Value pricing

“First, the bad news…”

Value Pricing takes work – both on the part of the client and on the part of the lawyer. Because the starting point is understanding what  “value” is, and this means understanding what the client really wants. Not what the lawyer thinks the client needs, but what the client’s commercial, personal and business objectives actually are.

Once the “need” is identified, it’s a matter of determining how that need can be met, and then it becomes possible to establish value.

But value pricing is worth the work. It avoids the problems of hourly billing where:

  • The client bears all the risk
  • There is no incentive for the lawyer to be efficient
  • The price is no reflection of the result – if a lawyer saved a client $10 million with 1 hour’s advice due to the lawyer’s expertise, it’s worth more than the hourly billing rate.

Examples of value pricing arrangements are:

  • Fixed fee with value component (holdback/write up)
  • Outcome based fee
  • Fixed fee by stage
  • Work product based fee
  • Benchmarked value fee

Some of these arrangement may involve an hourly billing component, but all ensure the lawyer bears some of the risk – has some “skin in the game”.

We can facilitate discussions to identify value, and help lawyers and clients agree a pricing arrangement which will ensure value is delivered to both client and lawyer.