Bill Josten is the global lead for thought leadership, content creation, and curation geared towards law firms and corporate law departments at the Thomson Reuters Institute. His job involves conducting proprietary research, analyzing data from law firm financial systems, e-billing, court dockets, and litigation analytics, and sharing insights on trends and best practices in the legal industry. The Institute publishes reports like the annual State of the Legal Market report, as well as webinars, podcasts, and other content that lawyers are increasingly consuming to understand market developments.
Josten discussed the growing demand from corporate legal departments for alternative fee arrangements (AFAs) beyond just hourly billing, with 54% of clients surveyed saying they intend to use more AFAs. However, law firms have struggled to effectively develop and market AFAs. Josten believes AFAs represent an opportunity for smaller firms to compete by offering more affordable and creative pricing models, leveraging AI/automation to increase efficiency. He sees a major disruption coming as smaller tech-enabled firms and alternative legal providers increase competitive pressure on traditional big law firm models.
Josten recommends that rather than just discounting hourly rates, firms need to completely redefine their pricing standards and value propositions. He believes subscription-based models have major potential, allowing firms to guarantee revenue while clients get predictable costs. By tying pricing to defined deliverables rather than unpredictable hours, and continuously optimizing the models, firms can drive mutually beneficial relationships while capturing higher profitability than the billable hour allows. However, successfully transitioning will require deeper change management around data utilization, processes, and client education.
__________________________
Check out the TR 2024 Report on the State of the US Legal Market.
Check out my new show, the Law for Kids Podcast.
Get Connected with SixFifty, a business and employment legal document automation tool.
Sign up for Gavel using the code LAWSUBSCRIBED to get 10% off an annual subscription.
Visit Law Subscribed to subscribe to the Substack newsletter to get notified about every episode, listen from your web browser, and for additional content.
Follow @lawsubscribed everywhere.
Sign up for the Subscription Seminar waitlist at subscriptionseminar.com.
Check out Mathew Kerbis' law firm Subscription Attorney LLC.
(71) The 2024 Report on the State of the US Legal Market with Bill Josten of the Thomson Reuters Institute