Traditional models of pricing legal services are not likely to work in the future. Indeed, they are not working well today. An article by Michael Chasin published on the Law Technology Today site explains why. In the article, Chasin mentions a couple of terms that most lawyers are not familiar with - yet.
Chasin argues that the traditional law firm business model of billing by the hour "inherently rewards inefficiency. The longer it takes to complete a project, the more hours that are billed, the more revenue the law firm makes." This, he says, will not work with today's clients. They demand more for less. It isn't clear that law firms will survive the downward pressure on prices.
Chasin believes the future is "data and analytics." Law firms will need to leverage technology to collect and analyze data. That data will reveal a firm's current Client Acquisition Cost (CAC) and Lifetime Client Value (LTV) for each client. Armed with that information, the firm will be able to set a "win-win" price that is acceptable to the clinet and profitable for the firm. Firms unable to do this will disappear.