Jordan Furlong has written an extensive article ‘How to compete on price’ on why lawyers should stop following the old advice not to compete on price and instead learn how to do it in a way that sustains the business.
Many lawyers are in fact already in the price competing boat with clients having made clear that price is the most important factor in their purchasing decision. As Jordan points out “There’s little point in charging what you believe is a fair price if no one’s buying at that price. Worse, more lawyers are going to join that boat over the course of this decade, as technology, collaboration, globalization, and regulatory change combine to rearrange the competitive landscape. Whether we like it or not, price will become a significant competitive factor, and it will be dangerous to run our businesses pretending otherwise.”
But the important point that Jordan points to is that “you don’t need to compete on price if you can go one better: compete on cost. Competing on cost means you spend less to get the same results as your law firm competitors, and puts you on an even footing with the non-firm competitors currently storming the gates.”
Here are some examples from Jordan of how you can compete on cost:
- Install a legal project management system
- Automate anything repetitive that moves
- Move work up and down the talent chain
- Use technology wherever possible
- Give serious thought to outsourcing
- Come up with a non-hourly billing and compensation system
By reducing inefficiencies, streamlining processes, systematizing and standardising where feasible, using technology as much as possible, especially tools like document assembly solutions that really can provide leverage, and reallocating resources to match the appropriate level of talent to the appropriate sophistication of tasks, you can ensure maintained profitability even though prices are reduced.
Or as Jordan summarises “You can’t control what the market will pay you; but you can control, to a large extent, what you spend to compete in that market. If you ever expect to seriously offer fixed fees to the marketplace, you absolutely must start by competing on cost. Competing on price might be a necessary evil, but competing on cost can be the key to your success.”