Identify “components” of matters and request firms to bill them on a fixed fee

A thoughtful approach to the pricing of external legal services, dubbed “component pricing,” appears in the ACC Docket, Vol. 27, Oct. 2009 at 23. Johnson & Johnson developed the method. Its basic tenet is that unit pricing – a price for a demarcated task – leads to cost efficiencies.

At the forefront, the discovery process lends itself to component pricing. The article mentions costs per custodian (unless there are significant centralized data stores) as well as costs per gigabyte for database hosting, and costs per page for document review.

The authors note that “depositions of fact and expert witnesses are also logical components that include preparing for the depositions as well is actually taking or defending them.” They feel that motions are probably the least likely candidates in litigation for component pricing. They also recognize a component for “management” which is expressed as a percent of spending on the total components.

Component pricing could match cost and value equally as well in parts of transactional services and counseling.