5/5/10

Reducing Price and Cost - The REAL Exercise


Tom O's post on "Proportionality" solidified an idea I've been contemplating. Tom's post is on reducing the cost of ED. He quotes from Craig Ball, who says the market may be paying 5 times too much for ED.
So here's where my idea comes in. What if you went to a law firm or ED company and said, "How can you deliver a service for X% less?" First off, the answer can not be "We Can't." This is an exercise to see how you can. Of course, there's a chance you might not be be able to, but the point is going through the exercise.
Further to my idea - what if a law firm asked the same question about one or more of their services. I think the exercise would be very enlightening. It goes to Bruce M's post on Quality and what is "good enough." The exercise will highlight 1) What doesn't need to be done, 2) What needs to be done "good enough," and 3) What still needs to be done the same way (e.g. excellent or superior). Another consequence of this effort will be the focusing of technology resources towards a business goal (versus addressing yet another tech need). Ultimately this approach should reduce the price to the client and the cost to the law firm. If done right, it will also improve the margin for the law firm.
This exercise - IMHO - will lead to the hard questions about law firms restructuring. Instead of talking about leverage, billables, alternative fees and compensation as if they are the ends, they will become the means to a successful business model.
It's way past time for law firms to engage in this exercise. What have we been waiting for?

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