The State of Pricing in the Legal Profession Today (Tweet Stream)
This post captures my live Tweets from the Ark Law Firm Pricing and Profitability Conference occuring now in NYC. This Tweet stream is from the keynote address, The State of Pricing in the Legal Profession Today, by Toby Brown, Director of Strategic Pricing & Analytics, Akin Gump Strauss Hauer & Feld LLP.
Below are my Tweets in chron order minus the hashtag for this conference, #ArkPnP2013. @gnawledge is Toby’s Twitter handle (name).
@gnawledge has formed a legal group of over 200 people focused on pricing. LMA is home (in a SIG)
Fulbright survey found AFA declined. @gnawledge questions this. But partly depends what we mean by ‘alternate’
Pricing in legal is defensive – about holding on to what law firms have.
To do pricing in BigLaw, skills needed: 1. ability to interact w partners 2. willingness to embrace unknown.
RT @nicholasnv: Function of strategic pricing is to maximize profitabily firmwide, not just at the matter or practice levels.
“Pricing is utter chaos”. Some firms have very experienced pricing profs; others barely have anyone focused on it
Firms struggle where pricing function belongs in staff structure. @gnawledge not currently in a department at Akin Gump
Knowing what clients want is biggest success factor in good pricing. Ask clients “where does it hurt”.
At one client, the pain point was first year associates. The real answer was not to put them on matter.
The pricing person has to model profitability. Existing tools look backwards; tools for prospective profit analysis emerging.
The pricing person has to monitor matters – but lawyers don’t want to be held accountable. Must give them actuals v budget.
RT @joshuafireman: Profit drivers: Rates, realization, productivity, leverage @gnawledge
Each point drop in realization translates to a one to three point drop in margin.
Firms must rely more on leverage to maintain profits. Partners must push work down – but they worry about their hours.
Firms will have to adjust partner compensation to encourage appropriate pricing and profitability.
Pricing is chaotic on client side. A few companies, e.g., GSK, focus on paying market price.
Clients not yet very good at specifying scope. Some RFPs do not make clear what client really wants.
Client trust is broken. Angry at 1st yr associate comp + PPP level. Price pressure will continue until those change.
Very easy for clients to seek discounts. When clients freeze rates, class bumps stayed.
Legal procurement has had mixed results. GC + proc profs still struggle. Still focus too much on hours.
In rational markets, info widely available. Legal market lacks transparent pricing.
Firms + clients ‘are begging for some rationality in market’
Existing + new players beginning to provide legal market price data.
@gnawledge backing away from emphasis on phase + task coding.
Law firms don’t know what they sell. Matters not sufficiently characterized to compare + analyze.
Law has been ‘no stone unturned business”. Clients want fewer or cheaper hours. But they need to more explicit about it.
Pricing and legal project management will continue to grow as firms struggle with price and margin pressures.
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