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How LEGO Blocks Lay the Foundations for Innovative Pricing

By Pieter van der Hoeven.

Pricing a matter, at its heart, is about predicting the future. Will litigation teams be required? Is due diligence likely to throw anything unexpected our way? What activities will this new type of work likely include? Sadly, even the most sophisticated business intelligence tools do not have a crystal ball feature (yet!). However, even unfamiliar work can be broken down into familiar activities. By building quotes up from these recognisable building blocks, firms can offer data-driven fee quotes. In doing so, they can pitch for new or complex work without the stress of fee-based guesswork.


Thus far, this series of articles has covered how and why firms should be automatically classifying timecards, and then how to use that data to form pricing ‘building blocks’. This third edition sees us examine the next step in the chain. Namely, how firms can use these building blocks to form sophisticated pricing strategies.

Whether or not the billable hour is dead, the competitiveness between firms around pricing and the relative transparency they offer clients is alive and kicking. As Thomson Reuters’ 2021 edition of ‘State of the Legal Market’ shows, tactics like rate rises (which supported firms post 2012 crisis) have not been possible. Instead, law firms are needing to provide certainty and risk sharing to a more cautious market. But how to provide pricing which is both reliable and competitive when matters are anything but? The answer is in how you break them down to their component building blocks.

Thinking innovatively about pricing

Pricing for new, or unfamiliar work can be daunting. After all, pitching and winning work with an inaccurate fee quote is likely to end one of two ways. Either the law firm must write off the excess costs, and damage overall profitability, or worse; the firm’s reputation. Or the firm must pass on unexpected costs to the client, who is likely to think twice before working together on similar matters in the future. Recently, Clocktimizer spoke to one of our customers, Levi Remley, Pricing Director of Barnes and Thorburg, who shared how they have tackled the problem.

“We had the opportunity to pitch for some wage and hour class action work, which is complex, expensive work. Our data set for this sort of work was somewhat limited over the past decade and we had very little time to build a quote. The client was looking for fixed fees and capped fees by phases, so we were able to identify tasks and classify them into phase categories and constructed a quote from that. Because of how detailed our quote was, we pitched an AFA and won the work.”

BT Law’s approach indicates that this ‘building block’ pricing strategy has two key knock-on effects. Firstly, firms can introduce more certainty into pricing by identifying familiar activities, and combining them to form sophisticated fee quotes. Secondly, this granular pricing detail offers the transparency that clients are increasingly demanding.

Building blocks in practice

But what do pricing building blocks mean, in practice? For many law firms, the first step must be to define and identify the cost of specific activities. As explored in the last two articles, the more detailed your analysis of your activities, the more accurate your fee quotes. At Clocktimizer we rely on natural language processing to automatically categorise time card narratives. Automatic categorisation is more detailed than existing phase and task codes and does not require users to manually select from multiple options. It is advisable that even where a law firm relies on codes for classification, that this data stream is enriched with natural language processing insights. Finally, it is worth remembering that the cost of services changes constantly, so whatever method is used to assess your activity costs must generate real time insights.

Having identified the cost of the activity, firms looking to use these activities to pitch for new work should be able to cross reference these activities against secondary values like practice groups, matter types, or even seniority levels.

Whether or not you have a tool like Clocktimizer to automate this for you, cross referencing your activity data is essential for accuracy. After all, the cost of due diligence for an acquisition is likely to be larger than for the purchase of a new property.

Finally, these building blocks should be critically assessed by your pricing teams. Recently, Clocktimizer hosted a webinar with Stephen Allen of Elevate and Royale Price of Greenberg Traurig. During a discussion about resource management, Royale noted the critical role pricing teams have in assessing activity costs. If an activity cost is formed by using 8 juniors for review, why not consider what staffing one supported by Luminance or Ravn would save the firm and the client? A critical assessment of why an activity has a specific cost can guide firms towards more sophisticated use of staffing, resourcing and technology in the long run.

Get creative with clients

For any firm which has gone through the process of identifying, refining and questioning their building blocks, it is time to get creative. The last year has been tumultuous, challenging and stressful. For clients, priorities have been upended. Some may be seeking a swift resolution to a matter. Some need to cut costs and want financial certainty. Yet more prioritise flexibility in approach. For the law firm with building blocks, anything is possible.

Let's take the example of the client who needs a resolution to a matter quickly. For the firm with building blocks, they can cross reference the relevant activities by duration and form a fee quote only from those which were completed quickly. They could even choose to offer a client the choice between fast, automated due diligence (which may not be as detailed), with entirely human due diligence which is heavily staffed for speed. Clients can determine whether to prioritise speed at all costs, or keep a wary eye on the price tag. Either way, this detailed transparency and choice is likely to be favourably viewed by a client.

Which drives home the final point about building blocks. Not only do they improve the financial certainty of fee quotes for a law firm, but they inspire creative cooperation with clients. Clients increasingly value collaboration with their law firms. Many in-house teams work closely with external counsel, sharing platforms, ideas and strategy. Any law firm which can offer bespoke pricing to a client, in turn shows that they are able to tailor their way of working to a client’s needs. And in a market where 7 in 10 clients have moved work in-house, that kind of pricing sophistication can set them apart from the competition.

Unpredictability breeds creative solutions

Far too many firms see the unpredictability of matters, at least from a pricing perspective, as a challenge. Not only can most matters be broken down into component parts, but the act of breaking them down often invites evaluation about their costs. Further, in an increasingly competitive market, firms can use sophisticated building block pricing to play to their strengths.

If you leverage technology well, you can reflect this in the pricing choices you offer clients. If your firm specialises in economies of scale, capitalise on that instead. If you offer bespoke services for complex matters, create bespoke pricing to match. As we all learned in childhood, the joy of LEGO blocks is that you can use them to make absolutely anything.


About the Author Pieter van der Hoeven, a former M&A lawyer

with 15 years of experience in the legal industry, is the co-founder and CEO of Clocktimizer.

Clocktimizer is an award-winning legal technology company that helps law firms to understand who is doing what, when, where, and at what cost. Global 100, Am Law 100, and Am Law 200 law firms use Clocktimizer to make data-driven decisions around matter management, budgeting, and pricing.

Before starting Clocktimizer in 2014, Pieter was an M&A lawyer at DLA Piper and earned his MBA from Rotterdam School of Management and IE Business School. Pieter can be contacted at

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