Three in Four Large Law Firms Now Employ Pricing Officers
Dedicated professionals tasked with reviewing and establishing law firm fees now viewed as crucial to firm’s competitiveness and financial health
NEW YORK – June 10, 2014 – As U.S. law firms take a more analytic approach to pricing their services beyond traditional hourly billing rates, 76 percent of large firms now employ a “pricing officer” inside the firm, up from 67 percent in 2013.
The survey report released today – “Pricing Professionals: Essential to Law Firms, An Ally to Clients” – is based on a survey by ALM Legal Intelligence.
“We looked at primarily large law firms in the Am Law 200 and NLJ 350, and asked them how they are responding to pricing issues, how many firms have installed a pricing officer or are planning to, the reporting structure of the role or department, and how — and how well — the process is working thus far,” said Jennifer Tonti, senior research director at ALM Legal Intelligence.
The report spells out a number of key findings, including the following:
- Among law firms with pricing officers, 38 percent have made this job a dedicated role within the firm;
- The top three reasons for implementing the pricing officer function in large law firms are the need for help with establishing alternative fee arrangements, the cost pressure from clients and the need for a better understanding of return on investment for client matters;
- More than half of large firms place the pricing officer on the firm’s senior leadership team, with 70 percent saying the pricing officer reports to a C-level executive; and
- The role of pricing officers is not likely to wane anytime soon, with 56 percent of firms projecting the pricing department will grow in the next year, 44 percent projecting it will stay the same and not a single respondent projecting the department to decline in size.
“For an industry known for its resistance to change, law firms have been very pro-active in the last two years in their move to put in place pricing officers and related departments or committees,” said Kevin Iredell, vice president at ALM Legal Intelligence. “With the billable hour slowly making way for increased discounting and alternative fee arrangements, law firms have recognized the need for professionals who can help determine costs and recommend pricing structures that satisfy the client while allowing the firm to make a profit.”
For more information or to order a copy of the survey report, please go to http://at.law.com/pricingsurvey.
ALM Legal Intelligence offers detailed business information for and about the legal industry, focused on the top U.S. and international law firms. The division’s online research web service, www.almlegalintelligence.com, provides subscribers with direct, on-demand access to ALM Legal Intelligence’s extensive database of surveys, rankings and lists related to law firms and the legal industry. ALM Legal Intelligence is a division of ALM.
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