How a law firm prices its delivery of legal services has become far from a rote or obvious undertaking. Pricing has evolved to be of utmost importance as large law firms continue analyzing how to improve their profitability, convey their value proposition to clients, and impose more discipline on their processes and practices.
To take the temperature of this environment, LawVision and Thomson Reuters Peer Monitor collaborated on the 2019 LawVision & Peer Monitor Pricing Survey, offering answers to what firm pricing professions think about the many important profit and pricing questions circulating throughout the legal industry. The report also casts light on how law firms are coming to perceive their pricing methodology and how that perception is impacting firm strategy and profitability.
“We undertake this survey annually to really examine how the role of pricing has changed within law firms,” says Mark Medice, Principal of LawVision. “What are the most common practices? How have the needs of law firms changed in this area?”
Download your copy of the 2019 LawVision & Peer Monitor Pricing Survey, from LawVision and Thomson Reuters Peer Monitor.
All large law firms want their pricing efforts to contain three objectives, Medice explains. “They want their pricing to be aligned with the value they’re offering, they want to deliver quality legal services, and they want to be disciplined in the processes they undertake to deliver these services.”
Today, law firms are being sensitized to the challenges within the legal industry — the focus on innovation and technology; the push for efficiency and lower costs; and the need to make your firm’s business case to clients — and how building pricing acumen is crucial to these meeting these challenges across the firm.
“They see that pricing can no longer operate in a silo as the purview of a few choice partners,” he adds. “Pricing is part of a whole that include process management, client service and satisfaction, the integration of technology and innovation and much more.”
In crafting the 2019 LawVision & Peer Monitor Pricing Survey, LawVision and Thomson Reuters Peer Monitor created 36 questions for large law firm professionals who oversee their firm’s pricing function. These questions addressed strategic and functional aspects of pricing, including issues like department structure, pricing methodology, and cash leakage.
Some key findings in the survey included:
- There was a split in satisfaction about firm rates and pricing performance with just about half of the survey respondents indicating they were either very satisfied or satisfied in those areas.
- Overwhelmingly, survey respondents cited managing and limiting cash leakage and other process discipline problems as the major challenges to their departments;
- A large number of respondents also noted that they were actively trying to better understand what their clients expected as to value and cost and to convey that knowledge to other parts of the firm; and
- Many survey respondents also reported that their firm’s pricing departments play a supporting — rather than controlling — role in the pricing process.
Indeed, many of these findings point up how far pricing has come in regard to its role in law firms, but also how far it has yet to go. “Many pricing pros identified the continued need for strong internal support for the pricing department’s structure, its processes, and its overall function within the firm,” Medice says. “Clearly, improving the pricing strategy within a firm is not going to be done through osmosis — it’s going to take hard work and commitment, demonstrated over time, to fully develop and integrate pricing and its impact on value and profitability into the fabric of the firm.”