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Legal Fee Pricing Changes

For the last few years, legal firms’ pricing has been under review by many large corporations. I remember hearing about the appearance of ala carte service requests and competitive pricing a few years ago. On Tuesday, I read an article in the Wall Street Journal about the use of reverse auctions to increase competition and lower prices for legal work. I thought it appropriate to share this here because pricing is a financial concern. Appropriate pricing is necessary to ensure your firm has the margins it wants. Also, competitive bidding takes place in many other areas, why not legal work?

Value

Here’s an excerpt from the Wall Street Journal article, “Pricing Tactic Spooks Lawyers”: “Several big companies – including GlaxoSmithKline plc, eBay Inc., Toyota Motor Corp. and Sun Microsystems – have used the tactic, known as reverse auctions or competitive bidding, to pressure law firms to lower prices, especially on high-volume work such as tax filings and intellectual-property transactions.” The article continues, “Reverse auctions pit multiple law firms against each other in an online chat room where they anonymously submit quotes for a particular job. Firms then race against the clock to tender incremental discounts agains competing bids.” (Aside: Was someone a dedicated aol chat room user who wondered how they could apply that technology to their job? Law firms in an online chat room! What a hoot!)

“Legal expenses for Fortune 500 companies range from about $20 million to $200 million a year, according to Courtney Sappire, chief marketing officer for RFx Legal, a consulting group that works with companies to reduce their legal spending. Reverse auctions can help cut 15% to 40% off those costs, she says.”

Now, with those kind of savings, wouldn’t you come up with similar strategies to reduce your costs? I know I may catch heck for saying this, but a downturn often sparks creativity. There’s nothing like having your back against the wall to make you start questioning assumptions that you may have taken as fact. And that’s another reason why I am referencing this article. The way to creatively resolving any “problem” is to question your assumptions and open your mind.

Want to read more of this article? Subscribe to WSJ or WSJ online. Sorry, no links available!

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About Tiffany C. Wright

Hi! I,Tiffany C. Wright, am the author of the ebook, "Help! I Need Money for My Business Now!!" and the book "Solving the Capital Equation: Financing Solutions for Small Businesses", available on Amazon. I am the president of Toca Family Business Services, a short-term & project-based interim management & strategic and financial advisory firm, located in Atlanta, Georgia. In the past five years I've helped small and medium companies restructure and obtain over $31 Million in financing and a similar amount in purchase orders and contracts. I have an MBA in Finance and Entrepreneurial Management from the Wharton School of Business at the University of Pennsylvania and a B.S. in Industrial and Systems Engineering from The Ohio State University. Personal: I enjoy investing. I am a prodigious reader of everything from business books, magazines, and newspapers to horror and popular fiction. I read 4-6 books per month. I also love to travel. I've been to 33 countries on 5 continents and lived in Japan for 2.5 years and aim for a foreign locale twice a year. I am also an athlete and run track on the Master's Circuit. The highlight was placing 7th in my age group in the 2007 World Master's Track and Field Championships in Italy.

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The Resourceful CEO, Tiffany C. Wright

the president of Toca Family Business Services, a strategic and financial advisory firm which provides short-term & project-based C-level management. She is the author of Solving the Financial Equation: Financing Solutions for Small Businesses, available on Amazon.

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