The Three P’s Shortchanges What’s Necessary to Bring Value To Clients

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I ran across an interesting article in Attorney at Work, Trends in Legal Pricing and Project Management. The article reported on the recent P3 Conference offered by the Legal Marketing Association. The three P’s are pricing, project Management and process improvement. Having just written a book that covers these topics (and more), I was interested to hear the latest. Unfortunately, it seems like so much pablum. Of course, my reactions below are based solely on this article and there may well have been much more to the Conference.

The basic idea, that pricing is about more than just the price offered but must include tools to bring value to the price offered, is one I have written about many times. Unfortunately, the focus on project management and process improvement ignores the critical role other tools play in creating value. My forthcoming book, for example, contains chapters on early case assessment, decision trees, disaggregation, managing risk and after action assessments. Each of these tools, particularly managing risk, is critical to obtaining value. To illustrate, if a client is unwilling to accept a modest amount of increased risk, it is hard to create significant value because the same old run-down-every-rabbit-hole approach will be a huge driver of high cost service.

But the points there were covered were much more “glass half empty” than “half full.” The author, Steve Nelson, reports that “law firm teams in pricing and project management are growing quickly.” There are now 16 non-practicing pricing and project management professionals at Reed Smith and a whopping 12 at Mayer Brown. At this pace, the firms will have the staffs they really need by the start of the 22nd century. These numbers, to me, show that the firms are playing at the periphery and doing little more than paying lip service to the importance project management and process improvement play in generating value. If you take the “some is better than none” view of things, than sure, these numbers show an improvement. But that bar is set so low that it will be hard not to trip over it.

The next point is that “there is a growing focus on budgets.” Really? That has only been an issue since the early 1990s. That is immediately followed by the point that “clients are bulking up too.” Again, this is not news. Maybe some clients are late to the party, but there was this thing called The Great Recession that caused many clients to focus on this issue years ago.

The next point, “beyond spreadsheets” is about the role of technology in pricing. Technology that utilizes the prior billable hour work doesn’t really bring much value to the table other than setting a bogey that firms should be able to beat for similar work. And beat significantly—think on the order of 20-30%. I am not aware of many firms who are using technology for pricing that provides real value to their clients.

The last point, “proving ground for tomorrow’s law firm leaders,” is an important one, but only because it provides career-path guidance to young attorneys. I am not sure I agree with Toby Brown’s statement that future COOs could come from those handling practice innovation. Toby is a highly accomplished and very rare pricing and practice specialist. He likely is destined for high levels of firm management, but firms need to reach the point Akin has in embracing the ideas of value pricing. Few have.

It sounds as if the P3 Conference was a “just scratch the surface” event. At least the article suggests such was the case. Even if not, the perception that creating pricing value is easily accomplished does a huge disservice to the endeavor. The challenges firms face to providing better pricing are core to their business model and require changes to firm DNA. Few are willing to expend the energy to truly accomplish the objective.

 

Topics:  Law Practice Management

Published In: Professional Practice Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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