"Always deliver more than expected." — Larry Page

A friend told me a story recently about a pricing proposal that went nowhere.

The proposal, as she described it, had all the markings of something that should have worked: a thoughtful menu of alternative fee options for a sophisticated private equity client, built to make the economics of the work more predictable without pretending the work itself was simple. Despite the care in creation, the potential client had rejected it. Around the same time, I had been working through a similar question from a different angle. Different client, different facts, same strange tension: why does one fee structure feel commercially elegant in the abstract and still fail to survive contact with the client expected to accept it?

That was the part I kept turning over.

Why hadn't they taken it?

Later that week, I had lunch with a family friend who had spent years as a managing director and European Board member at a large asset management firm, which meant he had sat across from more outside counsel than he could reasonably be expected to count and had developed, over time, a fairly well-earned set of opinions about the experience. As the conversation drifted toward work, I asked what might make an otherwise strong proposal feel weak to a private equity buyer, and took mental notes (scribbling on a napkin, I decided, would be gauche) of how his thoughts tied into a trend I had begun to feel.

Private equity clients are not generally allergic to complexity. These are people who live in risk, leverage, incentives, forecasts, and downside protection; they are comfortable with structure when the structure serves the thesis. So when a PE client says no to a pricing proposal that appears to offer predictability, alignment, or efficiency, the interesting question may not be whether the proposal was good.

It may be whether it was legible.

Because in pricing, as in investing, structure is only persuasive when the buyer believes the story underneath it.

Private equity firms and their portfolio companies often bring a more financially disciplined, cost-conscious lens to outside counsel spend than a traditional corporate client might. That is consistent with how PE operates generally. Value creation work in private equity often focuses on cost optimization, working capital, procurement discipline, operational efficiency, and tighter financial controls across portfolio companies. Legal spend is not exempt from that logic.

The legal department piece follows naturally. Corporate legal departments have become increasingly sophisticated in their use of benchmarking, outside counsel management, spend analytics, legal operations, and budget discipline. In the PE-backed environment, those disciplines can arrive with particular force because the business is already organized around measuring cost, performance, and return.

The GC at a well-run portfolio company is not simply managing legal risk. They are operating inside a company whose owners have strong views on spend efficiency, rate benchmarking, and matter economics, informed by people whose entire job is to have those views.

What that means for outside counsel is that the pitch is no longer primarily about credentials and relationships. Those things matter, and they are table stakes. The question PE firms are really asking when they send an RFP is: can these people tell me what a matter is going to cost before it is over, and will they be right?

Most firms fail this test not because they cannot do the legal work, but because they cannot manage the economics of it in a way that lets the client plan. Surprise invoices, mid-matter budget revisions that arrive after the scope has already expanded, accrual reports that are consistently optimistic and then wrong: for a CFO managing cash flow across a portfolio of companies, these are genuine planning problems. They erode the relationship faster than a difficult legal outcome would.

Knowing this begs the question - in an environment where everyone is expecting a value-based price, how do you appeal to some of the most discerning clients on the market? It may not surprise you, reader, to learn I have thoughts on this.

Budget accuracy over budget size. The number matters, but not as much as whether the number turns out to be true. A firm that comes in higher than average and hits its budget has a better relationship with that client than the firm that wins on price and consistently runs over. GCs have learned this and are increasingly evaluating firms on historical budget performance, not just pitch-day pricing.

Early warning, not late apology. The firms that earn long-term PE relationships surface budget risk when it is still manageable, not at the final invoice. This requires someone proactively tracking actuals against projections in real time and motivated to have the conversation before it becomes a crisis. That person is not, in most cases, the partner alone.

The ability to explain the work in business terms. Legal excellence is assumed. The question is whether outside counsel can connect the legal work to the business outcome the client is managing for. Not "we completed the regulatory filing," but "here is what we did, here is why it protected this piece of the transaction, and here is how we thought about the tradeoff." PE firms run on this kind of reasoning, and legal operations teams have a true value-add in shaping it.

The pitch deck is the beginning, not the end, of the pricing conversation. The real evaluation of whether a firm can manage PE client economics happens over the first two or three matters: whether the budget held, whether deviations were addressed early, whether the invoice was legible and defensible. Pricing teams that want to be part of this conversation need to be positioned upstream, in the pre-pitch matter planning, in the budget structure, in the ongoing actuals review.

The closing remark from my lunch conversation was: "The firms that have strong enough metrics to price fairly and accurately are the ones we do business with. If we lose confidence in your abilities to manage your own budget, we lose confidence in your other abilities as well."