Modern Law Magazine Issue 69

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INTERVIEWS THE PRICE OF LAW Modern Law sat down with Richard Burcher, Chairman of Validatum® & Virtual Pricing Director®, to talk about legal pricing, how to approach it, the latest trends in pricing, and how pricing affects the client journey. Pricing has been a big topic of conversation for years as the legal industry has discusses every-which-way to approach it. It is often an issue the industry struggles to find a general consensus on. When it comes to pricing Richard believes that one size does not fit all and finding what fits you and your firm best is the way to go. 6
INTERVIEWS Richard Burcher is a former New Zealand practising lawyer and managing partner with over 40 years-experience. Following masters-level postgraduate study in pricing, Richard relocated the business to London in 2012 since which the business has grown significantly, having now worked with over 300 law firms in 30 countries including 43 of the UK top 100 law firms. He is widely regarded as the leading international authority on pricing legal services through the group’s consulting arm, Validatum®. Could you share some insights into the challenges law Q firms commonly face regarding pricing and billing, and how Validatum addresses these challenges? Law firms have always been good at managing costs, A particularly during difficult times. It is only in relatively recent years that a lot more attention has been given to the pricing side of the profit equation. Pricing has become vastly more complex and nuanced because of things like market price information asymmetry that favours clients, the rise of legal procurement, more sophisticated and betterinformed clients, and more recently the likely impact of widespread adoption of AI enhancing the delivery of legal services. I think that all readers will recognise these examples. Complexity of Legal Work: Legal services can vary greatly in complexity, making it hard to establish standard pricing. Client Pressure on Costs: Clients are increasingly demanding more value for their money, and transparent, predictable fees. Time-Based Billing Concerns: The traditional billable hour model is often criticised for not aligning lawyers’ incentives with client outcomes. And now the emergence of credible AI powered service delivery is going to put firms that predominantly bill by the hour, under enormous pressure. Internal Resistance to Change: Changing longstanding pricing practices can meet with resistance within law firms. Competition and Market Pressure: As competition increases, law firms need to differentiate themselves through their pricing strategies while remaining profitable. Technology and Data Analysis: Leveraging data for informed pricing decisions has until recently been a challenge which has seen the emergence of pricing platforms built specifically for lawyers like Virtual Pricing Director®. In your experience, what are the most common Q misconceptions or myths that law firms hold about pricing their services, and how do you work to dispel them? There are many myths that are nonetheless firmly held A convictions, but there are two that immediately spring to mind. 1. The belief that most clients are highly price sensitive and will invariably go for the cheapest option. Some time ago, the Law Society Gazette published the results of the survey that revealed that a quarter of homebuyers would pay more for conveyancing, particularly if it was faster. The Gazette subsequently published another survey that revealed that only 6% of residential conveyancing clients chose their solicitor on the basis that they were the cheapest they could find. A recent Altman Weil Survey of in-house corporate legal teams found that only 9% make a buying decision based on lowest price alone. Over 90% said that the buying decision was a multifaceted one which also took account of price transparency, budgetary certainty, and their perception of the cost benefit (value) correlation. 2. Most lawyers think that they sell six-minute units. We don’t, any more than you or I go into a travel agent and ask to buy four hours on a plane. What we want is to get from point A to point B. Equally, clients buy outputs (results, a concluded deal, a dispute settled, peace of mind, reassurance), not inputs. Much of this is due to a failure to understand the distinction between time recording as a management tool and time recording as a pricing tool. This fundamental misunderstanding makes creative and novel pricing very difficult. How does the pricing strategy of a law firm impact the Q overall client journey, from the initial consultation to the resolution of their legal matter? The commercial aspect of the relationship with clients is A arguably the most problematic and challenging. As a general observation, lawyers are not comfortable talking about fees with their clients and many aren’t particularly confident at doing so. But all the surveys clearly show that clients attach a very high premium to price transparency, so we need to get much better at that. The other aspect where we frequently let ourselves down is a lack of continuity in the pricing conversation. Many of us are or have been guilty in the past of sending a pricing proposal to the client and then never re-visiting it until the end of the job by which time there is often a cost blowout resulting in a very difficult and potentially relationshipdamaging conversation with the client. No one likes to receive bad news, but bad news not delivered in a timely manner is much worse. We really do need to maintain better continuous lines of cost communication throughout the life of a matter. QCan you discuss the psychological aspects of pricing and how it influences a client’s perception of the value they receive from legal services? That’s an interesting question, particularly as behavioural A economics and pricing psychology was the most fascinating part of my postgrad study before leaving private practice and setting up Validatum®. And it is something that features quite prominently in our partner pricing master classes. I can illustrate this aspect with one example of a heuristic that is very powerful. A heuristic is a mental shortcut we all use to facilitate problem-solving, probability judgement and decision-making. This example we refer to in the master classes is ‘Price as a Proxy for Quality’. 7
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Page 5: CONTENTS IN-DEPTH 26 Breaking barri
Page 9 and 10: INTERVIEWS How do you balance the i
Page 11 and 12: INTERVIEWS As the founder of the La
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Page 15 and 16: INSIGHT Succession Planning: The Er
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Modern Law Magazine Issue 69

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