The discipline of pricing is ever-growing – an integral component of the business of law that can materially impact law firms — especially if used proactively. Importantly, pricing data can offer firm leaders a window into matter, client, and overall firm profitability. So why are lawyers still often reactive when it comes to pricing?
Why firms need a formal pricing function
There is good news that the needle is moving in the right direction. According to the 2019 Law Firms in Transition Survey by Altman Weil, 64% of surveyed firms are collaborating with clients on creative alternative fee arrangements, while 42% have trained lawyers to talk with clients about pricing. Yet only 30% have hired or designated a pricing specialist inside the firm. The consequence is a failure to understand the importance of how sophisticated pricing can affect profitability.
Lacking a formal pricing function, firms are missing out on the strategic benefits pricing and the underlying data can offer, and the impact implementing the right pricing technology can provide; namely, more flexibility and accuracy to pricing teams, more profitability to lawyers and partners, and more transparency to clients.
How technology can help a firm’s pricing team
Forward-thinking firms have found that adding modern technology to the mix — smart integrated solutions that include AI/ML, predictive modeling, and other data-science tools — can result in meaningful benefits for their people, profits, process, and data.
How can technology be a catalyst to the strategic nature of pricing to inform profitability? It can provide support where the intersection of pricing and budgeting impact client business, and offer visibility into activity, progress, and most importantly, the levers of profitability of each engagement. Robust pricing technology that is lifecycle-aware helps to create and support a seamless, closed-loop system that allows firms to stay on top of engagements throughout – from pitch and proposal through billing and collection.
A solid approach to profitability, a commitment to developing rigor around pricing and matter management, and introducing the right technologies at the right point will continue to move the profitability needle for law firms.
We invite you to watch a recent webinar where we led a discussion about how technology can help your firm advance its pricing capabilities and improve engagement profitability. Watch it now.