Zen and the Art of Legal Pricing
I have seen one consistent thread while working through different projects the past few weeks. Almost everyone is preoccupied with pricing. Not just what to charge by the hour, but how to price better (higher or lower) or communicate the value provided (more or less).
The larger the firm, the more focus on trying to pour higher hourly rates into new value-labelled bottles. The larger the client, the more efforts I see towards filtering away what they don’t need. It’s almost like value is seen by most law firms as a great virtue while being viewed many clients as a new vice.
In looking at new billing options and models, I have come up with 7 rules that can guide the art of legal pricing in practice. The focus, as always, is on corporate clients and their law firms. I will drip these out over the next 7 days.
For today, here’s something I thought was a rule, but may really be a rubric:
In-house counsel look for hours to fit the work. Outside counsel look for work to fit the hours.
Until you start practicing law inside the modern corporation, you can’t fully comprehend this. For a former outside counsel, it’s like you just entered legal nirvana. There’s legal fodder everywhere you look: potential lawsuits, festering regulatory issues, letters of intent being dispensed like toilet paper. Awesome, you exclaim, I’m going to make my targets easy!
And then it hits you: I have no targets. While I can spend all the time I want on anything, if I do there’s no way I will have time for everything.
While this seems less about pricing than about the realities of in-house practice, I think it’s really one and the same. Outside counsel tend to see matters as discrete tasks, and want to price accordingly. In-house counsel understand it’s all about feeding the same beast, and there’s never enough time or money to go around.
This is where rubric gives way to rule. It’s an outgrowth of something I learned by helping clients build a business of putting nasty things into the ground.
Tomorrow, we start with Rule 1: Legal fees are like hazardous waste.
(And yes, I have been re-reading Robert Pirsig’s classic work that he subtitled “An inquiry into values.” We should be glad he focused on motorcycles and not on lawyers. A focus on the latter would have consigned the first edition to the remainder aisle. Instead, I bet you have one of these in a box somewhere in your basement or attic.)