CBA Record March-April 2022

Chicago Bar Foundation Report

Value-Based Pricing: New Pricing Toolkit 2 . 0 Helps Improve Service and Expand Access By Jessica Bednarz, CBF Associate Director of Innovation & the Justice Entrepreneurs Project O ne of the biggest impediments to a ff ordable legal help in the con sumer and small business market

buy the value lawyers provide in solving their legal problem. Clients evaluate legal services based on value and price. Unfor tunately, most businesses, including law fi rms, tend to focus only on price because it is easier to understand. Value is harder to de fi ne. Yet understanding what your clients value is critical to pricing your services, improving your o ff erings, and creating new ones. While value comes in many forms, it is ultimately de fi ned by the client and what’s important to them. Our job as lawyers is to understand what the client values and how we can deliver it. One way lawyers can o ff er value to clients, in addition to solving their legal problem, is by o ff ering a predictable price. Fixed fees by task or phase or case, subscription fees, contingency fees, and hybrid fees are just a few examples of fee structures that have worked well and have become the norm for companies in other industries and for lawyers in the CBF Jus tice Entrepreneurs Project (JEP). With an up-front price, potential clients can assess whether they can a ff ord the services at the outset of a matter. Not surprisingly, the response from clients has been overwhelm ingly positive. The CBF Pricing Toolkit Learning how to price based on value instead of time isn’t easy. Th e CBF discov ered in the early stages of the JEP that there

is that pricing is largely opaque. People who might be able to a ff ord the legal help they need may not even try to get a lawyer because they have no idea of the cost. Th ey cannot simply write a blank check. Unfortunately, that is what most lawyers are essentially asking them to do. At the same time, more lawyers are seek ing to move away from the billable hour, which leads to unpredictable cash fl ow and unpaid invoices, and can result in reduced well-being and burnout. How can lawyers o ff er more transpar ency, predictability, and accessibility to legal consumers while also creating con sistent cash fl ow and increasing collection rates and well-being? By moving away from the billable hour and implementing value based pricing. Th at is where the Pricing Toolkit 2.0 comes in. Shifting to Value-Based Pricing Lawyers often think that their clients are buying their time. But are they really? Th ink about it for a minute. When you last purchased professional services, were you buying the professional’s time, or were you actually buying something else, such as a solution to the problem you had? Legal consumers are not interested in buying a lawyer’s time. Instead, they

are few practical pricing resources. Th is led to the creation of the fi rst iteration of the CBF Pricing Toolkit and an in-house series of related pricing trainings in 2016. Th e fi rst Pricing Toolkit was well-received by lawyers across the country and beyond and was recognized in 2017 by the ABA Standing Committee on the Delivery of Legal Services with the Louis M. Brown Award Meritorious Achievement Honor. Th rough our JEP attorneys and others, the CBF has learned a great deal since 2016 and wants to share these learnings with the greater legal profession. Th e Pricing Toolkit 2.0 compiles those learnings and is a collaboration between the CBF and On Purpose Legal (OPL). Helping lawyers

16 March/April 2022