In our previous blog post on law firm differentiation and responsiveness we highlighted that law firms invest huge sums trying to differentiate themselves. Some plough thousands of pounds into website redesigns and marketing initiative. Others invest in innovative technology that improves service delivery. For some firms, differentiation is just about offering the most competitive hourly rates.
In this post we want to explore in more detail where price fits when it comes to the challenging issue of law firm differentiation. This very topic is also explored in our recently published report, Standing out from the Crowd. The report is based on a survey of more than 250 in-house lawyers, the majority of which were SMEs.
The fourth most important factor
The ongoing cost pressures faced by many in-house teams means price is unsurprisingly an important factor when instructing firms.
Surveyed in-house lawyers gave price an importance score of 7.5 out of 10, making it the fourth most important factor behind responsiveness (8.8), an understanding of clients’ business and industry (8.6) and possessing specialist expertise (7.6).
What does it mean to differentiate on price?
So what really distinguishes firms when it comes to price? Two words were consistently fed back in our series of interviewees – transparency and creativity.
Transparency: Some 97% of surveyed in-house lawyers value transparent pricing. This is important because transparency creates certainty about what the final legal bill will be. Many in-house teams frequently state that cost certainty is more important the final cost itself. Our survey also highlight two things law firms can do to provide cost certainty to clients:
- Fixed-fee or capped-fee pricing structures
- Offering billing systems that embed transparency, or invoicing through clients’ own billing and invoicing systems
Creativity: Cost certainty aside, our series of interviewees frequently mentioned that creative and bespoke pricing structures truly distinguish firms. Our report contains some useful examples to illustrate what interviewees meant when referring to creativity.
Find Out More
Standing Out from the Crowd explores responsiveness and how it could be a differentiation factor. It also explores other potential differentiators such as price and technology. The report is particularly useful as it contains lots of real life examples that fully illustrate the findings. You can access the full report here.