The New Rules of Pricing
My friend and colleague Jordan Furlong has posted a piece on his blog titled The new rules of pricing, that is well worth a read. I have posted the comment below in response. This is an important topic and one on which it is well worth getting a discussion going. If you'd like to add to it, please would you click the link to Jordan's blog and do so there by also posting a comment / response?
"Jordan: You are of course absolutely right but I think many underestimate the magnitude of the change that is looming, or the level of effort that will be required of firms to adapt … or die.
At the most fundamental level, the whole model of a modern law firm has evolved over the past few decades to align very precisely with the notion of very intelligent, highly independent professionals crafting bespoke solutions for clients and being compensated on an effort-basis. Changing it is not a trivial matter. Over the years, this has also been an extremely successful model. It is facile to argue (a finger pointed not at you but at others) that law firms are simply recalcitrant in not accepting change more readily. The magnitude of the change that is looming in this instance may be akin to what happened in the auto industry when Henry Ford introduced the Model T and assembly lines, driving manufacturers that were building automobiles by hand into bankruptcy or seeing them assimilated into other manufacturers that also adopted the new practices. It also easier for us to see the looming icebergs from our perspective at the masthead because we, as strategy consultants, pay so much attention to these issues, than it is from the perspective of our law firm clients whose lawyers toil in the innards of their ships, shoveling coal and serving passengers.
This is precisely the dilemma that Clayton Christensen describes in “The Innovators Dilemma,” that emerges in the face of a disruptive innovation (and I have no doubt that what we are experiencing right now fits the description.) If Christensen is right, the solutions will come not from the established leader-firms but from the small splinters and start-ups that are not trammeled by established convention and who can move nimbly and change radically with greater ease. Those solutions, once proven, may well be replicated by the more forward thinking established firms. Those that do not follow suit will decline and be absorbed by the new leaders, or eventually go out of business.
Over the next 3 – 10 years, I expect the landscape of the Amlaw 100 to evolve quite radically as these and other ‘icebergs’ wreak their havoc on those that will not / can not / do not change their course."