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In 2016 Forbes magazine ran an article entitled, ‘10 Jobs That Didn’t Exist 10 Years Ago’. It’s a bit of a cliché but everyone understands the concept that jobs which could not have been conceived of a few years ago, emerge from the employment primordial ooze to address the needs of the day.
The article cites examples such as: app developer, market research data miner, educational admissions consultant, millennial generational expert, chief listening officer (I kid you not!), cloud computing consultant, elder care consultant, sustainability expert, user experience/user interface designer and social media manager.
Indeed, we could add to this list without any hint of irony, international legal services pricing consultant.
For the legal industry, a new breed of professional has been emerging over the last 10 years – the Pricing Manager or Pricing Director. As pricing analysis, policy and strategy becomes increasingly important for firms’ competitiveness and profitability, they are looking for increased expertise in the area. This is proving to be a huge challenge because the skill-set for the role is a rather unique one, falling as it does in a sort of no man’s land between finance, business analytics, business development, marketing, sales and delivery or performance of the legal service.
While there is no shortage of financial and analytical skills in well-resourced firms, what is often missing is the ‘bridge’ between this analytical approach and the subtleties and nuances of the sector.
It is often said that pricing is a blend of art and science. Synthesizing the art and the science of pricing is where the real alchemy occurs; turning base capabilities into something precious and very valuable from the firms’ perspective.
The skill set of a law firm pricing professional operating at a sophisticated and senior level should include most if not all of the following:
The list is in fact much longer than this, but you already get the idea that people with that combination of skills, qualifications and experience are thin on the ground. For the most part, this cohort is comprised of few if any lawyers but rather, people that bring skills and experience that have been honed outside the sector.
One key factor that is driving change is the increased emphasis on alternative or appropriate fee arrangements (AFAs). The evolution of the law firm pricing professional is also being driven by the increasing prevalence of the involvement of formal procurement. For the most part, this should actually be seen as an opportunity to raise both buying and selling sophistication.
So ask yourself: do we need a pricing manager? In mid to large firms, it should be given very serious consideration. But this comes with a significant caveat. Top pricing managers have a very unique and very valuable skillset for the reasons I have outlined. Demonstrably, the right combination will without any doubt at all, generate more profit for the firm than most of the firms’ partners. This is a role that will grow in stature and importance within firms over the next few years. Expect therefore to have to pay commensurately.
If that’s not an option right now, what do we do? First and foremost, and irrespective of whether creating a pricing manager role is contemplated, partners and senior lawyers need to learn pricing skills. It is one of the great challenges associated with legal services; the sales and marketing, pricing and service delivery functions are all inextricably intertwined.
Whilst a pricing manager can be a very valuable resource available to partners, they can never be a substitute for partners having a sound working knowledge of pricing disciplines. At the end of the day, they’re the ones who need to be able to have those critical conversations with the client.