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Does your firm have a sophisticated approach to pricing its legal services?

By Tim Aspinall, Managing Partner, DMH Stallard

13 August 2012

In my experience, lawyers aren’t particularly good at pricing. This is hardly surprising because, for many years, we have benefited from a ‘cost plus’ methodology of pricing our work.

This meant that we billed our clients by reference to an hourly rate, which was calculated by taking the salary cost of the lawyer plus the overhead cost of running the business and adding a profit margin. This approach was encouraged by the regulator and the courts for many years and became part of the DNA of the profession.

Its consequences were profound. As salary inflation took hold of the profession in the boom times, law firms passed on to clients the increased costs of an ever-more expensive workforce in rising hourly rates (or fixed fees calculated by reference to hourly rates).

In a market where demand for legal service exceeded supply, clients had little choice but to pay, even if they didn’t like the inefficient way law firms oper...

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