Pricing has three aspects -"Setting the price, getting the price, keeping the price"
Setting the price involves determining the appropriate pricing arrangements, not just the fee. It requires an understanding of the impacts of different Alternative Fee Arrangements (AFAs), fee estimates and "set in stone" budgets, requiring knowledge of pricing theory, profitability levers, and pricing options is integral to a successful legal practice. But implementing any different pricing arrangement has to involve consideration of the impact on all areas of the firm. For example, if remuneration is tied to billable hours, how will an AFA impact this?
Many lawyers struggle to respond to requests for AFAs, not understanding the pros and cons of the various options available. Others are concerned about the profitability risk associated with non-hourly based pricing arrangements. Our extensive experience in developing pricing fixed fee work enables us to identify the risks to profitability.
Even those operating under an hourly based regime struggle with working within budgets, and educating their lawyers about the profit margin in any pricing arrangement.
AFAs and Fixed Fee by Work Type
We work with firms to develop alternative fee arrangements that are compliant with legal profession regulations, address risks, and provide value to both the client and the firm. AFAs can be tailored to particular matters, or whole areas of work.
A successful arrangement involves consideration of not just profitability, but process improvement, HR impacts, service delivery, and marketing and often requires change management skills. We have worked with firms to develop fixed fee pricing arrangements for portfolios of work in litigation, personal injury, family law, insurance, banking and finance and commercial work.
In our experience, the reason many lawyers revert to billable hours is lack of confidence in adopting an alternative means of pricing. Pricing mentoring helps lawyers work through the pricing process and develop confidence in taking a different approach. The nature of the support can be tailored to the firm's requirements, ranging from pricing individual projects to playing the role of a pricing council, to sitting in with lawyers and and providing feedback as they work through the pricing process.
Pricing Master class
All training is tailored to your firm and its particular issues. Workshops cover price modelling, profitability levers, AFA options, and defining value. They are hands-on with a focus on a practical application of skills being taught. In smaller groups, attendees are encouraged to bring their own files to use in the practice exercises.
Pricing Conversation masterclasses
Getting the price requires a discussion with the client about price, and the ability to articulate why the price reflects value. The reality is that this is a sale discussion, and lawyers benefit from an understanding of pricing psychology and the risks a client takes into account when making a decision to engage a lawyer. Price is only one part of the purchasing decision, and often not the most important.
This class covers the importance of the discussion about fees, pricing negotiation skills, holding the value discussion and understanding when to walk away.