Last month we launched a bunch of fixed pricing offers for NZ startups, focussed on capital raising transactions.
Since then we’ve fielded a few questions from within the tech industry about this move, and we’ve also had a few questions from lawyers. So we thought we’d share our answers in a blog.
to give certainty to startups
Startups want cost certainty. Particularly around early stage financing costs, as cost blowouts leave the company with a shorter post-financing runway. We wanted to meet this market need – at least for the legal costs of a capital raise.
to bring more transparency to the market
There’s not a lot of public information to help NZ startup founders understand how much they should set aside for legal costs in the early stages. We are hoping that publishing our pricing will help startups to budget, and to agree fair fees with their lawyers.
we built up the data
We have been interested in fixed pricing for a while, but it has taken us time to build up a big enough data set to allow us to undertake an accurate pricing exercise. The volume of early stage financing transactions that we are involved in has been growing year on year. This has allowed us to set our pricing on meaningful cost averages.
it’s the future of legal services
Fixed pricing for routine legal work is the future – not just for B2C services like conveyancing but also for routine B2B services. This will be driven by new technologies reducing the time that lawyers spend reviewing and drafting documents. We want to get ahead of this trend and learn how to deliver complex services to competitive fixed prices – before we are forced to do so in response to market disruption.
We think of our current fixed pricing as Phase 1. We started out with financing transactions because the transactions are repetitive and we do a lot of them. This meant we had accurate data to help us with pricing.
Once we’ve got some experience under our belt working with these prices, we want to expand our offers to include a bunch of commercial jobs like customer T&Cs, privacy policies and services agreements.
We heard this question at the LegalTechNZ event Will technology kill the billable hour?
No surprises for guessing it was a question from another lawyer!
Based on our data, on average at least, we will make a profit on these fixed price services. We expect there will be some swings and roundabouts over the course of a year while we validate these figures. But as we’ve learned from our friends in the tech industry, at some point you’ve just got to make the decision to ship it.
Of course what fixed pricing also does is incentivise us to get better at scoping and project managing our work, and to find ways to deliver services more efficiently. This includes investing in our back-office technologies to improve accuracy and reduce manual work.
Any other questions for us? We’re happy to answer them. Releasing these fixed pricing offers in New Zealand was an exciting step for us and we are always looking for comments and feedback. Let us know what you think by leaving us a message.
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