Addleshaws to spearhead client billing revolution

31 October 2011 | By James Swift

Addleshaw Goddard is looking to revolutionise the way it charges for legal services by partnering with Cranfield School of Management to carry out a Government-funded investigation into the future of pricing in the profession.

The 18-month project, which is funded by the ­Government’s Knowledge Transfer Partnership programme, is aimed at creating a blueprint for how partners bill clients. It is expected to result in the firm’s partners requiring training in how to assess the correct pricing framework for each job.

The move comes after Addleshaws earlier this year began the process of unbundling its chargeable work in a bid to free associates from routine assignments to develop their relationship-building skills (The Lawyer, 7 February).

As part of this the firm created a transaction services team in Manchester to handle commoditised work, allowing associates to focus on high-value client-facing work.
Addleshaws commercial director Chris Howe is leading the Cranfield project and will present the findings to the board in April 2012.

“What we want is to be able to go to the board and say, ’Here’s a mechanism that can help each partner come up with a pricing solution’,” said Howe. “It’s about sharing risks with the client. For example, we had one client that was growing fast, so we came up with a value arrangement whereby we billed a certain amount up front and the rest was based on the company hitting certain achievements.

“There’s a lot of frustration with current billing arrangements and the pace of change is exacerbated by price pressures, but we don’t think anyone’s cracked it yet.”

Howe added that the firm had looked at but rejected the contract lawyer model adopted by Berwin Leighton Paisner and being piloted by Eversheds, as it feels it would lead to lawyers becoming distanced from the firm.

Cranfield, meanwhile, is looking to publish what it believes will be the first academic report on law firm pricing at the end of the project.

“Issues involving pricing are acute in the legal sector, possibly because it’s been neglected for so long,” said Lynette Ryals, professor of strategic sales and account management at Cranfield. “I think there are a number of firms that need to wake up and smell the coffee.”

Addleshaws has previously worked with Cranfield with regard to its key account ­programme.