As law firms face rising costs, tighter margins, and growing client expectations, pricing has become one of the most defining strategic decisions for SME practices.
In the opening episode of series four of the Build Better Habits webinars, Amy Bruce, marketing director at Osprey Approach, was joined by Simon McCrum – solicitor, former managing partner, and author of The Perfect Legal Business trilogy – and Scott Simmons, business development consultant at the Legal Balance Institute to tackle one of the profession’s most enduring debates: should firms continue to bill by the hour, or embrace new value-based approaches?
From profitability and client loyalty to culture and cash flow, the panel explores why the way firms price their services is no longer just an operational choice — it’s a competitive differentiator and a catalyst for modernising legal practice.
The panel tackled one of the most contested debates in the profession: the billable hour versus value-based pricing. They explored how pricing models influence profitability, client satisfaction, and internal culture, and shared advice for firms seeking to modernise their approach.
This episode covers:
- Why pricing is a critical issue for law firms today
- What clients truly value and how pricing influences their experience
- The pros and cons of billable hour, fixed fees, and value-based pricing
- How to articulate value and overcome client pushback
- Best practices for improving cash flow and profitability
- The role of tech and AI in shaping future pricing strategies
Why pricing is now a strategic priority for SME law firms
Law firms are under increasing pressure as costs rise and margins fall. The Law Society’s Financial Benchmarking Report shows chargeable hours sitting at just 70% of target despite costs per fee earner increasing by more than 6%.
Simon shared:
“Law has never been better, but the business of law has probably never been worse. Costs are going up, profits are going down. Something has to change – and pricing is one area where a real difference can be made.”
Scott added that pricing affects more than the bottom line:
“It’s the difference between a profitable business and burnout. It’s the difference between valuing what you do and undervaluing what you do.”
What clients value — and what they don’t
The panel agreed that clients value outcomes, not time. As Scott put it: “Clients don’t value a lawyer’s time. They value results, expertise, and service. You can have a huge impact in five minutes and no impact in five hours.”
This shift challenges the traditional billable hour model, which ties price to effort rather than results. Still, Simon stressed the need for flexibility, especially in litigation:
“For complex disputes, uncertainty makes it hard to apply fixed pricing without inflating costs. Clients may end up paying for work that never happens. We need a pragmatic approach — fixed prices where possible, hourly rates where necessary.”
Comparing the main pricing models
The panel highlighted the strengths and limitations of the most common approaches:
- Billable hour: Still the default for unpredictable work but can create pressure and distort priorities.
- Fixed fees: Offers transparency and certainty but requires careful scoping to stay profitable.
- Value-based pricing: Focuses on outcomes and perceived client value, removing the need for time recording but demanding confidence and strong communication.
Scott advocated for value-based approaches:
“Hourly rates are made up. Value pricing gives clients clarity upfront and frees lawyers from the tyranny of time recording.”
What firms are doing today
A live poll of webinar attendees revealed how firms currently approach pricing: 50% use a hybrid model; 40% still rely primarily on hourly billing; and the remainder use fixed fees.
Half of attendees said they were considering changing their pricing model but faced challenges including articulating value, handling client pushback, time tracking, and administrative demands.
Key habits for profitable pricing
The panel identified six habits that can help firms improve profitability and service quality:
- Articulate value confidently – Shift the focus from price to outcomes.
- Ask for money upfront – Strengthens cash flow and reduces lock-up.
- Use marketing and BD support – Build brand trust and deepen client relationships.
- Prioritise existing clients – It’s six/seven times cheaper to win work from them than new clients.
- Deliver a ‘Bentley service’ – Move matters forward and communicate proactively.
- Raise the bar – Do less work, better, for fewer clients at higher margins.
Tech and AI: the next pricing disruptor
Both experts agreed that AI will reshape how firms price their work. Simon predicted:
“AI will reduce time spent on tasks, which should reduce client costs and improve efficiency. Firms that embrace this will gain a competitive edge.”
Scott warned that firms still dependent on the billable hour face risk:
“If AI halves the time tasks take, revenue could drop. Value pricing protects firms because clients pay for outcomes, not effort.”
Smarter pricing for long-term competitiveness
The discussion made clear that no single pricing model suits all matters. Instead, firms should align their approach with client expectations, risk levels, and business goals. The panel emphasised that the firms that thrive will be those confident in the value they provide and clear in how they communicate it.
Watch the debate in full
For more exclusive advice and to watch the full heated debate unfold — including where our experts disagreed on litigation pricing and the future of AI – watch the full episode on-demand now
This session forms part of series four of Osprey Approach’s successful Build Better Habits webinar series, which focuses on four habits every modern law firm should adopt: thinking digital-first, being client-focused, prioritising continuous improvement, and empowering employees. This episode examined the second habit through the lens of pricing strategy.
