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Rethinking pricing: Why fixed fees and value pricing are not pricing innovations

Fixed fees and value pricing should not be treated as pricing innovations, says Chris Howe

18 April 2013

Pricing in the legal industry has become dominated by the use of the hourly rate. While lawyers were in demand and firms simply had to throw open their doors for work to flood in, this was fine. No great thought was required to set pricing - one simply referred to the firm's published rate card and calculated the fee. Clients effectively had no choice if they wanted to get the work done.

Lawyers undoubtedly missed opportunities to charge premiums when clients got the benefit of years of experience in a few minutes' advice, which saved them large sums. But, in general, lawyers were the main beneficiaries, with high profit levels coupled with very limited commercial risk as clients were effectively paying 'cost plus'.

This landscape has of course completely changed since the downturn, creating significant challenges for some firms, but also opportunities. Clients are using the change in the balance of power to shift the balance of risk too. T...

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