This week, Altman Weil released its fifth annual Law Firms in Transition Survey, which raises some serious issues about how law firms are responding to changes in the client marketplace. Survey respondents – a sizable bunch, 238 firms with 34% coming from the Am Law 200 – were in agreement that pricing competition is here to stay. And yet, less than 1/3 of those firms surveyed had made meaningful changes to their pricing practices following the economy’s tanking. So what are firms doing? Offering discounts. Focusing on “efficiency.” Argh. Indeed, when asked about the major challenges coming down the pike, firm leaders pointed to revenue, generating new business, firm growth and improving profitability. A mere 5.6% of firms raised the issue of delivering value to clients.

Opportunity is knocking. Instead of opening the door, methinks that some firms are battening the hatches, afraid of what’s on the other side. Look, discounts have a place in the pricing paradigm. And to be sure, cost cutting is good. However, trimming headcount and running a shop responsibly are operational imperatives, not growth strategies. The temporary swell in the profit margin may delight partners at year-end, but it won’t last long.

Value is the answer. Delivering value to clients must be the primary driver…of everything. If you start with value, you will build pricing structures that inure to everyone’s benefit. It won’t be a matter of percentage discounts off hourly rates for high volume work. If you start with value, your operations suit your strategy, rather than become your strategy. We are so mud-stuck to status quo, that we’ve jumbled important letters: REACTIVE and CREATIVE. All day long, I see firms crunch numbers for fee proposals to big clients. 2.5% here, but only if…and only for… The same firms still let attorneys order dinner and take car service home if the work day runs late…at the client’s expense. (That’s another blog post. Stay tuned.)

Opportunity is knocking. Open the door. Call your clients. Have a real conversation. Identify a challenge. Throw your best minds at the solution. And throw the reactive, legacy-laden ideas out the window. Lawyers are in the business of solving problems and creating opportunities. That work needs to start at home.