Legal Project Management, Pricing, and Alternative Fee Arrangements
Legal Project Management, Pricing, and Alternative Fee Arrangements is written by Jim Hassett and has probably the longest, most cumbersome title of any book I’ve ever read! Thankfully the content is better than the title.
The main focus of this book is really alternative fee arrangements, or AFA’s as they are often known. Legal Project Management (LPM) is an essential discipline to be able to use AFA’s profitably, and Hassett has chosen to introduce LPM first.
Like many books on the legal sector, it makes reference to the Altman Weil surveys. These annual surveys really do provide great insight into the sector. Hassett quotes a general counsel responses to the 2012 Chief Legal Officer Survey on the question of: “what you would most like to see from outside counsel?” the answers to which were:
- Cost reduction (50%)
- Non-hourly based pricing structures (53%)
- More efficient project management (53%)
And that was back in 2012!
The book has a very useful profiling of law firms who have adopted LPM, and Hassett provides an overview of the different approaches taken. What is clear is that whichever approach is followed, the undertaking is significant. Rather sensibly Hassett advises that firms take an incremental approach to adopting LPM, rather than a big-bang approach. The independent nature of law firm business units makes this very achievable.
Perhaps due to the services offered by Hassett’s firm, there is a lot of discussion about approaches to training. This information is, however, useful as it does challenge the traditional training approach.
The second half of the book delves deeply into pricing, and pricing strategies. There’s some good basic sample calculations provided, which will help law firm leaders to understand how to work AFA’s. There’s some handy tips in the book taken from other sources, such as ‘Five ways to improve pricing’ and ‘8 steps to implementing value pricing’.
Hassett has clearly done his homework as there’s lots of quotations from law firm leaders revealing how some firms manage their pricing strategies. There’s some survey data on AFA’s too, but like the author suggests, I think it is difficult to assess the validity of these survey results given the confidentiality in how firms set and manage their fees.
Chapter 9 gets into the different AFA models and serves as a useful introduction and reference point to the actual pricing strategy options. There’s also an 8-step guidance on getting started with fixed fees which is very pragmatic, and in my opinion workable (note as a consultant myself, for over a decade I’ve only worked on a fixed fee basis – hourly billing has never been in our interest).
The books end with chapter 13 which provides 10 nicely laid out steps to getting on with LPM and AFA’s, which I fully concur with.
Favourite quotes from the book
“According to Richard Susskind the legal market is in an unprecedented state of flux. Over the next two decades, the ways in which lawyers will work will change radically…unless they adapt, many traditional businesses will fail”
“The truth is, in the current legal marketplace, it is easy to obtain benefits from LPM.”
“What LPM is really about is to have the right people doing the right work at the right time, to increase client value.”
“Lawyers must understand that client perceptions of value may have nothing to do with the hours it takes to do the work.”
“The only way to make more money was to hire more people. The more efficient we became, the less money we made. Our needs were fundamentally opposed to our client’s needs.”
If you are seriously considering implementing alternative fee arrangements in your firm then I recommend that you read this book. At the very least it will provide you with the confidence that you are not alone, and that it can be done. The evaluation of the different fixed fee models is worth a read in itself.
Buy a copy of the book by clicking on the link below.