Growing up in Biglaw, I always thought pricing services for clients was easy. Conversations with clients went as follows: “Our rates range from X to Y, and are very competitive with our peer firms. If you have the audacity to ask for a break on these prices, we can offer you a 10% ‘courtesy discount,’ but will include language in our engagement letter allowing us to recoup that discount and more a few months into the engagement.” Of course, even in the mid-2000s (crazy that those days are nearly a decade ago), X was roughly the monthly lease payment on a well-equipped Honda Accord — for the least “experienced” lawyer in the entire firm — and Y was in the range approaching the monthly mortgage payment for a decent-sized colonial in a “pleasant” suburb. That was how things were priced, and depending on your firm, your rates were either considered cheap or expensive. But that categorization was always relative to other firms in your city, with a usually self-selected “peer group.” So there was always a “premium” (but unnecessary) firm more expensive, and on the other end of the pricing spectrum, a “discount shop” that could be sneered at for trying to undercut the market with low prices aimed at masking subpar legal ability.
When there was a surplus of demand for Biglaw’s services, the above approach was a tenable one. Once that surplus turned into a surfeit, firms needed to get a little more creative. At first, the tendency was to simply offer bigger discounts, with the “courtesy 10% off” turning into 25% off or more. Then clients started informing their firms of new “billing guidelines” where certain types of work would no longer be billable. Or where certain lawyers, such as junior associates whose time would no longer be paid for by clients, were magically transformed from revenue-producers for the firms that hired them to deadweight cost center investments in the “firm’s future.” Add in competition from other firms for a shrinking pie of business, and thinking about pricing became more rigorous. In fact, pricing expertise is one of the only Biglaw job skills with a growing rather than shrinking potential employment base….
Biglaw competition is getting intense. Everyone is chasing the same clients, while also deploying rearguard actions to protect institutional clients from being poached. Forget about lateral partners taking clients for a moment. I am talking about overt approaches from competing firms regarding existing matters, bearing promises of handling things more cheaply and more efficiently. In-house lawyers, under pressure to contain costs, almost have to listen. They may not act right away, but with each such approach another dent has been made in the Biglaw client-maintenance bumper.
It is no secret that in the face of declining overall demand (especially for the profit-pumping activities like mega-document reviews that were Biglaw’s joy to perform in the past), firms need to aggressively protect market share. While also seeking to grow market share. In an environment where more and more large clients are either (1) reducing the number of firms that they are willing to assign work to or (2) embracing an approach that finds no beauty contest too distasteful to engage in. So partners, at least those tasked with finding work for everyone to do, are falling back on a tried-and-true “sales approach” — putting things on sale.
Admit it: Your corporation has a lot of legal flotsam and jetsam.
This is probably true no matter what business you’re in. On the corporate side, you have routine business transactions, and you may well handle those in-house. On the litigation side, you have a bunch of routine cases that pose little risk to the company but represent a recurring, and predictable, expense.
I propose that you package up that flotsam and jetsam and sell it off.
So Lat calls me up all excited about some Biglaw Midsummer Bonus or something, which I totally ignore, and also about some hysterical dicta that Judge Kozinski wrote, which I also ignore (although it probably was pretty funny), and then he starts asking me about my law career. Which, you know, ended. And he points out that I failed to get ATL approval of my decision to close my small firm, which means technically, my column should just be called “Big Lawyers,” which is a whole other kettle of fish.
Then Lat says he knows how we can fix it. “Go on,” I say. Lat says that I can tell our readers exactly how to start pricing their legal services instead of just billing their time. “But Lat,” I plead, “I can’t give away my secrets. I have a whole new consulting firm to tell people these secrets in exchange for scads of dollars.”
Lat is quick to admonish me. “We don’t keep secrets from our readers, Jay. That’s why our readers know all about my obsession with all things Sophia Chua-Rubenfeld and why they all know that Elie is as jovial as an Ewok in real life.” Then his tone sharpened: “Plus we can always get Staci to write your column in a tenth of the time it takes you. And we can even have her use your name as a pseudonym.”
Well played, Mr. Lat, well played. So here then are the secrets to pricing your legal wares in eight easy(ish) steps.…
I’ve got news for you: The future of practicing law will not be about cloud computing. It won’t be about tablets or offshoring or client self-help or virtual law offices. It won’t be about e-discovery, or practice management, or paperless offices. Yes, these things will certainly all happen; many are happening now, and a number of them are helping to give small firms an advantage, or at least level the playing field. But they will not be the biggest change in our industry.
I recently gave a speech on what the practice of law would look like in 2019. I chose that year for two reasons. First, it’s the year that the classic sci-fi movie Blade Runner takes place, with a younger-than-Calista-Flockhart-is-now Harrison Ford playing a cop who rides in flying cars and hunts robots that look like humans.
I’ve got news for you, guys: There won’t be any flying cars eight years from now. (Which is probably just as well, as people will insist on texting while flying.)
But the other reason I chose 2019 is because it will be the hundredth anniversary of something nearly every lawyer deals with all day every day.…
Ever since I stopped billing by the hour in 2006, lawyers are constantly asking me, “How do you set your prices?” It’s a topic I’ve lectured on and written about frequently, and my new consulting firm, Prefix, LLC, focuses on teaching lawyers how to do it for themselves. But today, I want to turn the question around:
How do you set your billing rates?
It’s an important question, and one you should know the answer to.
I know what the books on starting your own firm say (I’ve read them). Most of them come up with a formula along these lines: Decide how much profit you want to make in a year, add your estimated annual overhead, then divide the sum by the number of hours you think you can bill in a year. That’s your hourly rate.
That’s not how anyone sets their billing rates, regardless of what the books say. Instead, their rates are based on three factors.…
Jiminy jillickers! ATL editors are going all over the place over the next month or so. Or at least all over the Eastern Seaboard. If we aren’t heading to your neck of the woods on these trips, never fear, we may hit you up on the next time around. We’ve already hit up Houston, Chicago, Seattle, San Francisco, and Los Angeles in the past year.
Kinney Recruiting’sEvan Jowers is currently in Hong Kong for client meetings and still has a few slots available through October 22. Evan will also be in Hong Kong November 14 to December 15. Further, Robert Kinney has been in Frankfurt and Munich this week and is available for meetings with our Germany based readers.
One of our key law firm clients has referred us to one of their important clients in the US, Europe and China – a leading global technology supplier for the auto industry – in order to handle their search for a new Asia General Counsel and Asia Chief Compliance Officer.
Kinney is exclusively handling this in-house search.
This position will have a lot of responsibility and include supervision of eight attorneys underneath them in the Asia in-house team. The new hire will report directly to the global general counsel and global chief compliance officer, who is based in the US. The new hire’s ability to make judgement calls is going to be as important as their technical skill set background.
The position is based in Shanghai and will deal with the company’s operations all over Asia and also in India, including frequent acquisitions in the region.
It is expected that the new hire will come from a top US firm’s Shanghai, Beijing or Hong Kong offices, currently in a top flight corporate practice at the senior associate, counsel or partner level. Of course, the candidate can be currently in a relevant in-house role.
The JOBS Act created new tools for companies to publicly advertise securities deals online. As a result, thousands of new deals have hit the market and hundreds of millions in capital has been raised, spurring a wealth of new business development opportunities for attorneys.
Fund deals, startup capital raises, PIPE deals and loan syndicates are just a handful of the transactions benefiting from the JOBS Act. InvestorID FirmTM is a platform designed to help attorneys equip their clients with the workflow, marketing and compliance tools to publicly solicit a securities offering online. By providing clients with the tools to painlessly navigate the regulatory landscape of general solicitation, InvestorID FirmTM helps attorneys add value above just legal services.
The Jumpstart Our Business Startups Act (JOBS Act) went into effect in 2013 and permits Regulation D offerings of securities to be advertised publicly. This means that funds and companies can now use social media, emails and web sites to market transactions to new “accredited” investors.
However, with these new powers come new pain points. InvestorID FirmTM provides a secure, fully hosted, cloud-based platform with a breadth of tools for your clients, including: