Technology and pricing, inextricably joined for the legal field.

Eva Bruch 07 marzo de 2015

Tecnologia y preciosI recently had a meeting with a supplier of management software for law firms which had been recommended to me and whose application I wanted to know more about. I was particularly interested in a number of aspects, such as marketing functions being integrated with the management, reporting and analytical functions and process management. One of the aspects software suppliers insist on showing you is the entering of hours invested by professionals in the clients' files and matters.

The software I was examining integrates the most usual desktop applications (Word, Outlook, Excel, etc.) so that the professional need not exit the application at any moment in order to enter the time dedicated. In other words, when a lawyer starts working on a document, the system recognises the file, the client and initiates the timer. It automatically allocates the time to the file in question. At the end of the day, all the lawyer's activity will have been registered to the corresponding clients' accounts automatically, without the lawyer having to access the application in order to do so.

Thus far, nothing particularly new on the horizon; systems such as Business Integrity work in a similar way with regard to integrating Office applications and automatic time keepers aren't a great novelty either.

It was the additional explanations which had me worried. The programme includes a dual time allocation system: one is real time (as explained above) and the other is "official time" (that which the professional decides will be invoiced to the client). This is, I thought, quite normal: not absolutely all work is invoiced to a client; one will not invoice the time spent on an e-mail to a client to set up a meeting, even if several e-mails are necessary and a total of 10 minutes are dedicated to achieving a date. However, this was not the goal behind the dual system.

This software has a built in document automation function which allows certain data, such as client information, standard clauses, articles, etc. to be entered into the text with the click of a button. This allows great time saving in certain work. In the case of drafting a contract, for example, they state 30% saving with regard to the time usually spent when such automation is not used. The sales pitch was that it was the longer time, i.e. that which the draft would have taken, had the software not been used, which was to be entered manually. Thus, the firm knows how long the process has taken and the degree of increased efficiency, but the client will be invoiced as if nothing had changed, thereby increasing the firm's profit margin. If the client's commission was based on a price per hour fee proposal, the client is simply being conned.

I don't see the point of doing this, as this situation will ultimately have an unfortunate end. This type of behaviour is only sustainable as long as the secret is not "disclosed" and the clients are completely kept in the dark; however, this imbalance is no longer possible. If the client doesn't realise of his own accord, sooner or later, another lawyer will offer the same services for 30% less and will explain the reason: the quality will not be lesser, it is the efficiency which is increased.

If the relationship with the client is good, the latter will probably raise the question with the firm. The firm can then say that they are also efficient and can match the price, which will make the client feel tricked and ask himself why he has been charged so much until then. The trust between the client and the firm will have been badly damaged. If the firm decides to maintain, in order to avoid such damage, that it cannot match or even get close to the lower price, a clear competitive disadvantage will be apparent and the client, however good the relationship, runs a business and knows about efficiency and productivity; given the same technical quality, the price will be an important decisive factor.

The only way out of a situation such as this would be to explain that the client is being charged for other high additional value items in which the firm has invested: e.g. an internationalisation project which could benefit the client, or the creation of a business department specialised in the client's field which will provide more comprehensive and specific advice, etc. There are means to provide more value to a client which justify a higher price. Some will be prepared to pay for it, others will not; but this belongs to business strategy.

The problem is that, if we change the price simply in order to increase the profit margin, no strategy will provide additional value and not only will we lose the margin, we will lose a client.

Tecnología y precios, un binomio inseparable para el sector legal.

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