First year law firm budget9/28/2023 Large-scale law firm clients now have procurement professionals who are increasingly involved in the selection and hiring of outside legal counsel and law firms. Involvement of procurement and pricing professionals ![]() This avoids time leakage and saves law firms considerable time and expense spent making adjustments to invoices and bills.Ģ. For example, if a client’s outside counsel guidelines (OCGs) prohibit the law firm from billing the client for first-class travel or first-year associate time, these systems prohibit these entries when time is entered by the firm’s lawyers. To avoid this from happening, sophisticated firms have deployed systems which automatically track professional time and costs against as-agreed-to budgets and not-to-exceeds, and also flag non-client-compliant billing entries. It leads to expensive law firm write-offs and write-downs and can decrease client satisfaction. This critical difference in the meaning and understanding of the word budget causes internal issues and problems for both law firm clients and lawyers/firms. So we often receive bills in excess of what we were expecting, which are not well received.” But to us, the client, the word budget means the total maximum fee the lawyer/firm will charge us. What happens next is a major misunderstanding regarding the answer to one of the most common questions all clients ask, “how much will this cost me/us?” In fact, several major buyers of outside legal services who use many law firms have recently told me, “outside lawyers define the word budget to mean an estimate of fees. This different concept of budget causes a major discrepancy in the important “setting expectations” phase. But what the word budget means to lawyers versus what it means to clients varies. “Budget” is a word commonly used by both clients and lawyers, especially during pricing and pitching. 3 pricing trends occurring in profitable law firms:ġ. In fact, most law firms still spend considerable internal lawyer and staff time trying to assemble the appropriate internal data and information. Firms without modern, up-to-date technologies in place to pitch new work efficiently will face increasing competition. In order to ensure legal services are proposed, pitched and then delivered profitably, lawyers and firms must use the right inputs from their proprietary and confidential internal data along with experienced pricing assistance before pitching. Worse yet, they chronically over-react to perceived client pressures to reduce fees, afraid they will lose the engagement.” A new way to price and pitch legal work ![]() McKenna, “robust pricing is a key to matter profitability yet most attorneys invest little time in seriously exploring how to price their services or to price them effectively. In this hyper-competitive market for outside legal services, it is no longer enough to price and pitch new work in the same old manner.Īccording to the renowned law firm strategy and practice management consultant, Patrick J. You can connect with Julie on LinkedIn, and please look out for her next post on how data analytics are transforming law firms. While firms want to ensure efficiency and profitability, client transparency and clear expectations also play a major role. ![]() In this second post from business and client development and service strategist, Julie Savarino, we discuss the trends firms should consider when pricing and pitching new legal work.
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