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Fixed fee pricing for lawyers & web developers

View profile for David Gilroy
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You need to read this report  Fixed Fee Menu Pricing in the Legal Sector.  It will take you just 15 mins even if you read by moving your finger along each line!  The report was commissioned by OMC Partners and carried out by Gillian Watt of Isential.

The highlights for me :-

  • 93% of law firms and all in-house lawyer respondents indicated that menu pricing was
  • most suited to repeatable work
  • 53% of law firms indicated that the risk of incorrect pricing was a serious impediment with fixed fee menu pricing
  • "What's important is keeping on top of costs meeting market demands and being up overall" a quote from a director of a fixed fee APS
  • It's not just about each quotes or each piece of work it's really about getting it right overall across your full portfolio of work
  • 70% of law firms reported there is an increased demand compliance for online systems to focus more on matter progress rather than billing

This report for me was really no surprise at all. As a client of law firms myself as a business owner the concept of hourly rates is clearly an anathema to many people.

I suppose when I think about how business and how we do our pricing then we have a similar quandary to many law firms. Quoting for designing and building a new website for a law firm and having done it over 400 times before in the last 11 years we can be pretty accurate without quoting.  Yes some elements of the project might be quoted on an hourly rate but generally the overall project will have a fixed fee.

If building a law firm's website with X number of staff and Y number of pages and having have accurate historical data from our time recording system as to how long a project like that should take, subject to a few constraints about the design of each site, quoting fixed fees becomes easier.

However, when a client asked us to implement an online payment gateway, a conveyancing calculator or even a client extranet then we can always do this at a fixed fee because again with some simple scoping, having done it numerous times before, we know exactly how long small project that that should take.

So the key thing with a report like this is does state inside the document at some point that it’s “stating the blindingly obvious”, clients are demanding fixed fees more often and law firms are struggling, to some degree, to work out how to implement this without taking on too much risk in terms of pricing and getting it wrong i.e. taking on the risk.

One caveat to my views on this report.  It is clearly aimed at a certain size law firm who have in-house lawyers and GCs as their clients, but don't let that stop you reading it. Even if you are a small law firm doing high-street type work, as one would call it, there is and will continue to be pressure on fees and having fixed fees and menu set pricing for conveyancing for divorces etc will continue to grow and you need to respond.

Disconnect between law firms views on fixed fees and those of clientsAnd my last point, and this is the big one.  Take a look at the graphs on the right.  Does that look like law firms have still got their head stuck in the sand when it comes to this whole issue?  The message from clients is unequivocal. The status quo cannot remain.

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