How To Use Legal Analytics To Competitively Price Your Services

In an increasingly competitive legal market, how you price your services matters. Particularly as associate salaries continue to rise, clients are pushing back on billing and increasingly seeking out alternative fee arrangements to the traditional billable hour model.

In order to best use pricing to gain a competitive advantage, you need to first understand all the factors that influence your pricing on a granular level — things like case timing, parties’ track records, potential damage exposure, and more. Legal Analytics from Lex Machina allow you to access the legal data you need to strike the right balance between risk and profitability in order to set rates that keep you at the top of a competitive market.

About Competitive Pricing

While the pricing of legal services is increasingly a competitive factor in clients’ decisions on law firm hiring, it’s also a subjective endeavor. Firms and cases vary widely, so pricing is not simply an exercise in offering the lowest number.

Competitive pricing needs to take into account both the value and the risk involved in the case. Your price ultimately needs to anticipate costs and rewards, not just your competitor’s prices, though it’s important to know what those are, too. The legal industry has become highly data-driven, and your clients will expect you to have data to back up your prices, or they’ll look elsewhere. Legal Analytics gives you the ability to back up your pricing and prove to your clients that you’re the right firm to represent them.

Case Timing

Whenever you take on a new matter, one of the first things your clients will want to know is how long the case will last — after all, time equals money in law. Lex Machina helps you answer that question by giving you in-depth insight into similar matters. You can analyze a vast amount of case data by venue, judge, type of case, and more to see how often those cases reach certain litigation milestones and how long on average similar cases last on the whole.

For example, you can view 12 years of contract cases in the Southern District of New York and find out exactly how many days is the median time to termination or trial. Armed with that information, you can give your clients a much more realistic sense of the lifespan of their cases and also set a price that will be both profitable and realistic for the work anticipated. This will also give you a solid framework for exploring alternative fee arrangements or potential areas for cost savings to come up with a price that pleases both the client and the firm.

Party Track Records

A major factor in how much a case will ultimately cost is how your client and the opposing party approach the case. Some parties almost always try to settle as quickly as possible, while others are intent on fighting to a substantive resolution whenever possible. Obviously, the latter scenario will result in significantly higher legal costs.

With Lex Machina, you can analyze how your client or any other party to a case has typically resolved matters in the past. While every case is unique, this will give a good sense of how long the case will last and what litigation tasks will be involved, which in turn gives you the best basis for pricing your services to account for the time and efforts that will be involved in the case.

Damage Exposure

Another major factor that often influences how much your clients are willing to pay for your services in a given matter is the potential damages they’ll likely either recover or have to pay at the resolution of the case. For instance, if they stand to recover very little, they might be less likely to go forward than if the likely damages are significant. The same goes for how much you can reduce the damages they have to pay if they’re the defendant.

Legal Analytics from Lex Machina includes a wealth of data on damage awards that you can filter according to case type, jurisdiction, and more. You can also see if your case is of the type where attorneys’ fees or punitive damages are typically awarded or not. By analyzing past damages, you can more accurately quantify likely damages and fees for your clients in current cases. Understanding potential exposure can help you make better pricing decisions and help your client understand the value of your services.

Firm Success Rates

If you’re responding to an RFP from a potential client, you’re not the only firm they’re considering. As part of your pricing, you need to show why your firm is the right firm to handle the matter.

With Lex Machina, you can quantify your success rate to your potential clients and empirically compare your outcomes to that of your competitors. Clients want value, and case success is an integral part of that. If you can show that you have a stellar track record in similar matters, and a better track record than the other firms they might be considering, they’ll see the value in your rates and you’ll gain a competitive advantage in a pricing war. 

In the battle to competitively price your services, Legal Analytics is your secret weapon. With Lex Machina, you can quote your clients value, not simply a number. When you can give your clients the data-driven case insights and quotes they want, you create the competitive advantage you need to attract and retain clients.