ALM legal Intelligence has released is second special report on Pricing Professionals. “Pricing Professionals: Essential to Law Firms, An Ally to Clients.” The survey was conducted in April 2014. Although pricing has been in place longer in larger firms, the function is found across all size firms. In just one year since the first report, pricing has moved from a tactical function to a strategic function. One consequence of this is that individual lawyers have less control over how matters or a portfolio of work will be priced. The pricing professional, the executive director, the CMO and Practice group leaders may all have input on the pricing decisions. The bottom line is that if a law firm doesn’t bring their own pricing expert to the table.. the client will! The report suggests that law firms have begun to put the people and processes in place to support a serous pricing and profitability assessment function.
The report's key findings affirm the increasing importance of the pricing professional:
- 76% of firms have pricing professional up from 68% in 2013
- More than half of firms have had a pricing officer for more than two years.
- The top reasons for establishing a pricing function are to help with AFAs, to respond to cost pressures from clients, and to get a better understanding of the ROI for various matters.
- Pricing officers are often a member of the firm's senior leadership team.
- Direct involvement in client discussions has increased.
- 93% of respondents expect increasing use of AFA's
- Pricing officers increasingly provide responses to RFPs
- Despite all the efforts, only 36% of firms report that the are very confident that they understand the cost of a matter when they price it.
- The majority of firms report that pricing efforts increased profitability
In Search of the Pricing Software
Pricing officers are waiting for someone to develop a software product to help with the analysis. The ideal software solution would model non-hourly pricing, help with matter intake, connect with LPM matter management and provide clients with a view of the matter management process.
How to Get Hired as A Pricing Officer?
While the data in the report is interesting the most compelling reading is the quotes from the pricing professionals themselves. They are an adventurous group who took on a vaguely defined, high profile job to which law firm have attached even higher expectations ... They toil without the comfort of a job description. Basically pricing professionals are inventing their roles as they go along. It is not for the feint of heart. The key criteria for hiring a pricing professional are 1) a financial skillset 2) people skills 3) prior experience in a pricing role, I would add to that list "nerves of steel,"