A consultant has said that lawyers ranked highly in the legal directories should charge more.
We know that law firms heavily tout their directories and awards successes on their websites and in publicity materials, and we know that firms routinely refer to these achievements when pitching for new work and responding to proposal requests.
But I’m not aware that any law firms actively charge more on the basis of a particular accolade.
Some comments from Mr.Burcher in his piece (edited a little by me):
Firms put accreditations on their website and in reception, but apart from that, I see little evidence of them being used to differentiate themselves from competitors and no evidence at all of them being used to justify a difference in pricing when compared with those firms who don’t hold the accreditations.”
“Lawyers are reluctant to use awards in their pricing. Celebrating success is reason enough of course, but apart from bragging rights within the profession, what use do winners put the awards to. What impact if any, does it have on pricing? None as far as I have been able to determine.”
“With directory rankings, I have seen no attempt to leverage these hard-won and expensively acquired rankings from a pricing perspective.”
“Unlike other businesses, law firms do not usually use their accolades to justify a price differential. In my view, this is simply a wasted revenue opportunity. Regrettably, it is this mindset that has contributed to the homogeneity and perceived commoditization of the market. The reasons have more to do with a lack of pricing self-confidence than any rational economic explanation.”
The author makes comparisons with other industries such as the restaurant business where a Michelin star is guaranteed to bring in extra business and enable the restaurant to raise its prices.
Likewise, a high star rating on travel site Trip Advisor is likely to result in a spike in bookings.
Over the years of working with law firms on legal directories and awards, I have seen many situations in which a directory accolade acts a tie-breaker.
In other words, all other things being equal, a prospective client is sometimes swayed by a firm that has superior directory rankings or industry awards to rival providers.
Clients often ask for this information in their request for proposals.
I once worked with a firm that pitched for a major piece of litigation work.
It was a big dispute, worth more than a billion dollars.
The law firm fees ran into millions.
Unfortunately, the firm I knew lost out to another firm.
The client said that she chose the other firm because they were ranked tier one in a well-known legal directory, and this firm was ranked tier two.
The general counsel said there was barely a hair’s breadth between them, so in the absence of any substantive differences, was influenced by the relative directory placings.
As far as I know, however, pricing was not an issue.
But what if the winning firm had said from the outset: “we will charge a premium because we are ranked tier one”.
Would that confidence have landed them the job quicker, and avoided what turned out to be a drawn out, painful tender process.