Where bullocks fear to roam

“And now the sequence of events, in no particular order.” (Dan Rather, former CBS news anchor)

When clients complain about the unpredictability of fees, lawyers often chide them that the law is not like a can of beans. But the recent travails of one beans baron hold lessons for us all.

The supermarket group Morrisons has had a torrid time, caught between the rock of competition from discounters and the hard place of an online offering years behind its peers. Its most heavily discounted item in the last three years has been its profits, which have tanked by two thirds.

Earlier this year, Dalton Philips, the chief executive, launched a new strategy to turn things around, confronting the discounters head-on by making swingeing price cuts across the range. His reward so far has been a further dive in profits and this fraternal contribution to the AGM from former chairman, Sir Ken Morrison: “When I left work... I chose to raise cattle. I have something like 1,000 bullocks and, having listened to your presentation, Dalton, you’ve got a lot more bullsh** than me.”

Whether or not Mr Philips’ strategy is a load of bullocks will be checked out over time, as indeed may he. But so far, a major hurdle is clear: the pricing has changed, but the way Morrisons operates, and therefore its costs, have not.

Pricing legal services has been a hot topic since the recession. Gripped warmly by clients in their most sensitive areas, lawyers sweat daily over how they can price to win and keep profitable work. There is good advice available on “strategic pricing”, “value pricing”, and the rest. But I have two observations.

First, while some firms may still approach pricing armed with little more than hope, fear and a wet fingertip, conversely, there are only so many combinations of fixed, capped, discounted, conditional or hourly charges one can apply before coming dangerously close to pirouetting on a pin. Secondly, to consider pricing before looking at how and by whom the work is done is an exercise in futility. “What’s our price?” can be answered only when we have answered, “Does what’s on our shelf meet market need?”; “How do we deliver it?”; and “Who delivers?”

Firms get this, but comparatively few follow the logic to its conclusion. Why so? Significant changes to working practices are daunting. They need imagination, project management, and other skills lawyers alone may not possess. A greater impediment is that these advances make keener pricing possible partly because streams of work which used to be handled by senior, expensive people can now be assigned to less expensive colleagues and/or fewer of them. As an example, Golds had 430 people when it merged, only 22 of whom were lawyers. This is not a model for everyone, far from it, but it may be of interest that we started from a very conventional place. While moves in this direction may be good for the business as a whole, individuals may, quite rationally, view them with the same affection Sir Ken’s herd reserves for his abattoir. None of this is insuperable, but it is a serious challenge to firm leaders’ persistence and powers of persuasion in an environment where autonomy is prized.

The pricing issues facing law firms are the same in principle as those facing supermarkets. They can be met successfully, but as Morrisons’ experience shows, only if tackled in the right order. The horse is no better behind the cart than in a lasagne.