publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/231030
A PRICING PARTY: BALLOONS, WIZARDS AND CRYSTAL BALLS stored in the firm's matters database. Not only did the research uncover critical context to the financial data, the knowledge manager located additional relevant trials to be included in the set of comparable matters. Having a well-established and comprehensive litigation matters experience database in this case made it easy to find the comparable litigation matters, even working under a tight deadline. Critical data points added into the analysis included: •The number of trial days •Jury vs. bench trial •The number of patents at issue •Jurisdiction •Size of the trial team •Hours worked by timekeeper rank •Exposure Armed with these additional data points and the collective experience and knowledge of the pricing director and knowledge manager, they were able to start connecting dots. For example, they were able to calculate the per-day cost of each trial per person at trial, which brought the various cases into line and provided some reliable data with which to start the pricing process. They were also able to see which cost drivers had the biggest impact on the overall trial costs, and then focus on how the trial at hand compared in those key categories. In addition to informing and validating the partner's bottom-up estimate, the data mining helped the partner think about optimal staffing for the trial. The partner was able to see the various staffing approaches others had taken and the impact of different leverage models on both total hours and fees. Ultimately, the team was able to provide the partner with a solid estimate backed up by a graphical analysis of similar historical matters showing key cost drivers. The partner responded to the client that day with an estimate. The client initially pushed back on the projected cost, suggesting it was too high for the scope of work. The partner was able to engage the client in a fruitful discussion about the work and likely costs based on the historical data and his projected hours by timekeepers. The parties reviewed the estimate together and agreed on a scope of work and estimate that worked for both sides. This case study provides several keys lessons and takeaways for developing accurate estimates and pricing proposals: •Effective pricing is truly a team effort, and knowledge management professionals are a key part of that team. •Finding the "right balloons" requires a comprehensive and reliable matter experience database, good search tools and people who know how to use them. •Time entry is a remarkably rich information mine. What other industry itemizes the level of effort and describes it in a structured written database, down to the level of six-minute increments? •Historical financial data itself is often of limited value in developing cost estimates and pricing proposals. However, historical financial data combined with other key matter information can be very valuable in developing accurate estimates and effective pricing proposals because you can focus on just the few "balloons" that really matter. •When looking at historical data, remember to factor in changes in billing rates, especially when looking at time worked more than two years in the past. A simple solution to the issue of changing billing rates is to focus on hours worked instead of the standard or billed value of hours worked. •Staffing can have a significant impact on total costs. Analyzing hours by timekeeper rank