Pricing Different Practices, DifferentlyAn on demand webinar that examines approaching different practice areas as entirely different business units within the firm
We hope you will join us for this one-hour on demand web-based discussion, as we discuss and evaluate:
- How we can view our respective practices differently, to help us recognize the inherent opportunities relative to each individual business unit (i.e. area of practice)
- Which client relationships are most rewarding to the firm? Those that are long-term and predictable, or those that are short-term but command premium prices? Or is it both?
- What we can learn from other industries
- What the market is telling us with respect to price
- The risks of uniform image and pricing
- The risks of separate profit centers becoming counterproductive silos
Can law firms view different practice groups as completely different business units and price matters and compensate attorneys relative to the business unit they work for? Can different practices have different profitability models—and can compensation design be customized for each? And how can law firms maintain a cooperative culture and avoid a silo mentality if they are essentially treating each practice group as a unique business unit, and playing by its own set of rules?
Successful conglomerates (Proctor & Gamble, Marriott, hundreds more) recognize that different products and services need to be managed and marketed in very distinct ways.
Can law firms do the same?
Have we reached a point where one size can’t and shouldn’t fit all?
Clients value different legal services in different ways. Regulatory counseling and compliance, for example, require continuity of lawyers, systematic monitoring of the law, high ethical standards and constant interactions with regulators. Cost for this type of housekeeping work is an important factor. For bet-the-company litigation, on the other hand, cost is secondary to the client’s monetary and reputational risks and the litigation team’s track record. The client relationship, however, is finite and often one-time.
Internally, this means different practices require different profitability models. For some, the sustainability of long-term relationships is critical. Often, reducing cost to the client may increase both market share and profitability, yet most law firm models miss these points entirely. Different practices likewise may need very different staffing models. Some practices provide the best output and are the most profitable with nearly all partners. Others, however, may function best with large numbers of associates, paralegals and contract attorneys.
Compensation also may need to be more customized. As practice groups and firms move back to fixed prices, contingency portfolios and the like, hours and hourly rates may have little if any useful relationship with compensation. Rather, compensation turns on the practice group’s profitability, combined with a share in the firm’s overall profitability. This also means lawyers in various practice groups may need to adjust their income expectations in light of competition, market conditions and ceilings on what clients are willing to pay.