In this week's Law Firm Disrupted, we ask how urgency should play into the price of Big Law counsel, and if a new venture can bring gig economy-style pricing to high-end legal services.

I'm Roy Strom, the author of this weekly briefing on the changing Big Law market, and you can reach me here or sign up for this newsletter here.

Here's a question: Do you know how much it costs for a cab ride to the airport? I don't. Let's say you don't, either. O.K.

Here's another question: How would you figure out the price of a ride to the airport? You'd probably pull up Uber or Lyft on your smartphone. That's at least what I would do. The market price for cab rides has been set. Anywhere you want to go, you can find a price in a minute or two.

Here's the final question: What would it take for that type of market to come to Big Law? It's not a complete hypothetical. People are trying to find out!

Last week we looked at an RFP platform aiming to bring “true market pricing” to the delivery of legal services. This week we're going to look at a new venture that goes a few steps further toward that goal by calculating things you probably don't inherently think about when pricing legal matters. Things like prestige, urgency and the adverse cost to a client if something doesn't get done, etc.

The new venture is called “Virtual Pricing Director,” and it is pretty close to what it sounds like: Software designed to do what pricing directors do. That is to probe the elements of a given matter and provide a price and budget for it.

The probing is done through an interview platform powered by Neota Logic Inc. that is populated with different types of work streams: An M&A deal for a purchasing company or a white-collar investigation. The program goes through “a huge sequence” of tasks and roles to scope the project.

But the program also takes into account things like the urgency of a deal. It can help answer questions like: How much should it cost for a client to demand a law firm partner clear their desk to focus on this matter for two straight weeks? How much should the law firm be able to charge if it knows that the consequence of not getting the work done is a $20 million taxable event?

The program, currently in beta testing, is expected to be released by February 2019. By that time it will have built up more data on historical costs and will have better insights on the “soft” factors of pricing, said Richard Burcher, chairman of Virtual Pricing Director and a managing director of London-based Validatum.

“Trying to devise software that takes those kind of squidgy variables and brings structure and discipline to them is a huge challenge, but it's what we see as the holy grail of pricing,” Burcher said. “It is the ultimate in surge pricing. A well-understood concept when it comes to taxis. But it's not at all well understood in the legal or professional services.”

Burcher said he's received about 150 inquiries from law firms looking to be part of the beta project since the announcement of the tool on Oct. 8. The beta test also includes some well-known client-side pricing professionals, including Justin Ergler, head of alternative fee intelligence and analytics at GlaxosmithKline plc, and Stéphanie Hamon, head of external legal management at Barclays plc.

To discuss the idea, I called up Daryl Shetterly, who heads Orrick Analytics and helps manage the global operations center at Orrick, Herrington & Sutcliffe in Wheeling, West Virginia. He has been spot-pricing legal work—typically electronic discovery matters and due diligence projects—since 2012.

Shetterly's team tracks legal work at a granular level that I've rarely seen. They track the number of mouse clicks it takes for project attorneys to go through a single document in e-discovery. That ever-growing pile of data lets Shetterly price projects in less than an hour, he said.

But the trouble with Uber-style pricing for legal is that it requires a lot of data. And it requires human insight about what happens when, for instance, a project is under time pressure. That may be difficult to build into a model, Shetterly said.

“Urgency doesn't just cause a client a fine,” he said. “It causes you to be less efficient. You're using timekeepers who are more expensive. Or you can't use technology because you can't deploy in two days. You end up being rushed, and you end up having re-work. The whole project is just less efficient.”

Burcher said part of the project's goal is to build up detailed data on all these projects across a wide swathe of firms. So he may be able to scale his data mountain more quickly than a single law firm can. But there is no magic in data capturing, Shetterly said. It is hard work.

Shetterly said there are some startups and legal time management companies that are working on better tools to track the input of data. But it may require employees acquiescing to a sort of Big Brother environment.

Some of the tools will integrate a person's phone, email and calendar to capture data on how long given tasks took them. Tracking a cell phone, for instance, can tell the system how long a phone call was or a trip to Starbucks.

“That is the level of invasiveness or metrics tracking you will need to have to do the kind of instant pricing you're talking about,” Shetterly said. “I have told people this is a great idea, but I'm already hearing rebuttals from partners saying, 'Not on me.'”

That kind of world could bring some trouble. Like, for example, what would my employer think if they knew I interviewed Burcher at a restaurant? Would they know I had a plumber in my home office tearing out a wall? I hope they believe me!

Roy's Reading Corner

On Outside Investment in Law Firms: Reed Smith is planning an ABS conversion for its U.K. and Middle East practice, my colleague Rose Walker reports. Tamara Box, the head of Reed Smith's U.K. and Middle East practice, said the global firm is aiming to do the deal by the end of the first quarter next year.

“We want to use that structure as an agility tool to ensure we are nimble enough to service our clients in the future,” Box said. “We operate as a global profit pool, so we have had to manage regulatory issues within different jurisdictions to clearly preserve that.”

On Automated Data Capturing: I have written before about Clocktimizer, a product that uses natural language searching to better synthesize what lawyers mean when they write time entries. Artificial Lawyer reported this week on another effort along those lines. SimpleLegal, an e-billing company, is rolling out a tool to automatically correct invoices to fall in line with billing guidelines. It seems a bit less intrusive than tracking my cell phone.

Thank you for reading The Law Firm Disrupted. You can sign up here and check out other new briefings from my Law.com colleagues. Please also share your thoughts with me on how the law firm market is changing: [email protected].