Cost predictability in Legal Projects - An over ambitious claim or an achievable factor

With changing timelines and erratic data volumes, law firms and corporate legal departments are always challenged when trying to ascertain the overall cost for a legal project. Even when they outsource to an alternate legal services provider (ALSP), one major concern they show is that the final bill is always much higher than the initial pricing estimate they were provided to complete the work citing different reasons. ALSPs who serve these clients have a crucial responsibility to provide cost predictability that not only helps them function but also aligns with the business and financial goals of their clients.

The major reason for this discrepancy could be that the parameters or assumptions that are taken into consideration for the early estimate is either too overoptimistic or unreal which leads to a substantial variation at the later stage. 

To avoid the inaccuracy in predicting the cost, we need to be proactive in defining the scope of the project, complexity of the subject matter involved, the skills and experience required, the time involved, when technology is to be utilized and where, complete list of exclusions from the scope, possibility and extent of customization, and any additional step that may be required to be added or ignored for end to end workflow during the project cycle. 

Galileo once said, “Measure what is measurable and make measurable what is not so.”

With experience and with historical data to pick up the dynamics of these variable to predict an accurate estimate is a value that organizations must bring to the table to build trust with clients. With the increasing integration of technology, the legal landscape has evolved in the recent times and AI plays a key role in providing the transparent, well-managed, and predictable costs. 

To meet the competition in the market, there could be a tendency to oversimplify the scope to make the pricing look attractive. Also, some of the clients might not be interested in spending some billable hours at this stage of the project and might suggest the ALSP’s to devise the strategy based on their past experience. However, it is at these instances, the ALSP’s will have to practice utmost professional ethics in defining the requirements and should convince the clients to actively participate in the early assessment discussions to explain their needs upfront to avoid surprises. The key to fair pricing and successful relationships is to clarify the scope, understand the proposed solutions, and test them in various client scenarios.

At Proxiio, we understand the importance of cost prediction and therefore we have a tailor-made process that addresses all the situations to promise guaranteed predictable pricing. Our trained team uses data analytics and AI to leverage both historical and current data to gain insights into the factors that may affect the costs and identifies the pattern and the anomalies and provides a detailed recommendation chart for cost optimization to our clients. By building a process which is robust yet flexible enough to be tailored to each client scenario helps provide a realistic, transparent, and accurate pricing.