Pricing is About Driving Profitability


Originally recorded on the Pricing Matters Podcast by Digitory Legal. Digitory Legal is now part of BigHand. Learn more here.

Aurelia Spivey, Marketing Consultant with BigHand, chats with Andrew Jewel, Senior Director, Strategic Pricing & Business Solutions with Seyfarth Shaw. Andrew works closely with Firm Department Chairs, the Chief Marketing & Business Development Officer, and key members of the Finance team and leads the pricing and business side of Seyfarth’s Alternative Fee Arrangement (AFA) program.

Prior to entering the legal solutions industry, Andrew practiced law for nearly five years as a commercial litigation and antitrust associate at two AmLaw firms. He earned a JD, with honors, from The National Law Center at George Washington University, where he was a member of the Journal of International Law & Economics, and a B.A. from Haverford College in Haverford, PA. 

Top three takeaways from this episode

  • Data & Risk Sharing Deliver Successful AFAs. Access to historical matter data and appropriate risk-sharing between law firms and clients are the building blocks for strong partnerships between law firms and their clients.

  • Beyond Revenue. It’s more important to understand and measure the cost of delivery and profitability drivers of the work your firm is doing.

  • Proactivity Matters Clients want firms that are efficient, know their business and deliver value without having to be reminded.

Don't rush to undercut your own price. You may be surprised what a client would be willing to pay.

Podcast Transcript:

Andrew Jewel 
I'm a strong believer in that an alternative fee arrangement is all about the proper sharing of risk between the law firm and its client.

Aurelia Spivey 
Welcome to Pricing Matters, a podcast by Digitory Legal. Digitory is a data analytics and cost management platform and service, bringing data-driven pricing and cost prediction to law. My name is Aurelia Spivey, and I will be your host as we speak to leaders who are making an impact in legal pricing, discuss market trends, and find out from them why pricing matters.

Welcome to the Pricing Matters podcast. Our guest today is Andrew Jewel. He is the Senior Director, Strategic Pricing & Business Solutions at Seyfarth Shaw. Thank you, Andrew, for joining us.

Andrew Jewel 
Thank you so much for having me. It's a pleasure to be here.

Aurelia Spivey 
Excellent. Well, I always like to start with the listeners hearing a little bit about your background. So tell us a little bit about your practicing journey.

Andrew Jewel 
I started practicing law many, many years ago, and I practiced for about five years before I decided that being a lawyer at a large AmLaw 100 firm wasn't going to be for me. I went into the business world where I was involved with business development and ultimately, management operations, in what's now the Ediscovery world, it wasn't the Ediscovery when I first started. After probably close to 20 years in that industry, I was given an opportunity to join Seyfarth, just about five years ago now, and in a role that helped build and lead some of their alternative staffing teams, which ultimately led pretty nicely into the pricing world. Because so many of the alternative staffing groups, meaning lawyers who are not on the partner track but who are highly experienced, are involved with alternative fees, it just seemed like a natural fit for me to take that on as well. So after about two and a half years at the firm, my role expanded and I became involved with the pricing and strategic business solutions at Seyfarth.

Aurelia Spivey 
Thanks for sharing that. One of the things that, when I was looking at your profile on LinkedIn and wanting to get you on the podcast, was that sort of operations background. Obviously, we've seen the rise of legal ops over the last decade or so. So I'd love to know from you how your background in operation influences your approach to pricing.

Andrew Jewel 
Operations mean, of course, a lot of different things to a lot of different people. And the rise of legal operations that we've seen over the past five to 10 years, certainly is a little different than some of the operations work that I was doing outside of corporate legal departments. However, I think the most important influence that my operations background has had on my pricing work is that operations, at least when it's been involved, is always about efficiency and getting the most you can for your dollar. Whether it's in the business world that I was in Ediscovery, or pretty much anywhere, I think it's about driving profitability. I approach pricing from that perspective. I think that it's often the case that law firms approach pricing with the goal in mind that they need to get all business pretty much no matter what. And while certainly revenue is extremely important in a law firm, as it is in any business, the cost of delivery and ultimately the profitability of the work that you win is even more important. I like to think that I come to that conclusion as a result of my operations and management background, outside of the law firm world.

Aurelia Spivey 
Seyfarth's alternative fee arrangement, AFA program, can you tell us a little bit about how the program got started and how you or the firm define AFAs, that's quite a broad term.

Andrew Jewel 
The program has been around for quite some time. As AFAs continue to increase in terms of their usage, both not only within Seyfarth but clients asking us for AFAs. It seemed natural that the firm needed to develop a formal pricing department that was outside of the finance group. So I helped develop and ultimately build the pricing team within Seyfarth, which focuses on alternative fee arrangements. Now Seyfarth defines alternative fee arrangements, I guess pretty much as anything that doesn't involve the traditional billable hour or billable rate per hour.

Aurelia Spivey 
Do you have an opinion on what are the characteristics of some of the most successful AFAs that you've come across?

Andrew Jewel 
To me what makes a successful AFA, when you're developing the AFA, is one that is based on as much empirical data. Data analytics, you hear that buzzword or buzzphrase a lot, but that really is what makes an AFA successful. If you don't have any experience doing a particular type of matter, a particular real estate matter, or a particular type of litigation, for example, it's very difficult to come up with a successful AFA. Additionally, though, I'm a strong believer in that an alternative fee arrangement is all about the proper sharing of risk between the law firm and its client. I think oftentimes, you hear clients who like to move away from the traditional billable hour because it doesn't have, of course, any predictability, but more importantly, there's no incentive for the law firm to be efficient. I agree with both of those things and I think that it's important to be able to provide efficiency and predictability for the client. But at the same time, there needs to be an understanding from a client's point of view that there is a shared risk involved. You don't want to see, at least in our world, we don't particularly like to get into pure caps on matters, because, in that way, there really isn't any downside for the client, because what we do is, then we will ultimately build by the hour up to a certain not to exceed point. If that point is reached, we continue to do the work, of course, and the client doesn't pay anything additional. That to me, is a shifting of risk exclusively onto the law firm and it doesn't, in my mind, lead to successful AFA or ultimately a successful long-term client relationship.

Aurelia Spivey 
Absolutely, I couldn't agree more on both the data points, but also that sort of partnership. And I've heard that a lot on the show and we've seen that a lot with people and firms that we work with. That the partnership between the law firm and the client is ultimately that relationship is very important.

Andrew Jewel 
I'm not entirely sure any of us were prepared for what's happened over the past six months or so, in terms of how it's affected price, there has been a growing need and a growing desire for alternative fee arrangements from the clients that Seyfarth is either pitching or working with already. I haven't seen a substantial increase in it, I think it's just part of the continued rise and importance of AFA. Now, that's not to say that it's not going to all of a sudden drive more rate sensitivity from clients. I'm sure that because of all the financial hardships that many clients and large-scale corporations of course, as well as smaller companies and small businesses as well are facing, there may very well be an increased importance placed on efficiency on rates being lower or as low as possible. But the AFA, we're still seeing the same level of demand for them and we're doing our best to obviously present the most competitive AFAs we can.

Aurelia Spivey 
And following up on that, what are the greatest challenges that you think practicing professionals are facing in this crisis, and now how are you and your team overcoming them?

Andrew Jewel 
I think the challenge that I see, that I've always seen for sure, but it has become more difficult given the current economic and I guess sociological situation, is that because there seems to be a little bit less work out there right now, across all law firms, there is a greater competition among the law firms to get that work from their clients. As a result, a lot of lawyers oftentimes believe that the best way to get new work is simply to cut your rates to offer a better price, a lower price, and what is a seemingly endless race to the bottom in terms of the dollar that you want to charge your client. To me, that is a really big challenge that I'm constantly facing, because, as I said, earlier, I come to the pricing world with a business development and operations and business background, and the simple fact is that not all work is necessarily good work. That's the importance of profitability we talked about a little bit earlier, you have to make sure that the work that you're getting, the work that you're pitching, is ultimately going to be profitable for the law firm. 

We have to constantly educate the partners on the importance of keeping that profitability, first and foremost in their mind. I'm not obviously an equity partner at this firm and therefore I'm not one to tell someone definitively, no, you can't go do this work at that price point. However, we make sure that when we're pricing things with alternative fee arrangements, we do so, so it's going to be profitable. In the event that we feel that it's ultimately not the best idea, we make sure to bring that to the appropriate people's attention. But it's all about communicating with the partners and reminding them of the importance of profitability and placing value on the services that they are providing. Be confident in the service that you bring to the client, be confident in the legal representation that you bring, and be confident in all the kinds of add-ons of legal project management and technology that Seyfarth can bring, and don't rush to undercut your own price. You may be surprised what a client would be willing to pay.

Aurelia Spivey 
I think that's excellent advice and I've heard that from other guests on the podcast. It is constantly a reminder of the value that you do bring. Which brings me very nicely into the next question, which was around value. Do you have any predictions on how the concept of value is going to evolve as you move through this crisis?

Andrew Jewel 
I always think predictions are dangerous. Of course, businesses, and particularly those in the General Counsel's Office or Legal Operations Office, are absolutely swamped with work right now. The current crisis has brought entirely new issues to the forefront that they're having to deal with and what they don't want to have to worry about is their outside counsel, right now. They want counsel who can be efficient. They want counsel who will know their business. And they want counsel who will bring value to the table, not only in the price or the fee but also those other things. They want to be able to rely on a law firm and outside counsel who can deliver what they need without having to be reminded. If they have to spend time holding hands with the outside counsel, I think that law firms ultimately going to lose business in the long run, because it's just going to mean more work for the General Counsel's Office. So I think that's always been how value has been defined somewhat. It's not only been about the actual fee or the bill rate, it's been about what else you can bring to the table, but I think that's going to only increase over time.

Aurelia Spivey 
That makes a lot of sense, that real partnership, and that knowing your client piece is something that we've been talking about for many years in the legal sphere. You're right, right now that is going to be a good key differentiator. So one of the other things that you mentioned earlier was data, so I would love to talk a little bit more about data and process management. So one of the questions I had was, how are you leveraging data to increase your precision in pricing, and what are the greatest challenges that you face in terms of data in this space?

Andrew Jewel 
So Seyfarth has for over 10 years when they were the first mover into the lean way of looking at the practice of law as opposed to just doing it. We still have process maps, within our firm, that kind of help inform what we believe a quote, typical case, or typical matter might look like. We have over time been tracking countless matters of all types. Seyfarth is known for its Labor and Employment Department, that's its largest department, but certainly, we have real estate, litigation, and corporate and employee benefits. We do a pretty good job of harnessing the information that we have within our firm based on many years of handling similar types of matters for our clients. So that is all, where the data comes from. Ultimately, when you're developing alternative fee arrangements you need, not alternative fee arrangements but a good number of them, you need to know, still, who's going to be doing the work, and how long is it going to take them to do the work. So we have over time developed a pretty decent skill set in knowing both those pieces of information. That being said, the challenge with respect to data, of course, is to continue to refine the data and continue to get more of it. And while certainly, we've done a very good job, in certain instances, with other cases, to be quite frank, our ability to harness the data or capture the data that we have within our firm, is probably not as good as it should be, there's always room for improvement. A lot of that stems from simple coding of matters. We are constantly looking to make sure that when matters are put through our intake system, we know how to put in task codes and particular activity codes, so we can greater kind of hone into what and how long a particular matter takes. But there are always challenges around just getting the data to begin with.

Aurelia Spivey 
Data will remain a challenge, but it's not something that we can't overcome. You talked a lot about efficiency and I think it's incredibly important. It's always been important and as we've discussed, it's more important going forward. So I'd love to, these are elements of efficiency I suppose, what role does technology and process management play in making your team and therefore, the lawyers and the fee arrangements that you work on, so successful?

Andrew Jewel 
Well, technology and process management play a pretty substantial role within our firm as a whole and very much so also within the pricing area. We are always looking, as you mentioned, to be more efficient and we have utilized a lot of different tools, whether it's dock automation or dock-generating software. We've used a variety of online, what we call playbooks, which enable our teams to become more familiar with clients, without having to reinvent the wheel every single time. Law firms historically had always been concerned with revenue, because clients historically hadn't pushed back that much on billable rates. As clients have become more and more educated consumers of legal services, with the rise of legal operations that you mentioned earlier, clients have become more sophisticated and as a result, the law firm needs to approach its business as opposed to the practice of law, in a very different way. The pricing component offers an alternative to that billable hour, that clients are asking for, and ultimately, it's an alternative that can make the law firm and its client reach a win-win situation. And that's important to me because ultimately, that means that the client is happy, but then again, so is the law firm. Ultimately, that's, I think, where we both want to be.

Aurelia Spivey 
I couldn't agree more. Well, thank you so much for joining us on the Pricing Matters Podcast. I can't wait to share this episode with our audience.

Andrew Jewel 
Again, thanks so much for having me. It's a pleasure speaking with you.

Aurelia Spivey 
Thank you for listening to Pricing Matters, a podcast Digitory Legal. To find out more about our guests please visit our podcast page. If you have any feedback or guests that you think we should feature, please reach out to me. Thank you for listening, see you next time.

About BigHand Matter Pricing

BigHand Matter Pricing is a next-generation legal matter pricing, budgeting and cost management solution. Turning data into actionable insight and transparency that empowers your teams to make objective pricing decisions, armed with accurate real-time business understanding. Gain a data-driven understanding of matter profitability drivers like leverage, effort and costs, to give your teams the autonomy they need to boost productivity.

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