Digital White Papers

WHATCHA MEAN BY "LEVER"? Levers of pricing are the characteristics of a good or service that materially impact the price. For example, a 16GB iPhone is less expensive than a 32GB iPhone (storage being a lever). A simple legal example would be the difference between a will for an older married couple with no children versus a younger married couple with children (age and children being levers.) discovered and some basic financial information — such as total hours, hours by timekeeper class, fees and duration — into Excel. Excel contains a useful data analysis add-in that can be activated by the user. With that extension, Excel can generate histograms easily to help create a visualization of the frequency of matters at different volumes. Similarly, scatter graphs can help identify clusters of matters at different volumes. The clusters that become evident might be additional variables a pricing professional needs to understand and account for. In addition, understanding mean, median, minimum, maximum and standard deviation for each cluster is important. The clusters THE PRICING PROFESSIONAL'S KM TOOLKIT and related variable information likely identify some of the pricing levers in the matters. If the sample size is large, this approach can also help to identify the relative importance of different known levers. As an example, one might find different jurisdictions matter less than initially thought (although that isn't always true). Sometimes, even when a firm has a detailed matter experience database that contains most of the important pricing levers, the histogram reflects subpopulations without explanations for volume. When that occurs, it is good to go back and ask a few questions of the attorneys who handled the file. In these conversations, pricing professionals often learn about other simplifying or complicating factors that are rarely documented. Simplifying factors might include that the parties in the transaction were seasoned pros or that the tax issues were very easy. On the complicating side, issues could involve parties being new or disliking one another as well as clients not having documents organized for due diligence. There are many of these kinds of issues; they need to be understood and captured in the experience database when they can change expected fees substantively. One approach to knowing whether a matter is more or less complex is evaluating its distance from the median. For example, matters with hours more than one standard deviation under the median might qualify as worthy of follow-up to document the simplifying factors. The same would hold true for matters more than one standard deviation over the median for complicating factors. Ultimately, as levers that affect price are identified, they need to be documented in the matter experience database. Capturing the information will enable easier analysis of the data over time and enable the creation of either self-service tools for the lawyers or a checklist of questions the pricing professional should ask when pricing out a new matter. The information might also support marketing efforts in describing the firm's experience or when questions are asked about whether the firm has ever handled a certain type of matter. LEVERAGE THE PAST IN NEW WAYS Although leveraging existing KM tools can and does save pricing professionals a great deal of time, many still find themselves mired down in manual, time-consuming tasks such as sifting through prior work product to find highly similar matters or, once found, using time entries or task codes from similar matters to support budgeting a new matter. The root of the problem is law firms have a lot of historical data that is not well organized. It could be that many matters did not use billing task codes or that matter descriptions are often brief and lacking detail. One

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