluted and over complex, or if you have any doubts about my sincerities here, read ‘Associates Want a Break on Billable Hours as Pay Cuts Roil Law Firms‘ by Dylan Jackson.

Little doubt then, in my opinion, as to why lawyers would suffer from imposter syndrome (or mental health issues more broadly).

Taking back control – how to demonstrate value to your customers

Adding insult to injury, having not had much say in the hourly rate they charge, and with little or no training, lawyers are then asked to go to market and justify why they are worth the amount they charge.

So can lawyers take back some control?

The short answer is: ‘yes’; there are several ways that lawyers can take back that control – one predominately relates to internal processes and the other to external communication.

Change the internal process: Establish a Value Council

If you want to adopt greater transparency and conversation around the amount that your lawyers charge – relative to the value they are delivering to your customers – and at the same time get greater collective buy-in from your lawyers, then I would suggest you take the power away from your Accounts Department and establish a Value Council.

The mission statement of your Value Council should be to establish:

‘a collaborative platform to discuss and exchange views and information about value to ensure outcomes that are mutually beneficial to all.’

Progressive law firms will include customers of the firm in their Value Council and consider adopting a Pricing Charter.

To be effective, it is suggested that your Value Council consist of no less than six and no more than 10 participants who, crucially, are willing to invest time in the process.

Change the external communication

For years lawyers have liked to brag about the hourly rate they charge. It’s up there with the mount of billable hours they have worked this year as ‘badges of honour’. The reality that most lawyer’s Average Billing Rate – the amount clients are actually paying for that lawyer’s time – are nowhere in the region of that lawyer’s hourly rate is conveniently forgotten.

But there is an alternative. Rather than going to market bragging about how much you cost, why not change the conversation up and talk about how much value you bring to your customers. How you help your customers? How you change outcomes to their benefit.

Dare I say it, you move the conversation away from you and onto them. In doing so, it is hoped you will take a critical step down the path of the Value Conversation; because, as John Chisholm wrote back in 2018:

“Before we price, we need a scope of work; before we have a scope of work, we need to have a scope of value and you cannot have a scope of value without first having a value conversation.”

That seems like a good place to put a line in the sand to this week’s post. I will add though that if you are one of those lawyers who questions their value, who may question if they deserve to be where they are or who suffers some form of imposter syndrome, keep in mind that around 90% of the profession is right there with you (and listen to Episode #182 of the Soul of Enterprise) .

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‘Annuity Revenue’ – who wouldn’t crave some financial certainty in current circumstances?

Annuity revenue – a predictable revenue stream from new or existing customers who buy products and services associated with new or previously purchased products. 

As the Managing Partner of a law firm today, what would you say if I walked into your office and told you that I could:

  • provide you with a guaranteed monthly revenue income,
  • with a product that creates loyal customers, and
  • where those customers become – at no additional cost to you – brand champions and refer your services to their network, free of charge, via the Holy Grail of marketing – positive ‘word of mouth’ referrals.

Sounds great doesn’t it. Almost too good to be true.

Well all I can say is that if you were anything like one of the Managing Partners servicing customers who responded to the Pitcher Partners recent ‘Legal Survey 2020 Report‘, that’s exactly what you would be saying: “thanks, but no thanks we are happy with the billable hour”.

Pitcher Partners - Billing Methods

The fact that the billable hour remains the ‘go to’ method of billing (not the same as pricing) for Australian law firms and their customers does not, in and of itself, surprise me. I must admit, however, to being a little surprised with the 1% increase in this billing method (up from 58% to 59%) year-on-year.

Given the times (even pre Covid-19), I was also a little surprised to see that both ‘fixed fee’ and ‘value-based’ pricing remain relatively static (although it should be added that from what I could see the report lacks a definition of ‘value-based’, probably purposely so).

To me this represents a massive lack of foresight on the part of law firms and a significant lost opportunity.

In much the same way as software as a service (SaaS) companies have come to realise that one-off payments around shrink wrap contracts were not servicing the long-term financial interests of the company (unless it’s a legacy product that will no longer be supported), the time has come for law firms (and professional services firms more broadly) to realise that if we want to maximise revenue and, potentially, profit we need to rethink how we generate that revenue.

One alternative that the likes of Ron Baker and Mark Stiving have been banging the drum about for some time is ‘subscription based pricing’.

The benefits of adopting a subscription based pricing model

I have posted previously on this blog about the benefits of subscription based pricing (see here), but leaving all that aside for a second; as Amy Gallo wrote way back in October 2014 in the Harvard Business Review (see ‘The Value of Keeping the Right Customers) with the acquisition costs of acquiring new customers running being between 5 and 25 times more expensive than servicing existing customers, it makes economic and financial sense to find, and keep, the right customers.

How you price this is probably the most important step along that path.

The weakness of having billable hours as your default billing method is that you are pricing to the transaction. Whereas one of the greatest benefits of the subscription based pricing model – or even a retainer based pricing model if you must at the start- is that you start thinking about pricing the customer or even the portfolio.

In other words, you start to think about the customer and their needs first. And for an industry that always talks about the customer being at the centre of everything we do, doesn’t it makes sense that our pricing structure reflect this claim?

But it also makes sense internally, because it:

  • is smarter pricing
  • leads to smarter collaboration
  • moves you away from seasonal end of financial and calendar year pressures, and
  • helps remove any discussion around the ‘commodity’ tag.

Not to say, in these COVID-19 times, when you are talking working capital facilities with your bank, it provides you with a guaranteed annuity revenue stream.

Now who would not want that comfort right now?!

These just represent my thoughts though and always interested to hear your views.

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Has the timesheet been thrown a new lease of life with COVID-19?

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Leaving aside for now whether or not you agree with the billable hour; Most law firms, including many of those that work on fixed/flat and other alternative fees, still require their fee earners to fill-out and submit daily timesheets.

For a small, but ever growing, number of us however there was hope – a light at the end of the tunnel so to speak – that the efficiencies that technology was bringing to the profession would eventually reduce the need to complete timesheets. After all, tasks that used to take several hours of [billable] time (e-discovery for example), with the help and use of technology, could now be completed in less than 15 minutes: so why bother with an outdated measure of productivity such as the timesheet?

And then we had COVID-19…

And so what effect do we think COVID-19 may have on timesheets?

Well, as Cal Newport wrote in his excellent blog post of 12 April, ‘Task Inflation and Inbox Capture: On Unexpected Side Effects of Enforced Telework’:

I’ve spent years studying how knowledge work operates. One thing I’ve noticed about this sector is that it tends to treat the assignment of work tasks with great informality. New obligations arise haphazardly, perhaps in the form of a hastily-composed email or impromptu request during a meeting. If you ask a manager to estimate the current load on each of their team members, they’d likely struggle. If you ask the average knowledge worker to enumerate every obligation currently on their own plate, they’d also likely struggle — the things they need to do exist as a loose assemblage of meeting invites and unread emails.

Ouch, but the killer blow comes with Carl’s next comment:

What prevents this system from spiraling out of control is often a series of implicit friction sources centered on physical co-location in an office.

I had not heard of “friction sources” before reading Carl’s post but he is absolutely right:

When you suddenly take a workplace, and with little warning, make it entirely remote: you lose these friction sources.

And what are those ‘friction sources’ exactly?

Well, as Carl writes [quote]:

  • If I see you in the office acting out the role of someone who is busy, or flustered, or overwhelmed, I’m less likely to put more demands on you.
  • If I encounter you face-to-face on a regular basis, then the social capital at stake when I later ask you to do something via email is amplified.
  • Conference room meetings — though rightly vilified when they become incessant — also provide opportunities for highly efficient in-person encounters in which otherwise ambiguous decisions or tasks can be hashed out on the spot.

[/unquote]

Carl writes like someone who has worked in a law firm for decades and his thoughts give food for thought to those of us considering what the future of law might look like post COVID-19 and why the new normal may not look a whole lot different to the old way of doing things.

As always interested in your thoughts/views/feedback.

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ps – If you want to Buy Me A Coffee, you find me hanging out here

 

Survey: Is the perception of value geographic?

Page 7 of April’s Briefing Magazine has a couple of interesting charts on how:

2019 was a mixed bag of business for US firms operating in the UK, with headcount growth hitting utilisation and billing rates requiring attention

As someone who is fascinated in the ‘pricing’ (not costing) of professional services, it was the “billing rates requiring attention” part that caught my attention.

billing realisation rates

The chart above, as titled, is billing realisation rates for US law firms in both the US and the UK.

So: why do two different offices of the same firm have such different realisation rates just because of the Atlantic Ocean?

After all, you would assume the clients are largely the same. You’d also assume the work types are largely the same. You’d probably be okay thinking the leveraging is largely the same. You may even reasonable expect the person reviewing the bill in Finance is the same. And, you may reasonably expect the hourly rate in London to be lower than that in New York for all said lawyers.

So why is it that realisation rates are roughly 5% higher in the US than in the UK? Especially when you’d think it would be the other way round.

And what does this mean more globally? Where would Asia, Africa, and South America fit on this scale?

More importantly, does this say that the perception of value is geographic?

I have my thoughts/views, but as always interested in yours.

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Pricing is a point of differentiation in difficult times

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In my working career to-date I have experienced, first-hand, four economic downturns:

  1. The first was in the late 1980s in the UK (when I had just moved to UK from Southern Africa) and everyone walked around with negative equity for a few years (at least, those that hadn’t had their homes repossessed).
  2. The second was the 1997-1998 Asian Financial Crisis (AFC). This was shortly after I had just moved out to Asia and it completely redefined my legal career as I moved from someone working in Project Finance and Major Projects work to someone who did an awful lot of Debt Restructuring and Workout work (Chapter 11 stuff).
  3. The third was the Global Financial Crisis (GFC) in 2007-2008 – shortly after I moved to Australia (anyone else seeing a trend here?). Fortuitously Australia didn’t suffer the GFC nearly as badly as the rest of the world and technically we haven’t had a recession in 30 years (although many of the States in Australia have, the country has not).
  4. The fourth is what is now know as COVID-19 in 2020.

Out of all of these, the uncertainties around COVID-19 concern me the most.

Having said that throughout history, every example of adversity has also provided us with a chance at opportunity and this latest economic downturn is no exception. While there are many who sadly won’t survive, there will be many who do.

And, in my experience, those who do survive will be the firms who both understand the circumstances they face and plan for how to deal with those circumstances.

The problem with ‘value’ in economic uncertainty

The perceived ‘value’ your customer sees in your services should be core to how you price those services – in that it’s not about the cost of your services, but the value of the services you deliver.

The problem with this theory is that in economically uncertain times, your customers’ perception of value will change.

It therefore becomes critical that all in your law firm understand that now is the time to provide solutions to your clients problems and not a service.

The elephant in the room: The unused capacity issue

The traditional professional services business model is one based on capacity. In my experience, one of the immediate results of an economy that falls off a cliff is that firms run around looking for work their excess capacity can do.

And one of the go-to strategies to achieving this is that firms will look to drop their prices to gain competitive advantage.

But, as my experiences of 1997 and 2008 have shown me, this is a short term solution to a long term problem.

In both those downturns lots of law firms dropped their prices significantly in response to the AFC/GFC, who were then never able to recover the lost ground.

Essentially they smashed the value perception equation and couldn’t recover it.

You can still drive growth and profit in difficult times

All doom and gloom aside, there are some pricing-relating things that you can start to put in place to get you through this without putting yourself out of business. These include:

1.  Do an audit of your work types

Do a deep dive audit and look at the types of work your firm does. Are these the types of work we are likely going to need in a post-COVID-19 world? If not, what types of work are we going to need? And can your firm provide this (or will you need to laterally hire it in)?

2.  Stay away from the traditional Alternative Fee Arrangements of discounted hourly rates and capped fees. These will only lead you to a race to the bottom.

3.  Align your law firm’s incentives with your customer’s

Over a decade ago Jeff Carr – Vice President, GC and Secretary of FMC Technology – introduced an Alliance Counsel Engagement System (ACES) on its outside counsel panel. Part of ACES included a methodology of aligning the incentives of the outside firm and FMC through a hold back incentive scheme under the terms of which it was possible to get remunerated more than you billed if you provided a good service outcome (dependent in part on an early form of NPS feedback – Carr was ahead of his time!). 

Take out: What is your firm doing to ensure it incentives its team to financially align with those of your customers?

4.  It’s time to think outside the pricing box

For most of my career as a pursuit and tender manager I have read law firm material about how innovative they are in pricing and how they think outside the box. In most cases this simply isn’t true.

Now is the time when you can change that.

For some time Ron Baker and Ed Klees have talked about subscription pricing being the new Value Pricing 2.0 (Google it). And now really is the time to consider pricing the relationship, not the transaction. Think about what services clients are likely going to need as a result of COVID-19, whether that is Employment, Safety, General Contracting, Debt Recovery, Workouts, Restructuring, Loan Borrowing – and think about this:

Which of these services can bundled into a subscription package?

To End

For a long time I wasn’t sure I held with Deloitte’s ‘Pricing and Profitability Management’ theory that a 1% improvement in price equaled a 12.3% increase in Operating Profit.

Don’t get me wrong though – I KNOW that any pricing improvement kicks the sh!t out of any cost reduction. I know it because I have lived it.

And that’s why I can say with absolute confidence that how you price your services over the next few weeks/months/years is never going to be more important to the ongoing success of your firm than now!

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