June 23rd, 2014 by Jim Cotterman
Pricing should reflect a fair value to the client for the product/service/result provided and the market in which they are provided. Thus hourly rates vary by location, practice specialty, practitioner experience and work/issue sophistication. They are also sensitive to market factors. For example, insurance defense rates are less and slower to move for a given practitioner than rates charged for similar work paid by the client directly.
Hourly rates have long been augmented by alternatives such as contingent fees and fixed fees for certain practice/market specialties. And interest in moving beyond the hourly model is accelerating. Law firms are investing resources in more sophisticated tools to understand cost of services and in people to analyze and structure pricing options.
The key is finding a means to best address a client’s needs for predictability, cost reduction and risk sharing in its legal spending. How does the client define value and how can the firm better define the value it provides to the client? Conversations with clients are critical as needs, issues and priorities vary.
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