The Sovereign Price

"To tax and to please, no more than to love and to be wise, is not given to men." — Edmund Burke, 1774

Last Friday, instead of publishing, I decided to soak in my country turning 250, the weekend belonged to charred burgers and fireworks and I let it. I did not quite manage to stop thinking about pricing, though, because the founding story we were all celebrating is, among other things, a governance dispute not entirely different to what I see playing out within multiple firms today.

Life, liberty and the pursuit of happiness is rarely also accompanied by "and the final word on colonial money" yet that was a large pressure point that tipped 13 colonies into a sovereign union. Parliament emerged from the 7 Years War victorious and heavily indebted. The colonies began to look like an income source. The colonial assemblies begged to differ. They had exercised tax autonomy for over a century, each tuning its own system to its own economy, and they treated consent as the one step that could not be skipped. These positions, though diametrically opposed, each served the priorities of the parties enacting them. Thus, a friction on governance emerged.

The Tea Act is my favorite piece of evidence for what the fight was actually about. The act made tea cheaper – something we usually forget after high school history class. Legal tea, after 1773, undercut the smuggled Dutch product dominating the market. It still went into the harbor, 342 chests of it, because the discount came bundled with a monopoly and a parliamentary duty fee absent colonial consent. A lower price, rejected on governance grounds.

I promise this is still a note about legal pricing.

If you have been at pricing round tables recently, chances are the governance question has arisen. Within firms, the branches sometimes converge, and sometimes oppose. There is a center: the revenue operations group, home to pricers and billers, hired to protect the economics of the whole firm. There are partners, who hold the client relationships, generate the revenue, and were governing their own matters long before anyone built a pricing team. In most firms I know, the business professionals are genuinely welcome in the building. The friction starts when a specific recommendation or number is on the table and both sides believe the final call is theirs. The partner knows the client, the market, and frankly usually has more experience watching matter lifecycles. The pricing team knows the analysis, has access to the data and the firm's own benchmarks. Each is usually right about the thing they know.

The 2026 numbers explain why this argument is worth having now. Thomson Reuters and Georgetown clocked last year as the strongest legal market since the financial crisis, with worked rates up a record 7.3% and average profits up 13%. BigHand's survey of more than 800 senior finance leaders tells the other half: 90% of firms watched client discounts and write-downs grow, nearly a third of them into the 11-20% range, while 96% plan to raise standard rates again. While the back office owns rates and quarterly reports, ultimately who drives the adjustments in the moment? Who is responsible for the number a client hears first, and how it's delivered? Most importantly, what forms the bridge between the two arms of government?

I wrote in May about who should own write-off approval, and split that question into approving a number versus reading one. That essay argued one clause. This one is about the constitution around it.

The finance instinct is uniformity: one rate architecture, one discount floor, one approval path, because structured policies are typically easier to scale. The colonial record suggests some caution. The thirteen colonies never taxed alike, and that discrepancy is a good metaphor for the variation in practice groups within a firm. How we price, pitch and manage work for one type of business is not always appropriate for another.

Litigation is event-driven and leverage-heavy, and the hourly model, whatever its sins, still tracks how the cost shows up rather reliably. Transactional work runs in cycles and tolerates premium and success-based structures well. Regulatory and tax work recurs and scopes cleanly, which makes it natural fixed-fee territory. Funds clients want portfolio deals that would horrify a trial lawyer – and often drive our own revenue teams to the medicine cabinet seeking antacids. Treating these differences as partner stubbornness or worse, a mismanagement of the practice group, misses that they are different business models, with different demand curves, matter lengths, and margins. A single pricing policy written at the center will fit all of them the way the Stamp Act fit: on paper.

I take the sovereignty claim seriously. It's one of the reasons I think taking the time to learn where practice leaders want to drive their business is such a golden investment. I also think the CFO has a case, and it is worth being precise about where.

Certain decisions belong to the finance group because the person making them locally may not feel their cost. The books are the plainest example. A firm needs one definition of margin and one realization methodology; I have written before about firms that count in hours, and whatever the unit, the functional reporting comes out of one set of books. Precedent is the second. A discount does not stay with the client who received it. Clients benchmark, and the concession that closes a renewal in March resurfaces in October as market data quoted by a different GC. The partner sees the relationship; Finance sees the pattern and how it lands on year end reporting.

Cash is the third. BigHand's respondents report receivables rising at 90% of firms, and half now name aged WIP as their biggest cash-flow pressure, up from a third last year. Slow cash does find partners eventually, through the compensation line, but it arrives a year late and split across the whole partnership, so the partner who let a bill age feels only a sliver of a cost everyone absorbs with her. Payroll is due either way. Read the compensation data as the finance team's answer: 46% of firms have tied write-down discipline to partner pay, and another 41% plan to. That is an attempt to route the cost of a decision back to the person who made it, at something closer to the speed it was made.

The partner's claim covers everything the data layer cannot see. Whether a concession is an investment in a client heading into a heavy year, or the start of a relationship going soft. What the GC's budget calendar looks like, which board fight is driving the fee pressure, whether the overrun was a scope change or a scope failure. That knowledge lives in conversations, and most of it stays there. Centralize those calls and you are governing Boston from London on a six-week sail: every decision defensible, none of them right.

Parliament's answer to the consent problem was a theory called virtual representation: the colonies were represented in spirit by members they had never elected and would never meet. Boston was not moved. What the colonists asked for, in the early years at least, was modest next to what refusing it cost. A seat where the rules were made.

The firm-sized version of that seat is unglamorous. Pricing professionals embedded in practice groups, resident rather than visiting from the capital, close enough to the work to know what a normal matter looks like in that group, in-tune with the native narrative to each client. Practice-group voices in the room when the annual rate architecture is set, so the uniform parts are uniform by agreement. While I love processes that scale, I am inherently wary of assigning "must do" lists, or blanket matrixes that overwrite nuance. In my perfect world, these decisions are made in equal consideration of each side – a business partnership rather than a necessary alliance.

Burke told the Commons in 1774 that to tax and to please is not given to men, and no approval matrix will make a discount conversation pleasant either. The empire declined to spend anything on consent, on the theory that authority came free, and collected a war instead of a remittance. Firms hold an advantage Parliament lacked: the finance and the practice groups share a P&L. Encouraging the bridge is the cheapest investment most teams can make.