Digital White Papers

December 2013: Business and Financial Management

publication of the International Legal Technology Association

Issue link: http://epubs.iltanet.org/i/231030

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CONDUIT… TOGETHER, WE CAN DO IT! Further efforts have been made to move the discussion from standard rack rates to worked rates or effective rates. The question to ask here is what percentage of your business is actually billed (and paid) at standard rates without any kind of discount or alternative structure associated with it. Within the past five years, firms have started to figure out the answer to this question. The largest push for change and further analysis around pricing has come from clients. Clients no longer want to deal with law firms adding yearon-year increases when they have continuous budgetary and shareholder pressures. Nor do they want to pay for training and onboarding time. Clients have also gotten more aggressive about cutting down on discretionary expenses for which firms used to be able to charge. The economy forced clients to take more control over the pricing and budgetary aspects of law firm services. And that is forcing firms to change. Change is always hard. It seems to be particularly hard for law firms. It is harder still for those of us who have to help steer these ships through the winds of change. However, the one trigger that has forced a lot of change in the area of pricing has been client pressure. When clients started asking for more and more data to justify rate increases and for firms to consider alternative billing methods, firms started getting serious about looking at pricing strategies. Enter the role of the pricing director. A lot has been written in the last few years about the emergence of this role and why it is important. A June 2013 ALM Legal Intelligence report, "Here for Good — Pricing Professionals in Law Firms and Their Impact on Clients and Firm Business," says: "In the largest firms in the United States, no new role in the firm's organizational structure has grown as quickly as that of the pricing officer. Pricing officers (and committees or departments, where applicable) are charged with helping partners more accurately budget matters and improve profitability of engagements. However, firms are still coming to terms with how to use these resources and the organizational and strategic changes that could eventually be required of them in order to continue to build profits in the long term." This new role is intriguing, and there are many levels at which a pricing director can tighten the firm's overall strategy and business practices. This is largely due to the fact that an integral function of the pricing director is to become a conduit between multiple departments that contribute to decisions regarding pricing. CONDUIT BETWEEN PARTNERS AND MANAGEMENT There are many disparate areas within a firm that get "pinged" when a new matter is opened or discussions about a new case are going on.

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