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« Social Networking for Lawyers | Main | When Lawyers Ignore Common Sense »

Survey: Firms Snoop on Others' Rates

A newly published benchmarking report on law firm fees and pricing has a variety of interesting findings about how law firms set rates and bill. But two findings stood out to me as particularly interesting. The first is that at least half of the firms surveyed conduct competitive price research "to uncover and understand their competitors' fee structures." They do this through data collected directly from clients as well as through external research. The other finding that interested me -- related to the first -- is that most firms base their pricing strategies on the going rates charged by their competitors. In fact, 80 percent of firms said they use that strategy "most of the time/sometimes."

Some other findings of the study worth noting:

• Brand drives pricing. No surprises here: Brand leaders charge more, generate higher revenue, realize higher profits and see greater revenue growth.
• Pricing is tough. Firms feel significant uncertainty and pressure about setting fees -- uncertainty about what clients will pay and pressure to remain competitive.
• Discounting is common. Firms criticize discounting, but three-quarters say they do it, at an average rate of 9.9 percent.
• Guarantees are common. Nearly half of the firms said they offer service guarantees, with the most common being to cut the bill based on dissatisfaction with the value received.

The survey was conducted by RainToday.com, a professional-services research and consulting firm based in Massachusetts, which sells the full report for $395 in hard-copy or $345 for download. Based on the findings, the authors offer some fairly obvious recommendations as to how law firms can raise their fees and profits: establish a brand, lead and innovate, get bigger, emphasize value, improve business development, and become active in the RFP process. All, of course, easier said than done.

Posted by Robert J. Ambrogi on June 10, 2008 at 09:55 AM | Permalink | Comments (0)