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In Search of Perfect Client Service Why lawyers don't seem to get it

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

Posted in Commentary, Hourly Rates and Alternatives

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.

  • Timothy B. Corcoran

    Wow, Patrick. You should have attended the P3 conference, especially since it was in your back yard. Your take couldn’t be more off the mark. Unfortunately, the Attorney at Work approach – in which days of content are distilled into a few bullet points – is designed to provide highlights, but alas the format lacks depth and in this instance didn’t do justice to P3. You and I have long agreed that Biglaw, entrenched protectors of the status quo, has long resisted embracing the changes needed to drive client value even when doing so can be proven mathematically to be accretive to the law firm as well. However, the 250+ P3 attendees from firms big and small, and from in-house law departments, represent the growing sentiment that change is not only desirable, it’s within our grasp, and it’s well worth investing in time and resources to get it right. Of course there are laggards, and simply having a pricing manager or a project manager trainer on staff doesn’t instantly translate to improved client satisfaction and value. But it’s a good start. And the content did indeed cover a much wider range than the article’s space limitations allowed – we discussed communication, managing expectations, understanding the client’s business – which often means deeply understanding his risk profile, decision matrix, and financial planning calendar. We discussed the changing math of law firm profitability where short-term success (max hours on an engagement) gives way to long-term success driven by client retention, in turn driven by client satisfaction, in turn driven by service posture, in turn driven by better processes, better communication, better understanding. We are, without doubt, years away from these changes going mainstream, but given Biglaw’s traditional reluctance to forgo short-term profits in lieu of waiting out these “fads,” the investments in this arena are a healthy step in the right direction. And make no mistake, while many clients are pushing hard, there are quite a few just as puzzled with these changes and struggling to manage costs and predictability and risk without the comfortable “big brand, pay by the hour” model, and struggling to embrace “bean-counter” procurement execs intruding on their turf, but they’re also in the room collaborating in this change process. I think it’s safe to say Valorem has carved out an early adopter role and those of us who have been advocating these changes for years thank you for leading the way. But eventually in any market the laggards start to take notice, and the heavy attendance at the P3 conference suggests such a stirring is taking place. Many firms won’t get there, and some firms in the room are indeed doing the bare minimum… but for those firms that are committed and are putting in the time and investment, it’s good for all of us. Hopefully everyone knows that one of the key investments is to buy, and embrace, the lessons found in your book. I predict a year from now these lessons will be as necessary as they are today – so let’s plan ahead and have you involved in the 3rd annual P3. Help us drive the change!

    • http://www.patrickjlamb.com/ Patrick Lamb

      Thanks for your far more positive discussion of the event, Tim. Your comment provides far more insight than the Attorney-at-Work piece, and I am glad my readers will have a chance to see your more expansive discussion.

      I remain skeptical that all of this activity is directed at providing real pricing value to clients. Firms still measure revenue against what they would have earned using billable hours, and until that mindset goes the way of the mastodon, real value will not be provided. Time will tell.

      And since I am a follower of yours, Tim, I am always happy to help share the message.

  • lindsaygriffiths

    I echo Tim’s comments, as I was in attendance at the conference as well. It was FAR more robust than the AAW article indicates, with very substantive discussion and an attitude of “let’s do this,” minus the foot-dragging that can be common in the industry. I’m recapping each of the sessions I attended in detail over on my blog (I’ve got two already up there, and will be adding the other four/five over the next week), so I invite you and your readers to check them out and see what some of the conversation was about, in addition to participating in anything you’d like to discuss further!

    * Value-Based Pricing, Legal Project Management and the New Value Proposition: http://www.zenlegalnetworking.com/2014/06/articles/conferencewebinar-session-reca/valuebased-pricing-legal-project-management-and-the-new-value-proposition/

    * P3: Project Management, Pricing & Process Improvement – An Open Discussion: http://www.zenlegalnetworking.com/2014/06/articles/conferencewebinar-session-reca/p3-project-management-pricing-process-improvement-an-open-discussion/

    * And a bonus overview: Two for Tuesdays: Takeaways from P3: http://www.zenlegalnetworking.com/2014/06/articles/two-for-tuesdays/two-for-tuesdays-takeaways-from-p3/