Ask VeraSage: Pricing Litigation Support Services

I received the following questions regarding pricing litigation support services over the prior week.

Mr. Baker.As a thought-leader in value pricing I was hoping that you could take a few minutes to share your thoughts and comments with me about value pricing in my practice area.I am located in California and I offer litigation support services to family law attorneys. I am regularly hired by family law attorneys to perform valuations of closely-held and professional service businesses, analyze apportionment of community and separate property claims, perform forensic tracings and complex special accountings, and calculate child and spousal support. Ultimately, these assignments result in me providing expert witness testimony either by written declaration or by oral testimony.I am writing to ask your opinion about somebody (me) providing the aforementioned litigation support services in a value pricing format.This is something that I feel confident that I could successfully do from a project management standpoint on my side. However, I am wary of how it would be perceived by the family law attorneys that hire me and the Courts that consider my testimony.I am curious what your opinion is on whether or not this non-traditional approach to pricing would be either a turn on/off to family law attorneys who only know the billable hour, if as an expert witness I can charge my clients in this manner and avoid be perceived/labeled as a "hired gun," what potential pitfalls may lie ahead when I am on the stand being cross-examined about my billing practices, and finally how would I market a value pricing approach without offending the bill-by-the-hour attorneys that hire me.Thank you in advance for your time and comments.

My reply:

Thank you for your email.My take is you should be able to provide a Value Price for this type of work. If the attorneys ask for "number of hours" simply reply that you don't do timesheets, but rather agree upon a fair price up-front for value delivered. As long as the price is not "unreasonable" I can't see why the lawyers or the court would disallow it, especially as it was agreed to up-front. There is nothing more transparent than pricing up-front, despite how proponents of hourly billing twist themselves into pretzels denying.I would also think the family law attorneys would appreciate the certainty in price; I know the clients would! As for "hired gun," I think that risk exists just as much with hourly billing as it does for a fixed price.Perhaps if you offered an "Unconditional Money Back Guarantee" on your service, you'd be in a much stronger position to command a premium price. Note that this is not a guarantee of a specific outcome in the case, only with your service level. For an example of such guarantees from law firms, visit here and here.I also realize state law varies on this, but if a court has jurisdiction over your fees, it may require billable hours. But again, only if it's questioned; and as long as your fee is reasonable, you'd be able to submit an estimate of the time you spent extemporaneously.

Another question, this one more specific:

I have a practical question.Hypothetically let's assume that a client and I agree on a value price of $20,000 for a particular case.And let's further assume that I had a very thorough meeting at the very beginning of the case and we identified four specific items that needed analysis.Then as I am working through the analysis the case settles.

• Does the client still pay me the full amount even if I have not actually performed all of the analysis?
• Would I price each item separately and collect on a percentage of completion basis?
• Even if priced separately what if I did the work but never presented it?
• Do I renegotiate a final price for what was done and refund the difference?
• Isn't there an intangible value that I provide just by being in the case? Maybe the work that I did complete was so convincing that opposing counsel chose to settle on the other issues? Should I not be compensated for this intangible value and collect the full amount?

Value pricing is something that I really want to put into practice but I am trying to think through as many of the future headaches and initial questions I will face.Thank you in advance for your help.

Again, my reply:

You're going to get used to hearing this answer from pricers: "It depends."You've actually answered your own question through the thought process in your bullet points.As long as you have an agreement with the client, up-front and BEFORE you begin the work, you can have a clause read any way you want in the event of settlement before the work is done. Depending on the value of that settlement, that will help you set the price.This is where you have to think like an actuary. What are the odds of a settlement? What are the odds you'll have to complete all the work scoped? You bet there is substantial value just having you involved, which could lead to a quicker settlement. That value should be reflect in a settlement clause price.Make sense?The important lesson is to always comprehend your client's value drivers, and plan for the contingencies you estimate to have a reasonable chance of happening. Price them in advance, giving your client certainty. You'll be amazed at the results.

As always, we'd appreciate any feedback and experience of others who have priced these types of services.