Two years ago Jim Hassett and Jonathan Groner co-authored “The Rise of the Pricing Director,” the first article to spotlight the growing number of pricing professional in the legal industry. The Bloomberg Finance piece highlighted several early leaders: Stuart Dodds, Michael Byrd, Toby Brown. (READ ARTICLE)
In September 2012 CorporateCounsel.com published Susan Hackett’s two-part series on law firm pricing directors. Hackett’s in-depth look raised the profile of the ever-growing group of professionals. She, too, highlighted Dodds, Byrd, Brown as early leaders. (READ ARTICLE subscription req.)
Now, as the roll call of professionals pushes past 80 (SEE ROLL CALL), Ark Group has published a new report on pricing personnel from one of the early leaders: Law Firm Pricing: Strategies, Roles, and Responsibilities. Authored by Toby Brown and Vince Cordo, this publication is an authoritative look inside the day-to-day activities of a pricing director from two AmLaw 50 veterans.
Brown and Cordo set a lofty goal:
“This report will explain, in detail, the function of this role, what breadth of skills one needs for it, how the pricing team should be structured, where it sits in an organization, how it interacts with strategy and with clients, and what governance should be set in place to make it work.”
Although the authors don’t quite deliver fully on this goal, the report’s eleven chapters do address many of these topics.
Chapter 1 provides a high-level introduction to the role of pricing directors. Chapter 2–the longest chapter–outlines the many roles of a pricing director: budget building, profit modeling, lawyer counseling, matter monitoring, fee approval, etc. Chapter 3 defines law firm profitability and explains the four drivers (rates, realization, productivity, leverage) pricing directors need to understand.
Chapter 4 presents more than 35 metrics used by law firms and clients which impact pricing strategy. Chapter 5–the meatiest chapter–enumerates 14 ways in which pricing professionals can help law firms (e.g., statistical analysis, task code implementation, engagement letter language). Chapter 6 is all about monitoring.
Chapter 7 offers nine ‘golden rules’ for pricing directors to deliver client value. Chapter 8 acknowledges the important role of technology. Chapter 9 discusses knowledge management and legal project management. Chapter 10 highlights a pricing director’s role as educator, motivator and regulator.
Chapter 11 concludes the report with a set of recommendations for a pricing team. In the lead is a pricing director who is both strategic and tactical and possesses leadership and management skills, as well as sixteen additional abilities. A pricing team should include the expertise of four areas: pricing analyst, statistical analyst, legal project manager and client value support. The report defines the contributions of each role.
Each chapter is full of quotable advice and wisdom. Here are a few highlights:
“The pricing role assists lawyers in securing work with creative and client-driven solutions.”
“A seemingly safe first step to establish this role is as some type of analyst function within the finance department.”
“One of the first projects a pricing director should tackle is developing a process for capturing the pricing requests as they occur.”
“Discounts: once you cut back, you never get it back.”
“Firms need to stop devaluing legal services by over discounting and taking on loss leaders.”
“The most important consideration in every pricing deal is that of the relationship between the requesting partner and the client.”
“Having the wherewithal to visit potential customers, and trying to understand the specific client pain points that the firm could potentially help to solve, is essential.”
In many ways, this report feels like an informal conversation with the authors. They tell you the basics of the pricing function; they offer a few anecdotes; and they provide some helpful guidance. After the conversation is over, however, you are left to wonder what you gained from the experience. The chapters are short on recommendations, and I had more questions than answers. For example, the authors tout technology, but the report does not offer a review of, or roadmap for evaluating, the tools available for a successful pricing function.
In addition, like a conversation, the report has two distinct voices. It appears the authors tackled chapters individually rather than collectively. That strategy can work in a collaborative effort, but I found it distracting in this instance. (At the beginning of each chapter, I found myself asking, “Is this Toby or Vince?”)
Overall, my expectation for this project, given the authors’ advanced experiences, was high. Unfortunately, this report isn’t so much a touchdown as it is a field goal: it is a notable accomplishment and it helps advance the legal industry’s understanding of pricing personnel. That is worth celebrating.
As someone deeply committed to this subject, I welcome Brown’s and Cordo’s contribution to the growing knowledge base of law firm pricing. Their unique perspectives offer a glimpse into their advanced pricing worlds and should be useful to firms with little-to-no pricing initiative.
A copy of the report is available from Marketing Partner/Ark Group: LAW FIRM PRICING.