Firms Begin to Eye Pricing Analysis
By tracking this data, the firm has something to look back on, not to slap a partner's wrist for making a bad deal, but to learn from, Licata said. Dechert now has about 40 to 45 different pricing models that an analyst can show a partner. If a client wants certainty of cost, there are models for that. If the client wants a hybrid rate, there are models for that, he said.
Licata has gone on between 30 to 40 client pitches with attorneys to help educate the client's procurement department on the fee deals the firm can create. The deal is then formalized in writing with specifics as to what the pricing arrangement will entail. That has reduced disputes with clients over alternative fee arrangements, Licata said.
When the firm's pricing analysts aren't creating pricing strategies, they are mining the data to come up with new pricing options, Licata said. Their work doesn't stop with pricing, however. Licata said the team sees the project through to the end of the matter, tracking things such as whether a fixed fee is nearly met on a case. Licata said firms have to track their data for about two years to have enough to predict trends and price effectively. And they should always revisit a pricing strategy at the end of each matter, he said.
Pricing and project management aren't options for Dechert attorneys. All attorneys go through a pricing process at the matter intake stage. If it meets the profitability standards, a more formal process isn't necessary. But the pricing will still be checked at the end of the matter to ensure it worked or find out where it failed. All alternative fee arrangements go through the firm's pricing department.
If a partner has too many instances in which a pricing structure didn't make profitability metrics, then all of that partner's matters will have to go through the pricing team, Licata said. Dechert also does what Licata described as a partner scorecard.
"Not every partner gets treated the same," he said.
Partners with a great history on pricing will more easily clear the process for a pricing model that brings with it some risk of not meeting a profitability index, he said.
Beatrice Seravello, Blank Rome's chief strategy officer, has been working with her practice management team for the past year on building pricing templates, analyzing data and creating alternative fee models. That work has been successful in a few practice groups and the goal in 2013 is to expand it firmwide.
Seravello said it became clear there needs to be a person dedicated solely to pricing analysis. To that end, the firm plans to transfer an existing staffer who has been involved from the start on analysis and alternative fee models to head up a new role handling pricing strategy. This person has a business analyst background and would move into the new role by June. Seravello said the position will most likely be titled director of pricing strategy because she views the role as a strategic function of the firm rather than simply project management.
For Drinker Biddle & Reath, the concept of legal project management has been part of Kristin Sudholz's role since she took over as the firm's chief value officer in 2010. Pricing and budgeting have always been a function of that role, but now Sudholz will team up with longtime litigation partner Wilson M. Brown III to work on strategic pricing initiatives on a more formal basis.