Maybe the Great Recession wasn’t all that bad for the legal industry. Thanks to the “death to the billable hour” movement, law firms have been adopting alternative fee arrangements (AFAs) and learning AFAs generate more revenue. Managed correctly, AFAs are more profitable, too.

Good New: Legal industry watchers continue to report an increase in RFPs.
Bad News: Law firms continue to win less than 33% of their submissions.

The right Pricing Strategy helps firms win more RFPs, which translates into more revenue.

Attorneys have been trained in the practice of law, not the business of law. When confronted with buyer demands, attorneys are quick to discount: 10%, 15%, 20%. The “fives” may sound good and be easy to calculate; often, they go too far. Firms can find more revenue by forbidding the fives.

Most of the time, Practice Groups and Firms focus on increasing rates. On rare occasions, firm leaders reverse that focus, going to market with lower rates (e.g., launching a new Practice Group, creating a segment of services). Economically, lower rates create higher demand, yielding more revenue.

Buyers want to buy at the lowest price. Sellers want to sell at the highest price. This “tug-of-war” hinges on the buyer’s willingness-to-pay (WTP). Practice Group and Firm leaders will realize more revenue by training their attorneys to identify WTP.