Three bumps on the road to value pricing

A thoughtful article in Legal Week, Vol. 9, Dec 6, 2007 at 26, sorts through some of the difficulties of so-called value pricing. One is that the few words of the wise counsel may bring tremendous value, but many general counsel balk if asked to pay for what seems to be such a brief contribution. Another difficulty is when a law department tries to argue for some percentage of the transaction’s value. An unimpressed general counsel can reply that any one of several other law firms would have been as willing to help, “so what particular value did you lawyers contribute?” This is a problem with this line of approach; “it ends up focusing people on the search for unique or exceptional contributions, which by their nature are going to be rare.”

The article also points out that large law firms with a likelihood of getting future work are more able to agree to success premiums and failure discounts because they can bear the risks, which is a quite different that for a small firm with no less assurance of future work.

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