Any student of marketing knows the importance of the 4 P’s: products; placement; promotion; and pricing. Having a quality product that meets a marketplace demand is, of course, essential, but having the right price – one that captures the consumer but allows for fruitful profit – is nearly as important to making sales.
Now, after many years of pricing their products based on how much profit they want, law firms are taking a more professional approach to the process. They are examining what constitutes “value” to their clients so as not to lose them to alternative vendors (mediators, arbitrators, contract consultants, accounting firms, and the like) who are pricing their products and services to capture market share, as well as profit.
Susan Hackett, former executive with the Association of Corporate Counsel, notes in a recent Corporate Counsel news article that more than 50 pricing directors have been retained at AmLaw 200 firms in the last 12 to 18 months, and says this trend is part of a new path to profitability for firms on the leading edge.
She also asserts that pricing directors need to be familiar with several disciplines to be effective, including:
- Commerce in general; and
This latest step in the evolution of law firms reflects a growing consciousness that the practice of law is, at least in part, a business, as well as a profession. It also demonstrates that leading edge law firms are aware of price pressures from competition, demand for fixed costs, technological advances in efficiency, and other factors that influence feasible pricing.
As law firms become more like business enterprises, working hard to deliver better value to “customers” every day, they will actually gain much greater favor with their clients and more victories for the profession in the court of public opinion.