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Trust: The missing ingredient in pricing

A major law firm recently contacted Validatum for guidance on how to recalibrate the pricing aspect of their relationship with a major client – a relationship that had become demonstrably radioactive and is now on life support. How did it all get to this point?

Reasons have been posited, but at the end of the day, they are just symptoms, not the cause. As is so often tragically the case, the real cause is a mutual breakdown in trust and poor communication. It began imperceptibly but grew like a cancer and with each wrong step by one, the distrust felt by the other was ratcheted up.

Both parties have been guilty of behaviour that was guaranteed to corrode the foundations of the relationship. The cost to them is both calculable and incalculable.

The most profitable, enduring and symbiotic law firm–client relationships are those that share a number of immutable attributes – honesty, courtesy, openness, transparency, integrity, empathy and trust.

You may well be thinking this all sounds a bit ‘tree-huggie’ with hints of Kumbaya for good measure. Surely anathema to the hard-bitten world of corporate clients and corporate law firms. This is a commercial negotiation after all. Yes, it is. But are the two concepts mutually exclusive? Is it possible to be commercial, entrepreneurial and push for profitable fees, yet at the same time, exhibit the behaviours which we would like to think we are capable of displaying?

As a profession we talk about partnering with clients, building long-term relationships and we aspire to the giddy heights of David Maister’s ‘trusted advisor’ status in the eyes of our clients (*). And yet we often don’t behave as if that is the objective.

Clients for their part are also perfectly capable of behaving badly. At least lawyers are bound by a set of ethical and legal/fiduciary constraints. Clients suffer from no such impediments and it shows – frequently!

Encouragingly however, there are growing numbers of law firms and clients that have managed to transcend the ‘games’, and brinkmanship that characterises too many relationships, and develop some incredibly innovative and mutually rewarding arrangements.

To do so though, law firms and clients need to do a stock take of what they are doing wrong. In the next two blogs (**) we will share our observations on what firms and their clients are currently doing to damage the relationship and destroy trust. Neither will be spared. There is plenty of criticism to go around!

Research. Reveal. Editor's notes

  1. Richard Burcher is the pre-eminent expert in pricing of legal services. This post first appeared in his Validatum blog in March 2021.

  2. (*) Readers are invited to contact Dr George Beaton for insights into the survey-based research beaton has done on David Maister's trust 'formula'.

  3. (**) Richard's sequels will be also re-posted on Research. Reveal.