Canadian Lawyer

tech Support By Danielle Olofsson Pricing legal services: Is the tail wagging the dog? O ur clients, just like clients of any other good or service, are purchasing results not processes, and to this Toby Brown in his July 7, 2013, posting to the 3 Geeks and a Law Blog, attributes some of the difficulty with pricing legal services. They want a dispute resolved or a sale of shares completed. They are not interested in paying for X number of depositions or X number of correspondences to opposing counsel. Pricing legal work often reminds me of the last days of the Cold War during which the United States allegedly brought the then-Soviet Union to bankruptcy by forcing it to overspend on the arms race. Conscious of being in an over-lawyered and under-cliented market in which a consolidation is inevitable, it seems as if we price our work not to earn revenue or even cover costs, but rather to undercut our competitors. Those of us who do not have the processes in place to produce better work, faster and cheaper, will end up collapsing. Some firms have begun to tackle the "hydra" that is pricing by trying to establish the resources required for a file through process mapping, task coding, and legal project management. While this is a start, the actual cost of a file, at this point in time, still remains largely unpredictable as a result of poor time keeping in the past and inadequate scope definition. In the many instances in which the clients themselves are not entirely clear on what they want or on how a given alternative fee could better 18 F e b r uary 2014 www.CANADIAN meet their budget, it has been too easy to fall back on the billable hour and offer discounts. Moreover, in the rare instances in which we are able to ascertain with some certainty the cost of a given legal service we often discover at the price we have established, we are "not market" and must cut our rates even more if we wish to win the file. While reactive pricing in response to what the market will bear is a way of L a w ye r m a g . c o m measuring how clients perceive value, in the long run it is probably not the best approach. To begin with, clients are frequently unclear on the value their lawyers actually provide. So, unfortunately, are their lawyers. This stems from many things, be it poor training — junior lawyers don't understand as clearly as they should what their seniors are asking them to do, frequently because the seniors don't understand it themselves

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