©2014 Baker & McKenzie Global Services LLC The Evolution of Pricing A perspective on navigating the pricing maze Stuart Dodds, Director, Global Pricing & Legal Project Management Baker & McKenzie Global Services LLC

©2014 Baker & McKenzie Global Services LLC Developing the capability 3 Quick Context 1 In closing 4 Facing up to the truth 2

©2014 Baker & McKenzie Global Services LLC 3 Stuart Dodds Ex-fee earner Management Consultant for 17 years (Accenture/ Efficio) Sales & Delivery lead Supply Chain/ Procurement/ Negotiation expertise previously Linklaters’ Global Head of Pricing (2008 – 2011) currently Baker & McKenzie’s Director of Global Pricing & Legal Project Management (July 2011 onwards) Stuart also sits on a number of relevant industry bodies (e.g. ILTA, TVPi) and is a Fellow of the College of Law Practice Management Author of ‘Smarter Pricing, Smarter Profit’ (published by the ABA, April 2014)Smarter Pricing, Smarter Profit Contact Who I am Quick context

©2014 Baker & McKenzie Global Services LLC Who Baker & McKenzie are Some Facts Established in offices (Jeddah the most recent) 47 countries, covering every major commercial, financial and industrial center in the world lawyers Admitted to practice in 250+ jurisdictions 17 key areas of practice FY14 revenues of $2.54bn (largest law firm by revenue) ‘Dedicated’ pricing function established 2011 Quick context

The painful reality “How many businesses do you know where the employees are given a broad mandate to set the price of the products or services?” Source: Richard Burcher / Validatum Blog Post, ‘Abdication of Pricing Responsibility’, 20 th August 2012 ©2014 Baker & McKenzie Global Services LLC Facing up to the truth “Would you invest as a shareholder in a business where the profitability fluctuated at the whim of often mid-level or even junior staff?”

Who normally leads negotiations over price? Source: Winmark Research, Marketing Director Benchmark ©2014 Baker & McKenzie Global Services LLC Facing up to the truth

©2014 Baker & McKenzie Global Services LLC Increasing financial pressure within legal sector Facing up to the truth

The business case (Part 1) ‘ ’ Facing up to the truth ©2014 Baker & McKenzie Global Services LLC

The impact on margin Revised margin shown Facing up to the truth

©2014 Baker & McKenzie Global Services LLC  The math: D x N x IP x W  D – Number of pricing decision-makers  N – Number of pricing decisions per week  IP – Incremental profit on each decision  W – Number of weeks The business case (Part 2) Facing up to the truth 10 x 1 x 5000 x 50 = $2.5 million

©2014 Baker & McKenzie Global Services LLC  ‘A pricing audit’  Preparation  Negotiation  Differentiation > New Business Simple changes make a big difference Facing up to the truth

The growth of the ‘pricing function’ within law firms Facing up to the truth ©2014 Baker & McKenzie Global Services LLC

Getting the scope right 13 “In most companies... there is a difference between what the role of pricing is stated to be and what it actually is.” * Source: * - Sodhi & Sodhi, Six Sigma Pricing, FT Press (2008) Developing the capability ©2014 Baker & McKenzie Global Services LLC

Role scope can limit potential benefits Client Facing Change Agent Analyst Scope Potential Benefits Monitoring/ Control Basic AFAs Impact: 1 – 2% overall Wider PGs engaged Partner coaching Impact: 2 – 3% overall Portfoilo Management Negotiation Impact: 1%+ overall/ 3 – 5% on specific clients Developing the capability

©2014 Baker & McKenzie Global Services LLC  Cultural fit  Leadership involvement  Firm structure and governance  Systems and processes  Client ‘ownership’ and protectionism Key ‘firm’ considerations – The law experience Developing the capability

©2014 Baker & McKenzie Global Services LLC  Excellent communication and stakeholder management skills  ‘Commercial’ and ‘Entrepreneurial’  Analytically strong  Intellectually curious  Not scared of technology The essential (minimum) skill set Developing the capability

©2014 Baker & McKenzie Global Services LLC –Doing nothing is not an option – it is too important to ignore –Have at least one person ‘own’ or ‘support’ the process in your organization –Allow the function to evolve – don’t try and do everything all at once –AFAs are here to stay and are an effective business development tool –Do something ‘Think Big, Start Small, Scale Fast’ In closing

©2014 Baker & McKenzie Global Services LLC ‘Set’ the price The pricing and agreed fee approach ‘Get’ the price The value proposition and negotiation of fees ‘Manage’ the price The ability to manage and deliver the matter ‘Review’ the price The opportunity to improve service and/ or margin Some context: Our pricing and delivery framework In closing

©2014 Baker & McKenzie Global Services LLC Any questions? In closing

©2014 Baker & McKenzie Global Services LLC The Evolution of Pricing A perspective on navigating the pricing maze Stuart Dodds, Director, Global Pricing & Legal Project Management Baker & McKenzie Global Services LLC