The question.

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I know our firm should be considering alternative pricing and value pricing, but our lawyers are hesitant to consider alternatives. How should I get people to start considering this--and should we even bother?

Terri Pepper Gavulic

There's a strong case for alternative pricing. If you're not able to give clients pricing flexibility, you will lose clients. Many people mistakenly believe this discussion is about billing and that ultimately, there is a winner and a loser. This is about pricing--giving clients the value they seek at a fair cost.

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Clients are asking for: predictability (e.g., fixed fees); budgets (implying that law firms get a handle around their actual costs and manage matters to budgets); and flexibility (recognize that not all matters are equally valued by clients and don't warrant a uniform approach in project management or pricing).

With the current economic downturn, many clients are asking for steep discounts, and people assume this is always how the discussion around alternative pricing will evolve. Actually these are two separate issues. Clients need a price break right now in tough times. The discussion about pricing is ongoing and will last for many years. It has to do with the value equation--how can law firms continue to increase profitability if the mechanism of automatic annual rate increases is not available? What can they do to enhance value from the client's perspective? The Association of Corporate Counsel is showing leadership with its Value Challenge, and all legal marketers would be well advised to log onto www.acc.com for a look.

As of July 4, 2009,Terri Pepper Gavulic is president and co-founder of Competitive Advantage Training, offering practical training at an affordable price. She has over 20 years of experience in the legal industry as a management consultant, author, trainer and professional marketer.

Nathaniel Slavin

Your lawyers need to talk with their clients to define value and understand their financial pressures before rolling out a new fee initiative. Value pricing and alternative fees are two very different beasts. Value should be a given, not something open for debate. Everything that a lawyer produces should have value that is agreed to by the client. If the client and the law firm attorneys have different definitions of "value," then the client will always be disappointed and the attorney will always be frustrated. Some firms, such as Valorem, even have a value...