The relationship between client and firm (not just the lawyer!) is becoming increasingly more sophisticated as clients demand more, and firms increasingly adapt a client-centric approach. The status quo is no longer enough to land and expand. Firms are being pushed to properly articulate cost-to-value and deliver a consistent high-quality offering.
Who else would be more poised to lead this charge than firms’ Business Development units? As Stuart Dodds pointed out in a recent interview about legal pricing professionals’ evolving role, “pricing is one of the 4Ps of marketing (the others being promotion, product, and placement), but more importantly… pricing really needs to clearly tie into a firm’s overall value proposition.” Moreover “the role is client-facing and acts as a conduit, bringing Marketing, KM, Finance, and IT together,” Dodds said.
While the pricing role within law firms is growing — 64% of firms have added pricing staff according to the 2016 Altman Weil Survey — not all pricing professionals sit within business development. In fact, at this time most sit within Finance, however Dodds point is not lost — at the very least the roles called out must work cross-functionally with people and data!
This collaboration makes sense because pricing offers the transparency and consistency that clients are demanding as they evaluate proposals. The activities surrounding pricing focus on the clients’ needs as well as outcomes; with more frequency, these activities offer a consistent deliverable that clients desire. Further, at this stage, a honed focus on pricing is a clear differentiator as many firms are still working towards this nirvana. Additionally, it complements the growing role of business development within firms as it equips business development with more depth to add to a rich understanding of how the firm will serve the client. It is through this articulation of value that clients can rationalize a firms’ cost.
The activities surrounding pricing focus on the clients’ needs as well as outcomes; with more frequency, these activities offer a consistent deliverable that clients desire.
Firms are catching on, nearly 90% of large law firms are trying to develop data on the cost of services for the purpose of pricing, according to the Altman survey. This cannot be done in a vacuum. The information needed to understand the cost of a matter goes beyond the financial system. A wealth of knowledge exists in the time and billing system (such as revenue, hours, fees, and even information on services like the practice and timekeepers) that help classify matters; and, narratives, industry, and other pertinent client data can add a layer of rich flavor to the story, helping a firm shape the way they deliver client service to the needs of the various subsets of client.
Think about it, the data available on a firm’s experience for a unique (or not so unique) cross-section of clients helps a firm not only serve the clients based on their needs but also helps articulate the price of a matter by highlighting the value the firm brings to the table.
While cost data can be ideal for pricing, when it’s coupled with more robust data sets it can also offer the ability to monitor and track a matter through its lifecycle. The understanding of the phases of a matter, hours, and other cost levers learned from historical matter can reorient firm efforts to proactive rather than reactive. It is yet another place for business development to get involved with lawyers to ensure the firm is on track, get ahead of expectations, and follow-up on client needs.
The ever growing collaboration between people and data helps firms better position themselves as it strengthens their story. Once you begin to incorporate the learnings from a matter when it comes to skills and resources needed, the cadence of the matter, the ability to stay on track with promised delivery, and even the satisfaction with the outcome, will allow the story to develop in a very rich way. Through this process, you now have enhanced insight — aka a full picture — of how your firm is serving the client.