The quarterly publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/116777
GATHERING THE RIGHT DATA TO ADDRESS PRICING PRESSURES by Keith Lipman of Prosperoware Clients want to understand the costs of legal services, and they want those costs to go down. The requests for cost control range from lower rates, fixed fees for a matter or phase, or fees that are based on the success or outcome. In pricing matters, partners prefer to look at past history to compare the potential new matter with prior similar matters. The challenge for almost every firm is that, despite year upon year of historical information, the firm is missing the critical information they need to easily locate comparable matters. Why? Most firms only gather information about a new engagement at matter opening, when little is truly known. To establish guidance for pricing, firms need processes for gathering the right data through the life of the matter. This requires getting information out of the lawyers' heads and putting it in actionable form. Here are the steps to get there: EVALUATE WHAT YOU ALREADY CAPTURE in your existing enterprise system. When does it get added, and does it ever get updated through the life of the matter? DEVELOP A LIST OF CRITICAL DATA you need to capture for each practice area that will actually give lawyers and pricing staff logical information to compare. Some of the data elements needed include: • Practice area • Type of matter (e.g., insurance coverage review, IPO, multiproperty refinance) • Size of the deal or litigation (dollar amount, number of witnesses, etc.) • Measurement of complexity (e.g., number of issues, risk tolerance of the opposing counsel) • Opposing lawyer and firm • Time span and phases for each matter type • Total cost and revenue (while many costs are paid directly by the client, they still will want to know total cost) 82 Peer to Peer ANTICIPATE THAT YOU WILL HAVE MORE THAN ONE PROFILE for a matter. In most law firms, a matter doesn't always equate with actual service delivery. It more accurately reflects the invoice. For example, many lawyers use a single matter number for multiple regulatory filings. Or many matters will contain a variety of services from a variety of practice areas. BUILD A PROCESS that outlines who is going to nudge lawyers for relevant data, how many times they are going to do this through the life of the matter, and at what point in the life cycle of the matter. CREATE A GOVERNANCE MODEL that reflects the assumption that gathering data about pricing is not only an ongoing process but an evolving process that changes as the business evolves. For example, establish a committee that helps steer the process and ensures the data gathered are actionable.