In my capacity as host of the Your Law Firm Success podcast, I’ve had the pleasure of interviewing a number of law firm leaders about the levers they have pulled to deliver law firm success.
In most cases, they have had to overcome barriers of one type or another. One of the most frequently quoted barriers is the billable hour, both in terms of its impact on the solicitor and the client.
The objective of each interview is to try and come away with a number of practical tips that solicitors can follow to deliver their own law firm success.
Unlocking pricing strategies
For our latest episode, I had a great discussion with Peter Jackson, chief executive of Hill Dickinson. Towards the end of this episode, Peter delivers some real nuggets in relation to how one can use the billable hour to inform pricing of all types.
For context, Peter has been involved in the management of Hill Dickinson since the early 2000s, having started there as an articled clerk in 1983. When he joined the firm, it was 50 strong. Today, there are 1,000 lawyers across multiple locations, so it is fair to say that he has seen it and done it.
What I’m finding in the interviews to date is that with those, like Peter, who have properly walked the walk, there’s not a lot of bullshit. What you get is straightforward, honest and pragmatic advice.
I hope you find some value in these top tips for getting your pricing right.
Accurate time recording
“You’ve got to get to the stage of having as accurate time recording as you can, for whatever purpose.”
This is not always for the purposes of billing the client, but in an order that you, as a law firm leader, can understand how long it takes to do a particular piece of work.
You have to know this because there is a known cost to employing a solicitor – their salary plus the ancillary costs (office, insurance etc) – and if you do not know how long a solicitor is spending on any given job, how do you know if you are going to make a profit or not?
If this is not done correctly, then any estimates, or fixed fees, could be horrendously wrong.
Clarity in client communication
Be absolutely clear with your client of the basis on which you are doing the job.
“So many times you see that law firms don’t do that.”
Don’t get so carried away by the new instruction that you launch yourself into the job without understanding, with complete clarity, on what basis you are going to get paid and when.
Be confident enough in your position with the client that, on day one, you are able to say that ‘The basis on which I am going to charge you for this piece of work is X’. There may be some variables in this, such as ‘If we achieve this result, there should be an uplift of Y’, but whatever it is, get it in writing and get it agreed.
Vigilant monitoring of time, costs and billing
“Don’t get to the end of the transaction, having quoted £50,000, to find out you have run up £250,000 on the clock and then try and go back to the client and say, ‘Actually…’”
This is poor matter management. The case management systems that are, or should be, in every firm regardless of size allow you to track time and expenses on an ongoing basis. Such systems also allow for alerts to be raised when work in progress reaches certain levels.
In Peter’s experience, the client that “gets the atomic bill at the end of the matter is far more unhappy than the client who may pay more, but gets it gradually over the course of the matter, and can manage his own cash flow”.
If the size of the matter merits it, always go for interim billing.
For similar reasons to those listed above.
This brings you in alignment with your client’s business needs and prevents nasty surprises, for both sides. Another point raised by Peter in this regard is that, if you wait until you have done all of the work before you bill, then your commercial leverage has gone.
Your Law Firm Success
By implementing these strategies, law firms can not only enhance their profitability but also strengthen client relationships by fostering trust and managing expectations effectively.
The Your Law Firm Success podcast is designed to help you grow your law firm by learning from the experience of others. Join our community of forward-thinking legal professionals committed to unlocking the full potential of their law firms. Your Law Firm Success awaits.
For further insight and information about future episodes, follow Stephen on LinkedIn.
Stephen Moore
Founder and CEO of MLT Digital and host of the Your Law Firm Success Podcast.
