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October 09
Billing and Pricing 19
October 09
Pricing must equal billing

By Stu Gooderham, Head of Client across the phases of pro- In a disjointed business en- lating time sheets and
duction – planning, discov- vironment, the various func- matching work executed
Relations at Lexis Nexis Enterprise ery, pre and post-trial and tions operate in siloes, against deliverables –
Solutions so on. Based on this granu- making it difficult to obtain which despite all the
lar understanding of matter a single view of the busi- scrutiny, still turns out to be
Historically, law firm rev- achieved by minimising costs, firms can ascertain ness, projects and matters. inaccurate.
enues have been driven by wasted effort and optimis- the price – i.e. the rate that Furthermore, inconsisten-
ambitious billing targets, re- ing resources. Assigning the client will be willing to cies and inaccuracies creep Especially in the current cli-
sulting in excruciatingly the right fee earner with the pay. in across systems, making mate where alternative fee
long work weeks becoming right skills to a matter at the the available data unreli- arrangements are becom-
the norm. Today, the undue right time significantly in- However, to price profitably, able. ing commonplace, the abil-
emphasis on ‘clocking the creases profitability. Further a firm needs insight into ity to monitor actuals versus
hours’ is no longer sustain- aligning pricing with billing what individual types of To devise commercially-ori- the matter plan (based on Vitally, such an approach
able. A £60,000 matter cost ensures that the bill pre- matter typically cost. This re- entated pricing, firms re- which the pricing was de- helps both curtail and pro-
estimate turning into a sented to the client actually quires access to data (histor- quire business insight based termined) is crucial. Then vide visibility of scope
£100,000 bill simply isn’t ac- equals the agreed price and ical and current) to ascertain on ‘real, live’ data – what a again, firms require legal creep, eliminating revenue
ceptable to clients. So pric- helps meet client expecta- what level of resources were profitable client looks like, project management capa- leakage.
ing isn’t being driven by law tions. applied in the past, how how much time does a cer- bility, which in turn means
firms anymore, it’s the result best to leverage those re- tain kind of matter typically that the front and back of- An enterprise resource plan-
of long-drawn negotiations, But why is pricing so chal- sources, whether the skills take, what level of staffing fice of a firm must be inex- ning approach to business
in which lawyers are in- lenging for law firms? Ele- are currently available, how does it require, what as- tricably and seamlessly provides a single working
creasingly having a dimin- mentary to pricing anything much will new skills cost to pects of the execution can connected. platform that ties in all the
ishing say. And once set, is an understanding of the acquire, what level of safely be outsourced and facets of business, deliver-
lawyers have to ‘live’ by that cost base of an offering. And staffing is needed, at what what is an acceptable Modern enterprise resource ing intricate business in-
matter price. ‘Profitable and herein lies the problem. stage of the matter lifecycle cost/profitability ratio, planning technology en- sight to facilitate confident,
realistic’ pricing is therefore Many law firms don’t know and such. among others. ables this. It provides a tem- informed decision making
essential. what their cost of produc- plate upon which to on pricing of course, but all
tion and delivery of matters Disjointed business envi- execute matters supported other aspects of business
Billing and pricing are two is and so struggle with real- ronment not conducive to Aligning billing and pric- by a connected environ- too. Law firms looking to
side of the same coin istically pricing their serv- profitable pricing ing ment – from pitching a embrace enterprise re-
Billing and pricing are two ices, often starting each The problem is that such in- Timely, accurate billing chal- piece of work across deliv- source planning are in a for-
sides of the same coin. The matter with a ‘blank sheet’. formation isn’t always read- lenges law firms too. When ery through to generating tunate position – the
drivers for both are revenue ily available to firms. They is the best time to bill a profit – encompassing business benefits the disci-
targets and profitability. Profitable pricing requires use multiple systems, which client, how can debtor days everything from time pline offers are already
Due to the relatively fixed business insight despite best efforts to inte- be reduced, and how to in- recording, resource alloca- proven across industries, in-
cost base of law firms Costing requires breaking grate and streamline, re- crease realisation. Anec- tion, skills management and cluding other professional
(salaries, premises, profes- down and clearly scoping main disparate due to the dotal evidence suggests communication through to services sectors. Their risk of
sional indemnity, etc.), prof- matters and associating numerous proprietary tech- that often firms spend days accurate and timely invoic- adopting the discipline is
itable pricing can only be costs towards each task nologies they are based on. trying to raise invoices – col- ing. negligible.

Cobden House Chambers announces the appointment of
Mr Richard A Hartley QC as its new Head of Chambers.
Chambers wishes to thank its former head
Mr Roger Farley QC for 14 years of dedicated service.
Mr Farley remains in full time practice.

The past 14 years has seen with the arrival of Mr Robert FAMILY
chambers continue to thrive and Sterling former Head of Miss Lisa Wilson joining us
grow in the face of challenges St James’s Chambers and enhanced the Family team
that have beset the profession as Miss Lucy Wilson – Barnes and Mr David Maddison
a whole. The past year has seen both established Chancery/ is congratulated upon his
increasing strength in depth in Commercial practitioners. appointment to as a Deputy
all its departments and there are District Judge.
exciting plans for the future. HOUSING
The Housing Team welcomes Chambers continues to grow
PI / CLINICAL NEGLIGENCE Miss Anna Short formerly of St based upon its reputation Cobden House Chambers,
The Personal Injury and Clinical James’s Chambers. for hard work, high quality
Negligence Teams were WLYZVUULS JSLYRZ HUK Z[Hќ HUK 19 Quay Street Manchester M3 3HN
delighted and strengthened by CRIME its ability to cater for our clients’ T: 0161 833 6000 F: 0161 833 6001
the recent appointment to silk of The Criminal Team are needs in a professional and E: [email protected]
Mr Marc Willems QC and the delighted to welcome the costs-conscious manner. DX 14327, Manchester 3
addition of Miss Chloe Murray arrival of Miss Stella Massey, Visit our website or speak to our
upon completion of her pupillage Miss Gwen Henshaw, Miss Senior Clerk/Practice Manager
with Mr Lee Nowland. Kate Hammond, Mr Alistair Neil McHugh for more details
Reid and the recent return to
CHANCERY/COMMERCIAL chambers of Mr Stuart Neale Cobden House Chambers,
The Chancery/Commercial from his recent sojourn as Manchester a modern set with www.cobden.co.uk
Team have been bolstered DPP in the Isle of Mann. traditional values.