The Going Rate

"When you come to a fork in the road, take it." — Yogi Berra

Over the last two months I have had a version of the same conversation more times than I can count. Pricing managers, directors, people who built these teams out of nothing and people who inherited them fully formed. I ask what the job is. Everyone answers differently.

One describes a week of rate cards and exception requests. Another spends most days in pitch meetings, sitting closer to the client than to the finance function. A third builds profitability models that circulate to four people and get opened by one. Several describe the work as strategy without pausing. Others describe it as a service function, in the way IT is a service function. Somewhere in that stretch I read a posting for a senior analyst which stated plainly that the role would not touch strategy. Analysis only, with anything strategic escalated upward.

That one stayed with me. Not because it is unreasonable, it is an honest description of a real job that someone will do well, but because I struggle to place its equivalent anywhere else in the building. Ask thirty finance directors what financial reporting is and you will likely get one answer, relatively quickly. Ask thirty pricing people what pricing is and you get a variety of titles, descriptions and prerogatives.

Some of this is youth. Almost every large firm now has someone whose title includes pricing, but the function was built in the wreckage of 2009, when clients started pushing back and somebody had to answer them. Most firms hired the answer before they had defined the question.

Aaron Boersma and Esther Bowers named the consequence in a piece for the Thomson Reuters Institute a few years ago, arguing that firms treat pricing as a utility rather than a strategy. Their description of the utility version is uncomfortably recognizable: rate setting, flat fee pricing, and efficiency, "with one mission in mind: boosting profitability." The strategic version they propose puts pricing inside decisions about growth, client relationships, lateral hires, and how a firm positions itself in its market. A firm can staff either version and call it the same job, which is roughly what has happened.

So thirty answers to one question are not a sign of confusion. They are thirty firms having settled the same unresolved argument differently, one office at a time, about whether this work is a function or a point of view.

There are several reasons the argument stays unresolved, and much of it has to do with what a rate is understood to mean inside a law firm.

Years ago I sat through a rate meeting where the partners spent most of an hour arguing about whether we were "a discount firm." The phrase was doing enormous work that afternoon. We were preparing a reverse auction pitch, scheduled to go live at a time of year when we were also pushing our rack rates up, just like our competitors. The argument hinged on how much discounting we could reasonably do to newly inflated rates. One partner memorably questioned why new rates were even necessary if we were willing to discount them anyway. Nobody had a good answer. I left with the sense that we had debated the firm's self-image under cover of a discount schedule.

That meeting makes more sense to me now. Marketing researchers have a name for what was happening in the room: the price-quality heuristic. Buyers infer quality from price, and they lean on that inference hardest when they cannot evaluate the quality themselves. Gneezy, Gneezy and Lauga modeled it formally in 2014, though their subjects were ordinary consumers buying ordinary goods rather than a general counsel armed with e-billing data and outside counsel guidelines. I would not import the finding wholesale. What aligns is the condition underneath it. The heuristic feeds on a buyer's inability to judge quality directly, and legal work supplies that uncertainty generously: a client can assess an outcome eventually, but has very little purchase on a first draft.

Firms know this without needing the citation, which is why a rate ends up carrying more freight than a price should have to carry. Coming in lowest on a panel gets heard as a confession about the work rather than a statement about the cost of it. I have watched teams hold a rate they had no operational reason to hold, because lowering it would have meant conceding something about who they were.

The instinct carries a cost that the research also documents. Kurz and colleagues found in 2023 that a higher price reliably lifts what a buyer expects while doing nothing for how satisfied they end up. Premium pricing buys a higher bar and no additional credit for clearing it. Marisol Torres made the 2026 version of that argument in January, writing that pricing power is no longer guaranteed by reputation or past performance, and that firms which cannot document their value get pushed into competing on price regardless.

Which brings me back to a number I mentioned here two weeks ago and have not stopped thinking about since. Writing about merging firms, I cited the Thomson Reuters Law Firm Rates Report 2026 in passing, as the soothing half of a question about whose rates survive a harmonization. It deserves more than a passing mention.

The report, published this month with the True Value Partnering Institute, sorts firms into three configurations according to how they manage the distance between the rate on paper and the money in the bank. Low-compression firms post higher standard rates and discount aggressively upfront; they grew demand 1.9% against a 1.0% market average, and fees worked 9.0% against 8.4%. High-compression firms hold realization discipline from intake through collection; they grew demand 1.3% and landed mid-pack on fees. The third group, which the report calls the afterburner configuration, accepts a steep drop between standard and collected rates at both stages, trading pricing efficiency for relationship velocity.

Three genuinely different machines, with different politics inside them and different client conversations coming out of them.

Then the part I keep rereading. On average, all three configurations collect between $553 and $580 per hour. The strategy-level averages, measured at the bank, land within twenty-seven dollars of one another. Roughly the cost of lunch in Midtown, if you're being conservative.

It is worth saying precisely what converged, because the three groups did not grow at the same rate and revenue is a product of price and volume. What lands in that narrow band is the price of an hour, measured at collection rather than at margin, which leverage and cost base will pull apart again downstream. The partner who asked why we needed new rates if we intended to discount them was asking a version of this report's question a few years early, and none of us could answer him then either.

So where does strategy sit in this conversation?

Not in the level of the rate. The market clears where it clears, and all three roads arrive within lunch money of one another. If strategy means choosing the price, the report suggests the choice was mostly made for us. It is also possible the causation runs the other way, with firms adopting the configuration that suits the market position they already hold, which would make the convergence a description of how the market sorts us rather than evidence that strategy is inert.

I do not read that as proof the work is decorative. I read it as a claim about where the work actually lives. The configurations produce nearly identical per-hour outcomes while doing entirely different things to the institution running them, and none of that appears on a rate card.

Start with where each machine puts the pain. A low-compression firm takes it early, in procurement, and the pricing team absorbs it. A high-compression firm takes it as friction, in every conversation where a partner wants flexibility the policy will not give, and the billing partner absorbs it. An afterburner firm takes it late, in write-downs and collections, and the CFO absorbs it in April. The destination is the same in each case, but the person doing the wincing changes, and firms are rarely deliberate about choosing who that is.

Then consider what each machine teaches. A firm that discounts upfront accumulates a detailed record of what its clients ask for. A firm that writes down after the fact accumulates a record of what its own partners will tolerate. Run either for a decade and the institution comes out with a different set of instincts, trained by whichever record it happened to be keeping.

Neither of those is an analytical question, and neither escalates cleanly to anyone. They are questions about which discomfort a firm can actually govern, and what it wants to be learning while the market sets its price.

I have stopped being surprised that nobody agrees on what pricing is. The disagreement looks structural to me now. The profession was hired to defend a number the market had already largely decided, then asked whether that constituted strategy, and the honest answer is that setting the price was never the strategic part. The gap is the strategic part: who absorbs it, who is allowed to give it away, and what the firm learns from the record it keeps of it.

So the next time someone asks me what the job is, I think I will say that the rate gets decided at the fork and the work begins after it, in the gap the market leaves us to govern.