publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/231030
MANAGING THE MIDRIFF: CORRECTLY PRICING THE BULK OF YOUR PRACTICE'S SERVICES and James Calloway's book "Winning Alternatives to the Billable Hour: Strategies That Work." These illustrate: •How clients perceive value and the relationship of this perception to the price they are willing to pay •The relationship between the type of work a firm does and the structure it can afford VALUE CURVE UNIQUE SERVICES price-insensitive EXPERIMENTAL SERVICES RELATIVE VALUE ADDED BRAND NAME SERVICES COMMODITY SERVICES price-sensitive VOLUME OF WORK AVAILABLE © Cobb Consulting The "Value Curve" illustrates the type of work available on the market and its relationship to price. Four percent of this work is perceived to be unique by clients who will not hesitate to pay what they are being charged by the lawyer who performs it. For the 16 percent of the work that is experiential, it depends on the experience that is held by a few lawyers in the market. Again, the client is unlikely to challenge the cost of this work. Then, there is the other 80 percent of the work on the market, 16 percent of which is brand name work (a client will send it to a firm because of its reputation in a given area), and 60 percent of which is commodity and, in a client's mind, can be sent to any lawyer. When working on files that the client perceives to be situated in the brand name and commodity services range, lawyers must be conscious of price. POSITION OF TWO FIRMS ON THE VALUE CURVE UNIQUE SERVICES price-insensitive EXPERIMENTAL SERVICES RELATIVE VALUE ADDED BRAND NAME SERVICES FIRM 1 (high overhead) FIRM 2 COMMODITY SERVICES (low overhead) price-sensitive © Cobb Consulting VOLUME OF WORK AVAILABLE This graph illustrates, through a comparison of two partnership structures, where firms can afford to position themselves on the Value Curve based on the type of work they do. A firm with high overhead (occupancy, employees, IT and partner draws) has to attract a greater portion of the unique and experiential work than a firm with less overhead that can afford to do work that clients perceive to be sensitive to price.