BigHand has published a new legal pricing benchmarking report, which reveals a significant disconnect between client expectation and law firm practices and plans when it comes to pricing, matter budgeting, and staff training.
Over the past three years BigHand has gathered responses from surveying over 800 senior legal professionals. The new analysis, which comes partly as a result of requests from firms themselves to see benchmarking data, provides an inside look into how firms are responding to changing market dynamics, as clients demand more financial transparency.
Key findings in the Trend Analysis for Legal Pricing and Budgeting report include:
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- Only 7% of firms are NOT planning to increase their prices in the next 12 months against a backdrop of 53% of firms reporting that clients are asking for greater discounting.
- 10% of firms increased their pricing by more than 100% last year.
- Only 33% of law firms provide dedicated training to associates on key financial metrics.
- There has been a year-on-year decline on firms giving their clients updates against progress against a budget, despite there being greater than 100% increase in clients requiring this over the past three years, which demonstrates a big misalignment.
BigHand’s chief marketing officer Briana McCrory told Legal IT Insider:
“Following on from our individual reports each year, we have been asked by our clients whether we see any trends occurring or what’s the difference between what the market is saying this year compared to last. With this in mind, we collated the data we’ve gathered over the past three years to provide to both law firms and law firms clients benchmark data and insights which they can measure their own progress and plans against.
“There is no doubt that there is a lot more focus being giving to pricing and budgeting, being driven by profitability and client demands so we hope that this trend analysis provides good insights that can be used in strategic planning.”
The data also shows a small but steady increase in firms hiring dedicated pricing, data analyst and finance systems resources with expertise aligned to better optimization of pricing strategies & improved profitability. Law firms are teaming these expert resources together with the education of lawyers to build profitable long-term client engagements.
Sally Swift, director of global legal operations & innovation at NBCUniversal, who provides analysis in the report, says: “When working with our law firms, I am not just seeking transparency on rates, I also want to understand the stages of the matter and the costs associated, up front. It’s also crucial for me to understand how a firm is evolving to drive greater efficiencies through technology and greater fairness when it comes to DEI and who is being allocated the work. We’ve seen firms struggle to produce relevant data for this when they don’t have the right technology and reporting in place.”
You can read the report here: https://www.bighand.com/en-us/resources/whitepapers/trend-analysis-pricing-and-budgeting-report/