ALM: 2014 Law Firm Pricing Report

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American Lawyer Media has released its latest law firm pricing report: Pricing Professionals: Essential to Law Firms, An Ally to Clients (May 2014). It is a remarkable change from the last two years, and the title says it all. Rather than focusing on pricing activities, this year’s report focuses on the law firm pricing personnel. The report highlights six key findings, all centered on the people behind law firm pricing:

  • 76% of law firms reported having at least one pricing professional, although only 38% are in a dedicated role
  • 70% of the pricing professionals report to the C-level; 50%+ belong to the firm’s senior leadership team
  • 50%+ of law firms have had a pricing professional for more than two years (but not in a dedicated role)
  • 56% of law firms anticipate growing their pricing teams
  • 30% of the pricing professionals dedicate at least 10% of their time to client-facing responsibilities
  • Top reasons for having a pricing function: help with AFAs (90%), help with matter pricing (88%) cost pressure from clients (76%), understanding the cost of matters (75%)

What does a law firm pricing professional do?  By far the biggest discussion over the last year has been centered on the job function of law firm pricing professions. This year’s survey offers an answer to that question: respondents were asked to rank nine core responsibilities, with greater emphasis on “business development” duties over “operations” duties:

  1. Client Fee Discussions (incl. Negotiation)
  2. Budgeting
  3. RFPs
  4. Profitability Analysis
  5. Pricing Training
  6. Legal Project Management
  7. Monitoring
  8. Setting Standard Billing Rates
  9. Process Improvement

How is a law firm pricing professional compensated?  One of the larger questions with any nascent field is compensation, as there is little reference data. This has been particularly true for this profession, especially since the pool of dedicated pricing professionals is small (<100). This reports sheds a little light on the subject, but it is important to keep in mind that 62% of the pool is not in a dedicated pricing role. The data below reflects 2013 compensation including bonus:

  • $300k and above     14%
  • $250k – $299k          14%
  • $200k – $249k         18%
  • $150k – $199k          25%
  • $100k – $149k          22%
  • Below $100k             8%

The full report can be obtained from ALM Legal Intelligence’s Research Store: 2014 SURVEY

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