The Evolution of Pricing
A perspective on navigating the pricing maze
Stuart Dodds,
Director, Global Pricing & Legal Project Management
Baker & McKenzie Global Services LLC
©2014 Baker & McKenzie Global Services LLC
1
Quick Context
2
Facing up to the truth
3
Developing the capability
4
In closing
©2014 Baker & McKenzie Global Services LLC
Quick context
Who I am
Stuart Dodds
•
Ex-fee earner
•
Management Consultant for 17 years (Accenture/ Efficio)
•
Sales & Delivery lead
•
Supply Chain/ Procurement/ Negotiation expertise
•
previously Linklaters’ Global Head of Pricing (2008 – 2011)
•
currently Baker & McKenzie’s Director of Global Pricing & Legal Project Management
(July 2011 onwards)
•
Stuart also sits on a number of relevant industry bodies (e.g. ILTA, TVPi) and is a Fellow
of the College of Law Practice Management
•
Author of ‘Smarter Pricing, Smarter Profit’ (published by the ABA, April 2014)
•
Contact email: stuart.dodds@bakermckenzie.com
3
©2014 Baker & McKenzie Global Services LLC
Quick context
Who Baker & McKenzie are
Some Facts
Established in 1949
77 offices (Jeddah the most recent)
47 countries, covering every major
commercial, financial and industrial
center in the world
4600+ lawyers
Admitted to practice in 250+ jurisdictions
17 key areas of practice
FY14 revenues of $2.54bn
(largest law firm by revenue)
‘Dedicated’ pricing function established 2011
©2014 Baker & McKenzie Global Services LLC
Facing up to the truth
The painful reality
“How many businesses do you know where the
employees are given a broad mandate to set the
price of the products or services?”
“Would you invest as a shareholder in a business
where the profitability fluctuated at the whim of
often mid-level or even junior staff?”
Source: Richard Burcher / Validatum Blog Post, ‘Abdication of Pricing Responsibility’, 20 th August 2012
©2014 Baker & McKenzie Global Services LLC
Facing up to the truth
Who normally leads negotiations over price?
75%
CRM/Partner
8%
Finance Director
Managing Partner
5%
Pricing Committee
5%
Practice/Team Head
3%
Other
3%
BD Director/Head
3%
Source: Winmark Research, Marketing Director Benchmark
©2014 Baker & McKenzie Global Services LLC
Facing up to the truth
Increasing financial pressure within legal sector
©2014 Baker & McKenzie Global Services LLC
Facing up to the truth
The business case (Part 1)
‘1 - 3 - 4’
©2014 Baker & McKenzie Global Services LLC
Facing up to the truth
The impact on margin
Revised margin shown
©2014 Baker & McKenzie Global Services LLC
Facing up to the truth
The business case (Part 2)

The math:
D x N x IP x W
10 x 1 x 5000 x 50 = $2.5 million




D – Number of pricing decision-makers
N – Number of pricing decisions per week
IP – Incremental profit on each decision
W – Number of weeks
©2014 Baker & McKenzie Global Services LLC
Facing up to the truth
Simple changes make a big difference

‘A pricing audit’

Preparation

Negotiation

Differentiation > New Business
©2014 Baker & McKenzie Global Services LLC
Facing up to the truth
The growth of the ‘pricing function’ within law firms
©2014 Baker & McKenzie Global Services LLC
Developing the capability
Getting the scope right
“In most companies . . . there is a difference between
what the role of pricing is stated to be
and what it actually is.” *
Source: * - Sodhi & Sodhi, Six Sigma Pricing, FT Press (2008)
13
©2014 Baker & McKenzie Global Services LLC
Developing the capability
Role scope can limit potential benefits
Potential Benefits
Client Facing
Change Agent
Analyst
©2014 Baker & McKenzie Global Services LLC
• Portfoilo Management
• Negotiation
• Impact: 1%+ overall/
3 – 5% on specific clients
• Wider PGs engaged
• Partner coaching
• Impact: 2 – 3% overall
• Monitoring/ Control
• Basic AFAs
• Impact: 1 – 2% overall
Developing the capability
Key ‘firm’ considerations – The law experience

Cultural fit

Leadership involvement

Firm structure and governance

Systems and processes

Client ‘ownership’ and protectionism
©2014 Baker & McKenzie Global Services LLC
Developing the capability
The essential (minimum) skill set

Excellent communication and stakeholder management
skills

‘Commercial’ and ‘Entrepreneurial’

Analytically strong

Intellectually curious

Not scared of technology
©2014 Baker & McKenzie Global Services LLC
In closing
– Doing nothing is not an option – it is too important to ignore
– Have at least one person ‘own’ or ‘support’ the process in your
organization
– Allow the function to evolve – don’t try and do everything all at once
– AFAs are here to stay and are an effective business development
tool
– Do something
‘Think Big, Start Small, Scale Fast’
©2014 Baker & McKenzie Global Services LLC
In closing
Some context: Our pricing and delivery framework
‘Set’
the price
‘Get’
the price
‘Manage’
the price
The pricing and
agreed fee
approach
The value
proposition and
negotiation of fees
The ability to
manage and
deliver the matter
©2014 Baker & McKenzie Global Services LLC
‘Review’
the price
The opportunity
to improve service
and/ or margin
In closing
Any questions?
©2014 Baker & McKenzie Global Services LLC
The Evolution of Pricing
A perspective on navigating the pricing maze
Stuart Dodds,
Director, Global Pricing & Legal Project Management
Baker & McKenzie Global Services LLC
©2014 Baker & McKenzie Global Services LLC