©2014 baker & mckenzie global services llc the evolution of pricing a perspective on navigating...

©2014 Baker & McKenzie Global Services LLC

The Evolution of PricingA perspective on navigating the pricing maze

Stuart Dodds, Director, Global Pricing & Legal Project ManagementBaker & McKenzie Global Services LLC


Developing the capability3

Quick Context1

In closing4

Facing up to the truth2

©2014 Baker & McKenzie Global Services LLC3

Stuart Dodds

• Ex-fee earner

• Management Consultant for 17 years (Accenture/ Efficio)

• Sales & Delivery lead

• Supply Chain/ Procurement/ Negotiation expertise

• previously Linklaters’ Global Head of Pricing (2008 – 2011)

• currently Baker & McKenzie’s Director of Global Pricing & Legal Project Management (July 2011 onwards)

• Stuart also sits on a number of relevant industry bodies (e.g. ILTA, TVPi) and is a Fellow of the College of Law Practice Management

• Author of ‘Smarter Pricing, Smarter Profit’ (published by the ABA, April 2014)

• Contact email: [email protected]

Who I am

Quick context

http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=213276

mailto:[email protected]


Who Baker & McKenzie areSome FactsEstablished in 1949

77 offices (Jeddah the most recent)

47 countries, covering every major commercial, financial and industrial center in the world

4600+ lawyers

Admitted to practice in 250+ jurisdictions

17 key areas of practice

FY14 revenues of $2.54bn (largest law firm by revenue)

‘Dedicated’ pricing function established 2011

Quick context

The painful reality

“How many businesses do you know where the employees are given a broad mandate to

set the price of the products or services?”

Source: Richard Burcher / Validatum Blog Post, ‘Abdication of Pricing Responsibility’, 20th August 2012


Facing up to the truth

“Would you invest as a shareholder in a business where the profitability fluctuated

at the whim of often mid-level or even junior staff?”

Who normally leads negotiations over price?

Source: Winmark Research, Marketing Director Benchmark

8%

5%

5%

3%

3%

3%

75%CRM/Partner

Finance Director

Managing Partner

Pricing Committee

Practice/Team Head

Other

BD Director/Head




Increasing financial pressure within legal sector


The business case (Part 1)

‘1 - 3 - 4’




The impact on margin

Revised margin shown



The math:

D x N x IP x W

D – Number of pricing decision-makers N – Number of pricing decisions per week IP – Incremental profit on each decision W – Number of weeks

The business case (Part 2)


10 x 1 x 5000 x 50 = $2.5 million


‘A pricing audit’

Preparation

Negotiation

Differentiation > New Business

Simple changes make a big difference


The growth of the ‘pricing function’ within law firms



Getting the scope right

13

“In most companies . . . there is a difference between

what the role of pricing is stated to be

and what it actually is.” *

Source: * - Sodhi & Sodhi, Six Sigma Pricing, FT Press (2008)

Developing the capability



Role scope can limit potential benefits

Client Facing

Change Agent

AnalystSc

ope

Potential Benefits

• Monitoring/ Control• Basic AFAs• Impact: 1 – 2% overall

• Wider PGs engaged• Partner coaching• Impact: 2 – 3% overall

• Portfoilo Management• Negotiation• Impact: 1%+ overall/

3 – 5% on specific clients



Cultural fit

Leadership involvement

Firm structure and governance

Systems and processes

Client ‘ownership’ and protectionism

Key ‘firm’ considerations – The law experience



Excellent communication and stakeholder management skills

‘Commercial’ and ‘Entrepreneurial’

Analytically strong

Intellectually curious

Not scared of technology

The essential (minimum) skill set



– Doing nothing is not an option – it is too important to ignore

– Have at least one person ‘own’ or ‘support’ the process in your organization

– Allow the function to evolve – don’t try and do everything all at once

– AFAs are here to stay and are an effective business development tool

– Do something

‘Think Big, Start Small, Scale Fast’

In closing


‘Set’ the price

The pricing and agreed fee approach

‘Get’ the price

The value proposition and

negotiation of fees

‘Manage’ the price

The ability to manage and

deliver the matter

‘Review’ the price

The opportunityto improve service

and/ or margin

Some context: Our pricing and delivery framework

In closing


Any questions?

In closing


The Evolution of PricingA perspective on navigating the pricing maze

Stuart Dodds, Director, Global Pricing & Legal Project ManagementBaker & McKenzie Global Services LLC

©2014 baker & mckenzie global services llc the evolution of pricing a perspective on navigating...

Documents

sigma pricing

role of pricing

pricing mazestuart dodds

truth10 x

decision w number of

legal sectorfacing

smarter profit

law firms