(Photo: Peshkova/Shutterstock.com) (Photo: Peshkova/Shutterstock.com)

The Portfolio Pricing Masterclass was one of the first panels on Wednesday agenda at the Corporate Legal Operations Consortium 2019 Institute in Las Vegas, and its early morning lesson was clear: Law firms and their clients need to hold onto matter-related data.

First things first: Portfolio pricing is any kind of fee arrangement covering multiple matters, either under a retainer or a deal that assigns one fee per matter for every single matter that comes through the portfolio.

So why bother? If you’re a corporate legal department dealing with a high volume of matters, chances are that you’d rather receive four bills over the course of the year than 1,200.

“It frees up our attorneys; it frees up our staff to do more strategic things,” said Alan Bryan.

For some clients, the portfolio pricing approach also can lend some much needed clarity regarding the annual budget. Negotiating the bulk of your matters under a single portfolio provides more predictability around the chances of hitting a targeted number at the end of the year than negotiating projects one by one.

If you don’t anticipate having a bulk of matters, then it’s possible that portfolio pricing isn’t the right option.

“There’s a point where you need a certain amount of volume to make this work on both sides,” Bryan said.

The demand for volume doesn’t just apply to the work involved. In order for both parties to ensure that a portfolio pricing deal is the right fit, they should ideally be sharing data that shows some consistency over the type of matters a company deals with year over year and how those costs might shape up on the law firm side.

Matthew Beekhuizen, chief pricing officer at Greenberg Traurig, said his firm typically tries to look at three years of history for a particular client. Some companies don’t maintain enough data themselves to paint a very robust picture, but assuming they have been involved with the firm for some time, that history can help fill in the gaps.

“The good part about hourly billing is we do have a lot of data that we can work with,” said Beekhuizen.

Firms can build upon this information to prepare for the work at hand, which in some cases includes going out and hiring new staff members to make sure that they can accommodate the demands of the matters they’ll be working on over the course of the portfolio agreement.

Aside from the prep work involved, having enough data to work from can also make the actual negotiation of the portfolio pricing agreement less arduous. For example, having a tangible matter history to draw from can help both sides feel more comfortable that there won’t be a slew of sudden developments that someone coming up short.

“Sometimes when you don’t have the data and you’re not sharing it, you end up having more caveats and conditions in the agreement,” Beekhuizen said.