Hi there,
Is there any legal leader right now who isn’t laser-focused on figuring out: “How do I get the most value for my legal spend?”
That inquiry eventually leads legal teams to this fundamental question:
”How do I know I’m getting the best price from my law firms for this matter?”
In the past, enterprise legal teams have largely relied on hourly rate data. They triangulate various pricing resources and leverage their firm relationships to negotiate “the best” hourly rates.
Hands up if your law firms have told you — and you believe — that you’re getting the best rates in town? [All hands go up].
Well, I hate to break it to ‘ya, but you can’t all be right. 🤷🏻♂️
And the biggest problem with this approach is that when you rely on billable hours negotiated at “best rates,” you still have no way of knowing whether this is a good price for the value of the services you’re receiving.
For example, let’s take that IP litigation that you’ve engaged your panel firm to take on at rates that are only a 5% increase from last year’s rates.
When your peers are reporting rate hikes in the double digits, it seems like a good deal.
But what if your firm could have done nearly the same work in two-thirds of the time? ⌛
Or with the help of an associate rather than a partner? 🫰🏻
Without a scope of work for how many hours a firm can expect to take on a matter, it’s kind of like writing a blank check. 💸
Your firms are already scoping matters to secure their bottom line. Why aren’t you?
We all know that firms spend a lot of time and money on very sophisticated business models to ensure that next year’s profit per equity partner comes out better than last year’s.
We’re also fooling ourselves if we think they don’t know exactly what it takes to handle a particular type of matter from cradle to grave — and how they’re going to bill that matter to get to their target bottom line figure.
I don’t blame them. That’s just common business sense. (I also used to be one of them.)
Process and data are the only way for in-house teams to change this dynamic.
Here’s the process we use at PERSUIT to help our clients find the “true market price” for a matter — this is how they move from being a “price taker” to a “price maker” with their firms.
(1) Break down your matter into milestones, phases, and activities.
Nearly any type of matter, even complex IP litigation, can be broken down into predictable phases, and those phases broken down into specific activities — depositions, witness prep, document review, etc. — and then templatized.
(2) Invite firms to submit proposals for that well-scoped work.
This gets you closer to a “true market price” where you can clearly see the range of proposed prices (and strategies) for the work.
Is it worth the premium for a Global 100 firm, or does the Global 200+ get you the strategy, team, and outcome you need but at a fraction of the price?
(3) Compete the matter.
Sometimes price estimates come in wildly different.
How do you compare firms against a price spread of $1.4 million for the exact same work?
Make them compete.
Set a time window, adjust the visibility for your firms to create the right transparency on rank and price, and watch the prices descend and converge. 🍿
Interestingly, the lowest-priced bid is only selected on PERSUIT about half the time.
Which tells us that the real power of revealing the true market price is to help in-house teams move beyond price so they can decide based on the things that truly matter — team, strategy, and outcomes.
Yep, shameless plug. PERSUIT makes this process (mostly) really easy.
But that’s not the point I’m trying to make today.
The point is the data.
Your peers have already been using PERSUIT for years to gather data on the strategies, phases, activities, and pricing that they’re getting from their firms for their matters.
And that data is what is going to help them get from “better” to “best” before you do (unless you’re already one of them).
In case you were sleeping through the last few of my letters (I wouldn’t blame you if you did 😴), we’ve now harnessed that data — from billions in legal spend from tens of the world’s leading enterprise in-house teams — to give you PERSUIT Price Benchmarking.
Even if you haven’t been benchmarking your own data on PERSUIT, you can now see the median and range of what matters — and the phases and activities underlying them — in the U.S. should cost based on all matters run by in-house teams on PERSUIT.
Or see how pricing compares by AMLAW ranking.
While our current data set is limited to specific M&A and litigation matter types, and only in the U.S., there’s a lot more coming soon.
Scroll down for a peek at some of the real data you can currently access.
If you’re an in-house team that’s ready to move from “price taker” to “price maker,” let’s talk.
Cheers,
Jim
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