On September 26th at TalentLaunch in suburban Clevelad, we gathered 9 legal industry thought leaders (in-house counsel, law firm partners, law firm CFOs, and Plante Moran’s law firm practice partner) to discuss the pressures law departments and law firms face and how they can work together better. In attendance were various General Counsels, in-house counsels, Managing Partners of law firms, law firm pricing analysts, and members of various alternative legal service providers and legal technology companies.
Here are the highlights:
PANEL #1: Legal Industry Pressures
Hilary Rule, Counsel - Aerospace, Eaton
The economic and time constraints in-house counsel face — stick to the time and budget restrictions given
The need for practical advice that is “good enough” — make sure to understand the end product the in-house counsel wants and avoid exhaustive memos (or any memos) unless asked for one
The parameters of the assignment — inform in-house counsel (and get consent) before expanding beyond these parameters
Recognize the resource and budget constraints - have to be prepared to have tough conversations about services that might have to be cut.
Focus on value proposition - BUSINESS partner
Lawyers are not just legal scholars-have to be disciplined and have a process.
Law firms should embrace alternative legal service providers - they're collaborators, not competition. Deloitte is already the biggest provider of legal services globally.
Can't just compete on price - have to focus on VALUE (cost with quality)
Have to be able to accurately estimate value of cases-cycle of risk aversion/zero defects.
have to develop more sophisticated ways of analyzing the probability of exiting at various stages
PANEL #2: Pricing Strategies
Hire a pricing manager who is not an attorney. They will be hated, but hang in there.
TRAIN LAWYERS TO TALK ABOUT PRICING
REWARD EFFICIENCY AND PROFITABILITY - BIG CULTURE CHANGE
The bottom 500 - not every client is a good client
Consider the overall cost or value that a firm can provide, rather than simply “price.”
A retainer/subscription model can be effective -- from a quality standpoint, a pricing standpoint, and a budgeting standpoint.
INFORMED not just ALTERNATIVE - fee arrangements have to work on both sides
Differentiate - "if you packed up and disappeared in the middle of the night, what would your clients miss?"
Know which performance metrics you should be tracking
Continual learning and incremental improvement are the keys to value-based billing
Trade-off based pricing: Value/Speed/Quality. Price based on complexity of the work.
Total cost of service - if i have to spend 2 hours to make your advice usable internally, i want to take my time out of your fee
proactivity premium - be a real partner
When it comes to pricing, communication is the key. Have to properly set expectations of the client and the law firm.
Fixed fees with collars have been effective alternative fee arrangements. Pricing risk is shared between the law firm and the client.
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