I am about to cut a law firm loose. Not because of the quality of their work (which was good) or because of their price (which was toppy, but within the bounds).

I'm cutting them loose because of their service, their misunderstanding of "value", and what the business I work for needs.

In 2017, there is absolutely no excuse for a law firm exceeding its quoted budget. There is no excuse for failing to tell the client you are going to do this. And there is absolutely no excuse for making a token write-off, expecting the client to pay the excess, and calling this "generous".

These are still common practices driven largely by law firms' internal metrics (ie. "recovery") rather than because the excess represents any additional value provided to the client. 

"Recovery" can be measured in a number of ways but always measures billable hours incurred versus billable hours charged and paid. The excess therefore represents the fact that the lawyers spent more time on the file than they expected - whether this was time well-spent is not part of the equation.

The "recovery" metric incentivises firms not to take the perceived risk of fixed pricing (it might hurt my recovery) and pushes them into poor client-service decisions. It also (although this is a different post) means they miss the opportunity to charge a value-based premium for work they excel at.

These points are well-understood and talked-to-death in law firms and legal media but rarely implemented, yet we know it can be done (I was very pleased to have been involved in Pinsent Masons' exclusive, fixed-price deal with E.ON, and use almost exclusively fixed pricing in my own consultancy). 

It's disappointing that basic customer service should be a key differentiator for law firms in the twenty-first century, but it is. The law firms that really grasp this and start to address the operational business needs of their clients (cost certainty, reliability, communication) beyond the basic entry requirement of commercial legal proficiency will have a bright future.

The rest will only learn when clients stop using them.