Pricing problems across the professions

Oh dear. In the same edition of a London newspaper today there were two stories highlighting the pricing problems in the professions.

In one article, a chain of estate agents had sent out a mailer to home owners in the wealthy areas of Central and Greater London to say that they would waive their fees on residential transactions completed before the end of the year. So, on a £500,000 property, that’s a saving to house sellers of £7,500 - £10,000 (1.5-2%). Meanwhile, the residential lawyers on the patch are struggling to justify their fees of anything between £500 to £900.

In another article it reported from the Legal Budgets in The Lawyer magazine that some partners at the five Magic Circle City law firms (i.e. Allen & Overy, Clifford Chance, Freshfields, Linklaters and Slaughter & May) have “jacked up their fees to £900 an hour”. Now we all know that they have great lawyers at those firms, but this must surely be evidence of a strong brand supporting an inflated/premium price as there are simply hundreds of equally good lawyers at any of the top 10 (or 20) law firms.

Yet surely both the percentage and hourly rate fees must have come to the end of their shelf life by now? What about taking into account the value to the client of those professional fees? Or even the relative strategic importance of the particular transaction or job? Aren't senior inhouse counsel at the global institutions under pressure from their shareholders to reduce costs?

The accountants seem to have got it (mostly) sorted – with the canny financial professionals wrapping up audit, corporation tax and various other regular services (e.g. PAYE, VAT) into an annual fee which is paid in equal monthly instalments by direct debit. One negotiation for the firm to achieve cash flow heaven and the client gets certainty and cash flow comfort – with both parties happy that only “extra” transactions or consultancy jobs (which the accountants are ideally placed to identify and highlight) need further negotiations and budgeting. And then you get the really shrewd financial whiz-kids at the larger accountancy practices – like the treasury managers – who only charge a fraction of a percentage of the often huge amounts of money that they make for their clients with some clever overnight cash parking or foreign exchange dealing.

What will happen when the current economic climate really starts to bite and, like the last recession, we see the return of cut throat low balling to win loss leading work? Let's hope that the risk management systems that are now receiving attention post "unanticipated financial meltdown" will be turned towards day-to-day pricing decisions so we get some more interesting pricing models into play.

Like they say, “interesting times”.

The wonder of collaborative workspaces

I have just started a new strategic review project with a medium sized partnership (around 25 partners) in an international market aligned to the legal sector. As I will be working – for the next few months – from their offices in London, from their offices around the regions and from my office at home, they have set up me as a client on their extranet providing a collaborative workspace.

Now over the years I have interviewed many of my clients’ clients about their views on the potential value of extranets but generally found that they had some difficulty getting their heads around the concept. I recently worked with a web development company who loaded all the site maps, proposed designs and project timetables onto their extranet for the entire project team to see and comment upon. But I was really wowed today when the real potential finally hit home…(am I a bit slow on the technological revolution)?

It means, of course, that I can work closely with their people without having access to their internal systems thus not compromising security and without needing to go through lengthy training on their document management protocols and other systems. Yet they can upload the numerous files and reports that I need to see into the workspace into areas that are just for me to see, just for my core project team or for anyone else they want to give access to for administrative support or for just part of the project.

Then I can happily upload files from wherever I happen to be and can take copies of – and work on – those documents as and when I please and upload the updated versions. No more boring old version control to worry about – and I don’t even need to worry about keeping the memory stick from getting lost at the bottom of my handbag.

There is a calendar where assistants can schedule all my meetings – showing everyone where I will be, what I will be doing and who I will be with – without having to worry about synchronising Outlook calendars. And anyone in the project team can schedule time, and file associated agendas and minutes with ease.

There is also an integral message system – that alerts your nominated email address when new documents are uploaded or new messages or discussions started. And it keeps track of all the threads. Awesome! If this is what cloud computing has in store, it sure does have a silver lining!

Now the global firms and their institutional clients have long used collaborative workspaces – for knowledge sharing and precedents in the legal world, for accessing deeds or property terriers in the property market and even for showing work-in-progress and audit status in the accountancy world. And I remember all those years ago getting excited when they first talked about electronic deal rooms for big corporate transactions. At the estate agency end of the market, it has long been possible to have a look to see how your house sale or purchase transaction was progressing (back in the olden days when there was an active residential property market) and even organise to get SMS alerts on your mobile phone. But this is a relatively modest partnership and some of its commercial clients are really quite small. As more clients catch on to the wonders of this technology, surely the whole world of professional services delivery will be turned on its head.