Jacqueline Brown spoke at The Legal Iconoclasts Expo on value-based pricing and its introduction at her firm Lynn & Brown Lawyers Pty Ltd.
Value-based pricing provides a new form of payment for clients whereby costs are estimated to the clients individual needs rather than firms going on previous cases or a cost-based approach which can bring unexpected costs for clients.
Brown explained the process of value-based pricing and how it is arranged with clients. She stated:
“First thing we will do is see the client and have a strategy meeting with the client. This is an opportunity for us to have a sit down with them and plan a strategy as to how we’re going to deal with their matter. It’s probably a top-heavy kind of a process because it involves a lot of investment in the client… and you don’t even know if you’ve won the work at that point.
I guess this could probably be one of the negative things (about the process). I choose to think it means we’re going to win a lot of work that we wouldn’t of otherwise. It really helps weed out clients that we don’t want as well.
During that strategy meeting we’re really conscious of having a value conversation with the client so we can work out what is going to be the thing most valuable to them. We work out what a win looks like, or at least what a loss doesn’t look like, so that is the initial touchpoint.
Then we prepare a proposal that goes to our value councils, so we never price our own work. We have a number of different things that go into that proposal. This includes the attributes of the client, and also the matter, so we look at complexity.
The value council will look at the work that needs to be done and will price the work, and then once that’s been done a proposal will go out to the client, and then the client engages and we have a rule that we always have three options in our proposals.”
Brown claims that client feedback is largely positive towards this pricing method as she added:
“I think we’ve 100% had positive client feedback. Maybe 99%. It’s almost invariably ‘Wow, that’s really great, I love knowing what I’m going to be pay up front. I love not getting a bill out of nowhere.’ People know exactly what we are going to be doing for them and clients absolutely love it.
“We did give the clients the option (on value-based pricing or cost-based pricing). I can’t recall off the top of my head I can’t remember how many chose to remain, but out of 100s of clients it was less than 10 (who chose not to use value-based pricing) and most of them transition over time.”
However, according to Brown transitioning to cost-based pricing brought many challenges. Brown stated one of the main obstacles was “unlearning” everything about cost-based pricing, but after making this transition it was worth it. She claimed switching to value-based pricing allowed her more time for mentoring young lawyers meant less time was spent filling out time sheets which was something she hated.