A conversation with Richard Burcher: An insider look at pricing protocols in today?s legal environment
Pricing legal services is an ongoing challenge for law firms. Today?s advanced technology (e.g., AI, machine learning, GPT-3 models) is adding complexity to the task. Today?s episode of The Legal Helm features pricing expert, Richard Burcher. The conversation covers a lot of ground, including how to get buy in, what increases revenue right now, and where legal pricing is heading. Enjoy!
Your Host
Bim?Dave?is Helm360?s Executive Vice President. With 15+ years in the legal industry,?his?keen understanding of how law firms and lawyers use technology?has?propelled Helm360 to the industry?s forefront. A technical expert with a penchant for developing solutions that improve business systems and user experience,?Bim?has a knack for bringing high quality IT architects and developers together to create innovative, useable solutions to the legal arena.
Our Guest
Richard Burcher is a former practicing lawyer and managing partner with 40 years of expertise in legal services pricing. Currently, he?s the Chairman of Validatum and Virtual Pricing Director, which have provided pricing consultancy services and the very latest in legal pricing software to over 300 law firms in 25 countries. He is regarded by many as the international leader in the field.
Transcript
Bim: Hello Legal Helm listeners! Today on our show I’m really excited to be talking with Richard Burcher. Richard is a former practicing lawyer and managing partner with 40 years of experience in legal services pricing. He’s the chairman of Validatum and Virtual Pricing Director, which have provided pricing consultancy services and the very latest in legal pricing software to over 300 law firms in 25 countries. He’s regarded by many as the international leader in the field. And today’s topic is how a pricing strategy plus technology can impact a law firm’s bottom line.
So firstly, Richard, welcome to the show and thank you for taking some time out to talk with us.
Richard: Thanks, Bim. Great to be here.
Bim: Before we get into the software side of things and what you’re doing in the pricing space, it would be really interesting to know a little bit more about the path that led you from practicing law to consulting with firms around pricing and then on to develop your platform, VPD. Could you give us an overview of your journey?
Richard: Sure. All of my practicing career was in private practice in New Zealand. Began my legal career in 1980, far too long ago. All throughout my career I had a fascination with pricing. I had colleagues in my own firm that seemed to have the extraordinary ability to articulate the value that they were providing to clients and have them pay a good fee. Others really struggled with it. I made a career-long goal to try and get better at it.
As I moved through the firm, I had more opportunity to implement change. I undertook a couple of years of master’s level postgraduate study around pricing, left the firm in 2008 to set up, Validate PD as a consulting business.
As luck happens, I was invited to be a keynote speaker at an international conference in 2011. That resulted in my first major instruction with one of the large London headquartered firms. So we relocated the business to London in 2012, and we’ve been here ever since.
As for the technology side, one of the things we realized a few years ago, was that the purchasing of technology by the legal profession had matured to a point where everyone now pretty much understood that technology on its own is very rarely, if ever, a solution unless it’s accompanied by the other two components: people and process.
Paradoxically, we’d built our international reputation around the people and process part. We realized that the piece of the puzzle that was missing in our offering was the technology. That was the birth of virtual pricing director.
Bim: Fantastic. Thank you for that, Richard. You touched on what I wanted to get into with you, which is about l law firm’s approach to implementing solutions around pricing.
Pricing solutions have been. Around for a while now. Some of the feedback that I get from law firms is that they have challenges in terms of getting pricing software implemented in a meaningful way. Largely because of lack of engagement, sometimes because a lot of the knowledge around how to price a matter is in the lawyer’s head; It’s in those experts? head.
You talked about those three components of your approach to being successful in implementing your solution. I’d love for you to delve into that a little bit more. What is the process that you guys take that really makes a difference in terms of making sure you’ve got the engagement of the people that understand how to price a matter. And then, how does that flow into the way that you educate a firm to make sure that they’re able to get a successful outcome from implementing your product.
Richard: Well, I think it’s a really good question. It’s perhaps key to the success that we’ve enjoyed so far and it’s one of our VPD USPs as well. I guess the answer lies in part to the fact that I come from a background that is shared by the people for whom we are trying to solve the problem, namely the lawyers.
There is a wide set of constituencies in a law firm that have an interest in pricing. Obviously, the finance team, the bids pitch and tender team, marketing and business development… They all. have various perspectives that they bring to the pricing function. Finance in particular are already well served with some very clever data visualization technology that we’re all familiar with that enables them to do their job really well.
And of course, your average lawyer is frankly not interested in anything like that. So, we built Virtual Pricing Director from the ground based on a specification that I kept asking myself, ?What would I have liked when I was in practice? What would’ve made my life easier??
While it’s a, a terrible marketing cliché to say a product is built by lawyers for lawyers, that is the truth of the matter with VPD. We’ve placed an enormous emphasis on UX/UI so that your average lawyer can look at it and think, ?This isn’t scary, it’s intuitive. It looks like my working day. This is how I go about putting a proposal together.?
So that’s an important element, but if you come back to the people and process part, they have to know why they’re doing it. The unfortunate reality is that historically as practicing lawyers, none of us have had any training in pricing. We were just assigned an hourly rate, told to fill out time sheets, and one thing would follow; profit.
The pricing world in law is vastly more complex now. If you instill the skills, the tools, the confidence, and indeed answer the question, ?why should I use the technology and what difference will it make to the firm and to me personally in the delivery of my services,? then you risk leaving out a huge piece of the puzzle, and you’ll get the very thing that you spoke of, Bim: very low adoption, very low interest and a very low ROI. We?re told this characterized some of the challenges that firms are facing at the moment, but we think we’ve cracked that.
Bim: Thank you for going into that. Ttotally agree with you. You make the point around ROI. That is one of the big drivers for a product like this. Because fundamentally, you talk about ROI being related to profit, and profit margin at the end of the day, which is on everybody’s minds at the moment with the economy being the way that it is.
For a firm that’s looking at putting the business justification for a product like this, what’s your angle on that? How would you educate firms in terms of taking it to the business to say, ?This is why we need a pricing solution, here’s how we define what ROI we’re going to get from a pricing solution? so that it becomes an easy decision-making process?
Richard: We have found that when we’re asked to come in and pitch or put a proposal to a firm or, give them a demo, there are typically three audiences in the firm that we need to engage with and dare say impress: the lawyers. the finance people and the IT specialists. They each have a stake in the success of this as a project.
The finance people are very focused, understandably on the numbers and the ROI. I can say that that breaks down into two components. One is the opportunity cost associated with the time saving. So if lawyers can produce a high quality, thoughtful novel, interesting. pricing proposal in 20 minutes when it previously took them an hour or an hour and a half, that there’s clearly a cost benefit there that can be quantified.
The second financial benefit will be in the improvement in the usual metrics and KPIs that firms keep a close eye on. Realized rates, write-offs and so forth. But there is another component to the ROI, which is, I would argue is just as important, and that is the client perspective.
At the end of the day clients have certain requirements. Top of the list is usually price, transparency, and budgetary certainty. If a solution can help deliver that from the client perspective, then the second qualitative ROI you’re going to get is high rating by the firms around how the firm handles the commercial aspect of the relationship with clients.
So, it’s both qualitative and quantitative.
Bim: Very good. That’s super helpful. Can we delve into the platform, Virtual Pricing Director, in terms of how it?s delivered to a firm? Can you talk a little bit about the technology? Is it a cloud or on-prem solution? Tell us a about what it integrates with today so that we get a better idea of what the platform is.
Richard: Sure. Probably 85% of the functionality of the platform can only be delivered with seamless integration with the firm’s PMS. We have both an on-prem and a cloud solution. Both of those are immediately available and we integrate with all of the major practice management systems: 3E, Aderant, but smaller ones as well, including Peppermint SOS and partner for Windows.
The key to that is having a relatively painless integration. We are very, very conscious of the fact that this is a pain point for firms. When we are doing a presentation, we’ll often see IT directors leaning intently into the conversation looking for the inevitable pain points. They’re invariably under a lot of pressure and have multiple projects on the go. Without going into massive detail now, there’s an awful lot that we do to relieve the IT team within the firm of a lot of those pressures and we take those on ourselves.
Bim: When I was looking at the information around the product one of the things that you talk about on your website is around the AI aspect of the platform. I’d be keen to understand more about that so our listeners can understand what aspect of AI is being leveraged and how that impacts the overall outcome of the product.
Richard: if I’m honest Bim, that’s probably more aspirational than in reality at the moment. We are desperately keen to avoid over-promising and underdelivering. I think many firms have fallen victim to that in the past. Our aspiration around AI is that we will be able to deploy machine learning against the data lake that inevitably builds up within VPD, We find that many firms are very keen to bring their data into VPD.
At the time of launch and after due reflection, every firm that we’ve been working with has actually decided against it because sadly, if the data has not been properly categorized and tagged, then the machine learning has little to go on. If you ask your average lawyer, what would the fee be on a $30 million dollar or pound commercial property acquisition with a mortgage of half the purchase price, they will quite literally give you a range between $50,000 and $200,000. The variables within that seemingly consistent job description will include the number of tendencies in a myriad of other factors. Actually, comparing like with like, which is essentially what you are asking machine learning to do is, extraordinarily difficult unless firms have gone to a very deep level of granularity in categorizing their data and their various work streams. And to be honest, once they start looking at it closely, they admit it themselves, they aren’t there yet. It’s something that we are very much working on and going to help firms to improve on. But right now, it’s not feasible to do it commercially, but we are getting there.
Bim: It’s very refreshing to hear you hear you answer that question in that way because it’s very much the case that law of solutions in the market do over promise. It’s good to understand that you can get benefit from a platform that doesn’t deliver all of the shiny stuff on day one, but fundamentally, it solves the actual problem that you’re looking to solve and that you’ve got the core fundamentals there for the future. That data is building up and getting that clean data is the key to success for any of these types of solutions. It’s great to hear that the solution itself has that capability for future.
Richard: I’ve, taken a leaf out of Peter Thiel of PayPal fame?s book when he talked about the most successful software he’s ever had anything to do with are not the ones that have, or claim to have, the greatest number of features and functionality, it’s the ones that do the basics brilliantly. That’s certainly a mantra that we’ve taken on board.
Bim: Absolutely. If I’m a firm that’s in a state where I’m not ready to buy technology, but I really am concerned about my approach to pricing and the methodology, or lack of methodology, that might have within my firm. how would you advise customers on that aspect of things in terms of getting ready for putting a strategy in place? Would that make an impact without the technology, for example? What is be your general advice around that?
Richard: We’ve actually refined our approach considerably over the 14 years that we’ve been working in the market. We now have a well-defined successful roadmap that we’ve deployed many, many times. It begins with an exercise in winning hearts and minds of partners. There’s a lot of skepticism, and bear in mind, I’m a former managing partner, so I’m one of them. I understand precisely where the skepticism comes from. They will say things like, ?The market is the market. The market sets the price. We review our rates annually. there’s nothing that you or anyone else can really teach us about it?.
We’ve been doing this a long time. There?s an exercise in metaphorically lifting the curtain and giving them a peak about what is happening out there. What currently constitutes pricing best practice, what their competitors are doing in a suitably anonymized fashion to get them believing that there really is much more that they can do to control their own fortune around pricing. That they are not a cork bobbing on the sea. We find that a session galvanizes and motivates the entire firm.
This leads to the next question. If we are going to get better at pricing, there seem to be a lot of moving parts. Can you give us a very high level synopsis of the kinds of things that we need to be looking at, and we’ve encapsulated that in what we call the four pillars of pricing: pricing, governance, pricing analytics, pricing execution ?which is basically teaching partners how to have better pricing conversations and learn some pricing skills ?pricing technology.
What we find is that firms have made some progress in all four of those quadrants. Our initial job is to run a diagnostic ruler over the firm and see just where they are on each of those quadrants. Then we prescribe a bespoke solution for them to take it forward. It doesn’t matter where the firm is on that continuum, whether they’re only just started to think about it or they’ve already made a lot of progress under their own steam. We come in at that appropriate point and help them move to another level altogether.
Bim: In terms of the kind of conversation around preparedness, if somebody is looking to implement a pricing solution and a new methodology, and the change management piece around that, is there anything that you would advise customers or potential customers to be thinking about now in terms of readiness? Before they even begin an engagement to make that change, are there things they can be doing now that could make a difference? I think you mentioned a really good point around data. Maybe data cleansing, data cleanup operation? Is that one of the things that they want to think about before moving into the platform? Any other things in terms of process or change management that you’ve seen work to, lead up to actually implementing a product like this?
Richard: Interesting you make the point about data cleansing and so forth. A lot of firms actually begin by saying to us, ?We’re not ready to work with you. We have. a whole lot of things, including data cleansing and so forth.? We always counsel against that. The reason why is, if you go back to those four quadrants, pricing, governance, pricing analytics, pricing execution, and pricing technology, it begs the question: Is there a best practice linear approach or contemporaneous effort to try and improve under each of these? Can you do one before the other? Are there dependencies between those four?
The short answer to all of those questions is no, which then leaves us open to the question: Where’s the low hanging fruit? Where can we begin to legitimately make progress right now, today, this month, this quarter? Let’s start with that. That’s the pricing execution piece. That is upskilling the lawyers, instilling them with greater pricing confidence, teaching them the art and science of pricing, enhancing their commerciality and their ability to have commercially-focused conversations confidently with the clients. Then begin to pick up on the other things later.
Because if, for example, you say, let’s clean up all our data, well, that could be a two- or three-year project ? quite literally with larger firms. And even then, there’s no guarantee that the quality of that data would be as usable or as dependable as we might like. So, we encourage firms to start now by saying, look you can start making more money now, you can improve your bottom line with the skills development. We were doing that for 10 years very, very successfully before we even conceived the idea of providing a technology solution. So, let’s get some runs on the board, improve the bottom line now, improve our partners pricing confidence, and start to backfill the other aspects and the other requirements.
What I?m saying is almost counterintuitive, but we’ve worked with over, 300 law firms in 25 countries. I think we can say with a measure of confidence that that the strategy works.
Bim: I love it! I think what you just described makes total sense because you are getting to that ROI destination a lot quicker. You’re proving out the value of the product a lot quicker by simplifying the implementation process. It makes total sense.
Richard: The other thing too is the way we’ve architected Virtual Pricing Director. The quality of the data going forward, because it engages in almost enforced tagging and characterization through the template model, users start accumulating more and more quality data that then becomes more usable and more informative going forward.
While no firm wants to be told, look, your historical data, terabytes of it though there is not necessarily surfaceable in a usable way. Start using Virtual Pricing Director, and it will be. No one wants to be told, ?Hey, you have to start from scratch.? But there are massive benefits that flow from VPD even without having access to that historical data. And I’d be delighted to show anyone why that is the case.
Bim: Moving on to some of the dynamics we’re seeing at the moment in the global economy. I’d be interested to get your view regarding pricing trends. Any changes, any significant shifts that you are seeing in terms of some of the dynamics that are happening with all of the additional cost pressures and inflation pressures and everything else that’s going on in the economy at the moment?
Richard: Thanks for the opportunity to rebut something that frustrates me a little, and that is, everyone’s bought into the mantra. that clients want more for less. In other words, they want more of our legal services and they want to pay less for it. That is not necessarily the case.
We work with firms that are deeply involved in procurement processes and have close relationships with GCs and in-house legal teams. What they want is better value for money, which is not the same thing as more for less. This might sound like a contradiction, but it isn’t. What they’re also looking for, as I said before, is greater price transparency, greater budgetary certainty, and a greater correlation between what they’re being asked to pay and the value that they perceive that they’re getting.
None of that speaks necessarily to cost reduction. Some of the specific pricing techniques that are, at the front of people’s minds at the moment include things like subscription models, retainers a different method of selling legal services through a subscription model. LAAS if you like, law as a service.
Another area that’s proving to be problematic and people are really interested in is how do we wrestle with the development of hybrid technology, stroke human service delivery. We’ve got a lot of great kit hitting the market now, document review technology and so forth.
But firms have realized that one of the challenges with that is they’ve not only incurred the cost of investing in the technology, but whereas without the technology, they would’ve charged paralegals out ? half a dozen of them for a couple of weeks ? to review documentation that can now be reviewed by the software in a fraction of the time. That has effectively trashed the hourly billing model. So working out how to charge for a hybrid human tech service delivery is proven to be really interesting.
One of the other trends that frankly, we are encouraging in our professional development, masterclass, and consulting work with firms is an increased commerciality around price risk sharing models with clients. Law firms have historically prided themselves on partnering with their clients (I use partnering not in the legal sense, but the sort of the business collaborative sense} but that does not often manifest itself in pricing models reflect that alignment of commercial interests. So, one of the very successful trends has been coming up with pricing models that share both the downside and the upside from the client perspective.
We’ve seen a lot of traction gained with that. With clients who really appreciate law firms that don’t just sit there and dispense black letter law advice, but are truly willing to align their commercial interest with the clients through a pricing model that reflects that. There’s some really interesting stuff happening. Really interesting actually. Especially the challenge around pricing some of the technology driven automation and stuff that’s happening at the moment. That’s a really interesting space actually.
We recently had an example of that where one of the providers, Kira, asked us to present a series of webinars, global webinars for their law firm subscribers who were raising the question: We don’t know how to price this aspect of our work anymore because it has both a technology and a human component. That’s not a dimension we have historically had to contend with or understand because we’ve been in the business of, I suppose you could say, cynically selling six minute units. When you introduce software as a major contributor to the delivery of the services that’s a real challenge.
Bim: Absolutely. Richard, it’s been really good to learn about pricing methodologies and how to approach implementation, and about the platform Virtual Pricing Director. I’d like to move on to some wrap up questions, if I may,
This is a question I ask all my guests. I find the answer very interesting. If you could borrow Dr. Who’s time machine and go back to Richard at 18 years old, what advice would you give him?
Richard: I can see why the answers to these are interesting. That’s not one that I was expecting.
I guess my answer would be to believe in yourself. Be courageous. It is quite possible to be the only one that’s right in the room, but it’s also very easy to lose faith in that conviction. If you believe in something and you believe you can make a difference, it doesn’t matter what anyone says just pursue that. Relentlessly.
Bim: Fantastic. That’s great advice. Second, what is the one question that you would’ve asked yourself that I didn’t ask you today?
Richard: Oh goodness… Do I still enjoy what I’m doing? At this stage of my career when, to be honest, a lot would say that they’ve reached the stage where they can’t wait to retire and are cynical, bitter, and twisted, I love what I do. I’m in the UK, working intensively with one of the great regional firms between their two major offices. I always finish the masterclass sessions on a high. I never get tired of interacting with lawyers. I am one. I always will be one. I understand their world and I love it. I love making a difference.
The acid test for me is the reaction I get from long-in-the-tooth partners at the end of these sessions. When someone comes up, as they did a couple of weeks ago, and says, ?Look, don’t take this the wrong way, but I came along to this with a pretty closed mind and pretty skeptical and cynical. But I have to say that that was the best professional development I’ve had in my 40 years in practice.? That’ll get me through the next month. I thoroughly enjoy what I do.
Bim: That’s excellent. To be honest with you, I’ve met you a few times. The passion and determination that you have for this area and for the technology side of things definitely comes across in every conversation that we’ve had. I can see how people would really appreciate those masterclass sessions.
Any closing thoughts or advice that you think would be beneficial for the legal professionals that are in our audience today?
Richard: Yes. Look, we are going into a challenging time. I don’t think anyone denies that. Keep the bow of the ship into the waves. There will inevitably be casualties in the profession, firms that disappear, that are absorbed, merged and so forth. But the future is bright.
I suppose with the benefit of some age. you can subscribe to the view expressed by somebody much more articulate and eloquent: This too will pass.
In times of challenge business-wise, there are also opportunities. I read a Forbes magazine article a couple of years ago that said that there were more millionaires created during the Great Depression than at any other time in history. You look at it in terms of the glass being half full rather than half empty, there are always opportunities. There are going to be winners and losers for sure. But for those that get it and take the right steps now the future is still very bright.
Bim: Fantastic. What a positive note to end on.
If anyone wants to get in touch with you, Richard, what is the best way to contact you?
Richard: They can jump onto our consulting website, VALIDATUM.com or Google ?Richard Becher pricing? I was astonished to find that I’m on the front page, so you shouldn’t have too much difficulty in finding us.
Bim: Excellent. Thank you so much. It’s been really good to talk to you today. Really insightful and I’m sure lots of excellent nuggets for our listeners to take away. I look forward to talking to you again in future. Thank you, Richard.
Richard: My pleasure. Thanks so much, Bim.