Originally recorded on the Pricing Matters Podcast by Digitory Legal. Digitory Legal is now BigHand Impact Analytics. Learn more here.

Aurelia Spivey, Marketing Consultant with BigHand, chats with Mike Milazzo, formally the Director of Strategic Pricing with Kelley Drye. Mike is currently the Director of Pricing and Practice Analytics at Milbank, LLP and is focused on delivering solutions to enhance overall client value and drive bottom-line performance for the firm.

With over 12 years of pricing experience, Mike works with the firm’s Executive Director, Chief Financial Officer, and senior firm management on strategic and operational initiatives related to pricing, project management, and process improvement. He consults with partners to develop appropriate pricing strategies and collaborates with clients and legal operations professionals to drive the development of creative pricing solutions to meet client needs and business objectives. Mike serves on the firm’s Client Value and Innovation Committee, is an accredited legal pricing professional (ALPP), and an active member of the True Value Partnering Institute organization – Law Firm Pricing Cohort.

Top three takeaways from this episode

• Start with Empathy: Lawyers should be having human conversations with their clients. To develop genuinely symbiotic relationships means hurting when their clients are hurting.

• Understanding Client Needs: Sometimes you must sift through the weeds to understand your client's true needs. 

• Delivering Value. Clients are going to find value in firms that can help them anticipate what’s going to happen next.

The more data that you can leverage, the stronger your argument can be.

Podcast Transcript:

Mike Milazzo 
I think our clients are looking for a few things from us during this time, the most prevalent being empathy and understanding. They want to know that we understand how their business works, and that we understand how this pandemic is affecting their business, and that we're going to be by their side to help them get through this.

Aurelia Spivey 
Welcome to Pricing Matters, a podcast by Digitory Legal. Digitory is a data analytics and cost management platform and service, bringing data-driven pricing and cost prediction to law. My name is Aurelia Spivey, and I will be your host as we speak to leaders who are making an impact in legal pricing, discuss market trends, and find out from them why pricing matters. My guest today is Mike Milazzo. He is Kelley Drye's Director of Strategic Pricing. Welcome, Mike. 

Mike Milazzo 
Hi, how are you? 

Aurelia Spivey 
I'm good, thank you. I think it's always important to start with that question right now. I'm doing fine. I'm very lucky, I'm here in California, me and my family are safe and sound, and just trying like everyone to keep going. Obviously missing the human contact, but it's great to be able to speak to you today.

Mike Milazzo 
Thanks for having me. 

Aurelia Spivey 
How are you?

Mike Milazzo 
We're doing okay. My wife and I are wrapping up week six of remote working. So by now, we have a pretty good routine set. The most difficult part probably is when we both have conference calls at the same time and finding our own personal space, but other than that we're doing pretty okay. She's actually in her seventh month of pregnancy. Oh, congratulations! Thank you, thank you. I'm happy, she doesn't have to commute anymore, and I'm happy that I don't have to commute anymore. It's nice because we've picked up probably about an hour and a half in our days, that we can now go for nice, long walks around the neighborhood and eat dinner at a normal hour. We're making the best of, what everyone's struggling through.

Aurelia Spivey 
Wow, that's good to hear and I'm glad you're all doing well. What I always find is that it's very helpful for our listeners to hear about your background. So I always say, tell us more about your pricing journey.

Mike Milazzo 
Sure, I started in pricing in 2008 at a technology company. We were doing business-to-business sales, and leasing copy machines, printers, scanners, and fax machines back then. So pricing was very exact. We knew what our costs were down to a tee, we had even priced out the price of one staple for a copy machine, and that was .00056 cents for that one staple. So analysis was very clear, and profitability was very direct, but there really was no pricing strategy, so to speak. At the company, I was at we had the mandate to gain market share. So that is terror for a finance person because the salespeople would do anything they had to do to win business no matter what the profitability analysis setter was, and that was champion. So we would do analysis, and it would kind of go by the wayside. So that was a little bit of a struggle. I received the opportunity to work in legal in 2011 and I was pretty intrigued from start. To go from a world where you were pricing physical products and everything was so exact, to the legal world where you're pricing a service, someone's mental capacity, their legal acumen, and data is unclear to put it best. That seemed like a great challenge to me and nine years later, it is still interesting every day.

Aurelia Spivey 
Fantastic. Thanks for sharing that. I mean, as you were talking about the exact price of a stapler, I was wondering, wow, this is going to have been a very interesting transition into the world of legal pricing, where matters can cost up to anything. But it seems to me from reading your bio and talking with you, you really took that sort of data piece into your role. Data analytics seems to play a key role in the pricing strategy that you've brought to your firm. So I'd love to talk a little bit more about data and how you're leveraging data at your firm to increase that precision around pricing as we say, it's a very different world.

Mike Milazzo 
It is. We look at data in a number of different ways and a number of different levels, in order to guide our pricing strategy. So my team has spent years compiling a database of historic matters that we can use as benchmarks to quote future work. Our database typically breaks down matters on the task level, so we get a completely granular look at time entries, look at narratives, to see what work was actually being done. So we get a full sense of the resources that we're going to need to complete each task. We also tried to capture qualitative data to give context to the numbers, such as how confrontational our adversaries were, and what quarter judge presides over the case, as those sorts of things can be influential in terms of the level of activity. We then take that benchmark data, along with the scope of work that the attorney anticipates occurring, to create a task list or the beginnings of a budget. So we can get a sense of who will be doing the work and how long they'll be engaged. Once we have a sense of our inputs, then the fun really starts in creating a pricing strategy and we'll look at a number of different data points to establish such strategy. We'll look at who we think our competition is, if this is a pitch or RFP request, we'll look at the demand of our attorneys doing the work, to see if they're fully leveraged or not, we'll determine their expertise in the area, are, for lack of a better word desire to work with that client. A lot of different factors that will give us what I call the firm's price. And then hopefully, that meshes well with what the market bears and with our client's expectations of the price would be.

Aurelia Spivey 
That is super helpful. Now, you make it sound very simple. So I'd love to know a little bit about what are your greatest challenges in terms of data. I'd love to know that and what you've learned that you can share with our listeners. 

Mike Milazzo 
The data is only as good as the person who entered it originally. So sometimes we're looking at time entries that were written back in 2010, 2005, our database actually goes back to 1995. So the quality of our data is not always the best. And we don't have a system in place currently, even after me being at the firm for nine years and trying to implement an easy system, which there really is none that we've found, to just categorize the type of engagements we're working on in the first place. We don't have a system where we can type in TCPA class action and get a list of all the TCPA class actions that we've worked on. It's a lot of time speaking with practice groups, speaking with partners, and trying and developing a system where we can quickly identify engagements in the system so that we can leverage them moving forward. And then, once we have our data, sometimes it's a little bit of a selling job to the partner saying, No, this is actually the time that you spend, or these are the actual inputs that went on with the engagement. A lot of our partners are accustomed to the work that they do and the work that their associates do, but sometimes they lose track of all the effort needed to run a case successfully. So having that conversation, and sometimes the sticker shop saying that this is the actual cost inputs from the work that we did, is a little bit of a struggle. 

Aurelia Spivey 
I would love to be a fly on the wall in some of those conversations. Do you have any top tips, because I'm pretty sure you're not the only one having them, just a few ways to navigate that conversation that you've found to be successful?

Mike Milazzo 
The strongest case you can make is having more data. So if you say to a partner, well, this one manner that you worked on last year went this way, they'll come up with 10 Different reasons as to why that was an abnormality. Well, this is not going to happen again, and we work too hard and the associate was new, so they work too much. And they'll come up with a lot of different excuses. But if you can establish a pattern of 10 cases that all flowed the same way, or at least show where they went differently. So you have possibilities and say it may go down the expeditious path that you think it's going to go down, but here's what else may happen. The more data that you can leverage, the stronger your argument can be.

Aurelia Spivey 
Absolutely, we couldn't agree more on that point. It makes sense because it's much it's easy to argue one case, but it's much harder to argue against a pattern of behavior. And it's easier to start changing that if you can actually track that pattern. So I'm going to switch a little bit to talk about, I loved your elements of the pricing strategy and I love the term, giving us the firm's price. So, I'd love to know, what are your what are the elements of the most successful pricing arrangements that you've put in place. Tell us a little bit about that.

Mike Milazzo 
Sure. For me, there really is only one element to a successful pricing arrangement, and that is to meet the client's need, whatever that may be. The problem is, as we all know, that the client isn't usually going to tell you straight out what their needs are. Some do and they're great, but sometimes you have to swift through the weeds to figure out what is their true need. We read a lot of industry articles, or sometimes we hear straight from the clients that they're interested in ultimate fee arrangements or fixed fees in order to save money. While that's true that you can save money, sometimes with fixed fees, it's not a direct correlation between the two. Sometimes you may have a cost saving if you went with an hourly pricing arrangement. The question to me is, what is your real need? It could be the same money, it could be to better manage your costs, and your cash flow, it could be to lower your risk thresholds, it could be just to simplify the billing process, or it could be a combination of those things. So when we know the answer to that question, then we can create a successful pricing arrangement that will deliver that need to the client. And as pricing professionals, we're going to make sure that it's also beneficial to the firm too.

Aurelia Spivey 
Absolutely, and it makes me think about it, you mentioned, some clients are really good at understanding, knowing, and identifying their needs. What do you do with the clients where that's a bit more of a struggle? Do you have any specific questions you ask? Or how do you get them to dig deeper into their need?

Mike Milazzo 
For me, the easiest way is to show them a couple of options. If we're not sure what the client's need is we'll propose a number of different solutions to them. And you'll see them quickly gravitate to one inherently based upon what their sheer need is. So it's a simple menu of A, B, C, and D, we could do it this way with the hourly arrangement with a discount, or we can guarantee a price and do it this way. So if you give them options, that will one engage them in conversation, and two, you'll quickly see which route they gravitate towards, and that will give you a good sign.

Aurelia Spivey 
Excellent, it is good to present some solutions. So what I wanted to talk about, is you've sort of alluded to some of the processes you have, in terms of your sort of data analytics and scoping. So I'd love to know what role does technology and process management play in making your team successful.

Mike Milazzo 
Yeah, as a department, our goal is to share data, whether it's through a budget, or through matter accruals, or profitability analysis. Our goal is to show data with 100%, accuracy, complete transparency, and probably to some most importantly, as quickly as possible. Everyone wants information now. And that's what technology and process management tools do for us, it allows us to take our treasure trove of data, which is massive, and pick out the data that we want to show here and disseminate it rather quickly. We use a variety of tools from our data analysis and budgeting programs, to a Business Intelligence platform, to give our partners quick hits of data. We don't want to overwhelm them with a lot. We just want to give them what's pertinent to them. Whether it's a weekly budget update via email, or a little bit more complex breakdown of client profitability, or any ad hoc requests that they may have. We want to answer their questions directly and as quickly as possible. If we don't have a process to answer their question directly, our tools allow us to identify and run it pretty quickly. Aside from tools that allow us to do our job better, I found that working remotely has encouraged, I won't say forced but encouraged, us to look at tools to help us communicate better as a team. And over the last few weeks, we have started using applications like Microsoft Teams and Planner to help us organize ourselves and share information a little bit more easily and some might seem a bit more of a modern fashion since we can't go to each other desks and talk out problems and whatnot.

Aurelia Spivey 
Thank you for sharing it and I think you bring me very nicely on to the next part of our conversation. We can't really ignore the situation that we're in and I'd love to talk about pricing in the next normal, is what I'm calling it. Let's dig in a little in terms of what you're seeing and what you think clients are expecting from their firms during this time of crisis.

Mike Milazzo 
I think our clients are looking for a few things from us during this time, the most prevalent being empathy and understanding. They want to know that we understand how their business works, and that we understand how this pandemic is affecting their business, and that we're going to be by their side to help them get through this. It may require us to be more lacks in payment terms, they may require us to provide counsel with no strings attached. I think our attorneys have to check in, have human conversations and are empathetic, and truly foster a symbiotic relationship, which unfortunately means hurting when their clients are hurting, not only benefiting when they benefit, and being there now will reap the benefits and dividends a year, a year and a half, whenever we get through the struggle.

Aurelia Spivey 
Yeah, thank you. I think empathy is our greatest tool at this time. I couldn't agree more. And so coming, sort of taking you back to your team, and the type of work that you're all doing. What do you think are some of the greatest challenges for pricing professionals during this crisis? You mentioned something in terms of communication. So I'd love to know what you think the challenges are and how your team is overcoming them.

Mike Milazzo 
The biggest struggle for us is the uptick in the volume of work that we've been receiving, which I'd probably say is typical in a downturn. The pricing industry, so to speak, was formed out of the crisis in 2008. So it shouldn't be surprising that, at this time, the clients have an eye on their own expenses, which means more work for us. Creating budgets, monitoring spending, and creating alternative solutions to help them in their time of need. Ironically, I think during this pandemic, pricing departments have a real opportunity to take large strides and show how they can add value, cementing their role in the client relationship as an integral member, and showing our true value.

Aurelia Spivey 
Yeah, I couldn't agree more. So talking about value, it's a somewhat ambiguous concept, and we're always trying to define it. But I'd love to know from you any predictions you have on how that concept of value is going to evolve as we move through this pandemic.

Mike Milazzo 
Right? Yeah, I think each client is going to value or define value differently. And it's important for us to segment our clients, and not paint all of them with a broad brush. If you're lucky enough to have Netflix and Amazon as your clients, they're going to value different things right now, as opposed to if you have clients in the retail industry or medical industry. For those clients who are in more non-essential industries, I think there's going to be a major shift, and they'll find value and help them find value in the firms that can help them anticipate what's going to happen next, whether there'll be helping clients with transition, as employees start coming back to work, and safety dynamics may change, or increase litigation that may occur post-crisis, things of that nature.

Aurelia Spivey 
Yeah, thank you for sharing that. And this is the pricing matters podcast, so I always like to ask this question. So Mike, why does pricing matter to you?

Mike Milazzo 
In our firm, like most firms, do a lot of great things. Our environmental team fights to make sure that our soil and border are free of contaminants. We have partners and associates working on the US border helping refugees claim asylum and representing them through all the processes that they have to go through at the National Immigration Justice Center. So just to be a small cog in that wheel, and being able to help partners run their business, so they can focus on doing what they do best, which is practicing law and doing all the things that help their clients and in turn help our society. Just being a part of that I think makes it all worthwhile for me.

Aurelia Spivey 
Thank you. That's a really great answer. Well, this has been a fantastic conversation. There are some really great insights for our listeners. So thank you for joining me. 

Mike Milazzo 
Thank you, it's been a pleasure. 

Aurelia Spivey 
Thank you for listening to Pricing Matters, a podcast Digitory Legal. To find out more about our guests please visit our podcast page. If you have any feedback or guests that you think we should feature, please reach out to me. Thank you for listening, see you next time.