Good morning Ladies and Gentlemen, Mr. Gaillarde, thank you very much for this kind introduction. As you look at your law practices, are there any of you who have clients that you provide a cap on your fees? A fixed fee? How many demand an estimate? Why do clients demand an estimate? Picture this: A large old tree needs to be removed from your garden. Your gardener tells you not that the cost of the removal is $250 but instead that he charges by the hour. After all, he does not know how deep the roots of the tree are and how long it will take him to remove the entire tree, cut out all the roots and remove all of the debris. He also tells you that he will tell him how much you are to pay him after he is done removing the tree. I see a frown of worry and concern appear on your forehead. Imagine how your client feels, and your ticket usually is higher than $250. Now also imagine that this tree is 2 meters from your house, and a bad removal could greatly damage your house. You still don’t care how long it takes to remove the tree, but you want it done so that the tree doesn’t damage your house. Do you have a different concern if the tree is on your 10 ha estate in the middle of nowhere? So you might seek a skilled tree logger if the tree is near your house but the neighbourhood kids if the tree is in the middle of nowhere. The point is this: Many law firms focus on the product they sell – a patent application, a trademark license – and charge their client for the amount of time it takes to produce this product, irrespective of who their client is and irrespective of how important that particular service is to the client. My presentation deals with an alternative approach to the pricing of legal services based on how long it takes to do the job, the concept of “value pricing.” How much is your work worth to this particular client?

My presentation has three parts: First, I will explain some of the problems with pricing legal services on the basis of how long it takes to perform them, meaning the problems with the cost of production, or billing by the hour times the hourly rate, approach. Second, I will introduce the concept of value pricing, a concept that starts with an assessment of the client’s needs and not with the lawyers’ service product. Third, we will work through some questions that a fictional intellectual property firm may want to ask when considering whether to apply the principles of value pricing in their practice.

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