The legal sector’s pricing function has big ambitions to take a pivotal place in the legal sector’s commercial future, according to the findings from our latest survey on pricing teams. But will the ever-increasing daily workload make it difficult to achieve those goals? We report on our survey’s in-depth findings.
At Totum, we have worked with legal pricing functions for over 10 years, back when teams were still in their infancy or, indeed, did not yet exist. Since then, we have watched them grow, gain value and contribute massively to sustained growth in the legal sector. Pricing played a critical role most recently through the pandemic, supporting sustained law firm profitability through uncertainty. But as the world shifts once more and firms face new economic turbulence, the pressure is on for pricing teams to continue to make a difference.
With this in mind, we decided to follow up on our pricing report published in 2018, with a new, comprehensive survey of UK pricing teams to determine exactly where we are in terms of this important function’s evolution (contact details to receive the full PDF report can be found below).
Not only did we seek to find out the size and structure of today’s pricing teams, as well as share insights on salary and bonus structures, but we also wanted to know how teams’ remits have changed and what this means for the future. What became clear quickly is that pricing teams are becoming a vital strategic lynchpin, operating at the heart of their firms.
Part one of the report comprises our full ‘Survey findings’, including all data, graphs and analysis. Respondents included 58% of the top 50 UK law firms, plus international firms with pricing teams based in London, giving us insights into all aspects of their functions as they are operating in 2022. To this, we also added several interviews with today’s pricing leaders – the results of which can be found in part two of the report, Pricing Perspectives.
Highlights of survey findings
- Pricing teams are fast becoming more commercial. Over a third (34%) of respondents think that ‘Defining the firm firm’s value proposition to drive commercial decision making’ is the chief purpose of their pricing team, while 38% chose ‘Liaising with the leadership team on commercial objectives’ as a key priority for the next 12 to 18 months.
- The vast majority of respondents (82%) also think that ‘Commercial/strategic thinking’ will top the key skills/capabilities needed for the future of successful pricing teams.
- Half of the members of today’s pricing teams are in pricing-specific roles although 43% have a combined remit (for example, a combined LPM and Pricing Analyst role).
- The challenge to source the wide spectrum of skills needed for these fast-growing teams is reflected in the fact that 61% of pricing leaders have now recruited people to their pricing teams with no previous legal sector experience. Firms are willing to think more creatively and flexibly to source the best talent.
- Most pricing teams are now following a hybrid model of working – with over half of pricing teams working in the office for 40% of the time and 60% from home.
- Perhaps a surprising finding given the relative youth of the pricing function, is that the majority of teams (54%) have a structured career path for their pricing team with team members typically promoted every 18-24 months.
- Three quarters of respondents are anticipating their pricing team to grow in the next 12 months, with most (71%) planning growth of one or two people but nearly a third (29%) anticipating headcount growth of three to four or more in that timeframe.
- From a people-management perspective, the biggest challenge for 71% of respondent Pricing Directors / Heads of Pricing over the next 12 months is ‘Managing the heavy workload to prioritise the right projects’, followed by ‘Difficulty sourcing the right level of pricing skills’, chosen by 57% and the salary inflation, selected by 46%.
Managing a heavy workload while delivering commercial objectives will be a difficult balancing act in times to come but it is encouraging to see so many pricing leaders have a vision for their path ahead. This is one in which pricing teams deliver the commercial expertise to determine how all elements of the legal business can come together to drive future profitability.
If you would like to receive a PDF copy of the full report ‘Developments in the legal pricing function: Totum report 2022’, please contact [email protected]