Legal teams that take spend management seriously, often struggle with determining a fair price for legal services. The traditional model based on billable hours, usually leaves the legal team and the law firm uncertain about the actual value of the services rendered.

Emphasizing value over hours

To address the limitations of hourly billing, a growing number of in-house teams are adopting a new process that emphasizes the true value of legal services. By segmenting legal matters into milestones and deliverables, and adding a reversed auction process, they are able to select firms based on insight into the value each firm can bring to the table, rather than on the price of billable hours.

Determining the actual market price of legal services

Through this competitive process, a real market price for legal services can be made visible. In-house teams can assess the firms’ proposals for each matter based on the outcomes and the total price they offer, rather than solely relying on hourly rates. This empowers them to choose the best law firm for the matter, ensuring a more fair, objective, and effective engagement of outside counsel.

Benefitting all stakeholders

The concept of the real market price is beginning to transform the legal services landscape. By embracing transparency and competition and emphasizing the value of legal services, in-house teams can make better, informed decisions about their external spending. And it helps firms to capitalise on the value they bring clients. This approach benefits all stakeholders involved and paves the way for a fairer and more effective legal marketplace.

Looking for more information on this topic? Contact Maarten Hagen.