Posted by George Egford, solutions manager at Legal Futures Associate BigHand
Egford: Without budgets, scope creep becomes inevitable
Before joining BigHand, I spent time in the pricing function at a law firm. I had a front-row seat to the challenges law firms face when it comes to financial productivity.
What struck me then, and still strikes me now, is how often the gap between projected and realised profit has very little to do with the client being ‘unprofitable’. More often, it’s about the process.
BigHand’s 2025 Pricing Trends Report, which tracks five years of market data, makes that point loud and clear: firms continue to lose margin because they fail to control the fundamentals of pricing, engagement and execution.
To explain why, I use the ‘Pitch to Profit’ model – a simple framework that shows where value is won or lost.
- The pitch: Discipline should start here, but often doesn’t. Estimates are shaped by client pressure or guesswork, discounts are applied without knowing the cost base, and pricing teams are brought in late. Those early choices set the tone for profitability.
- Engagement: Scope should be nailed down, yet too often engagement letters are vague, assumptions are missing, and expectations don’t align with the fee. Without clarity, scope creep is inevitable.
- Matter execution: Profit is made or lost in delivery. Without real-time monitoring, matters drift from the model, overages go unflagged and write-offs quietly mount.
- Realised profit: By the end, the numbers rarely match the forecast. Not because the client was unprofitable, but because value leaked at every stage. Few firms close the loop by comparing actuals to assumptions, so the cycle repeats.
In my view, unless law firms address the weaknesses in the pitch and engagement phases, they will consistently struggle to convert projected profit into realised margin.
Transparency in pricing
The idea that clients want greater visibility into the costs of their matters is not new. What is new, however, is the scale of that demand. The report shows a sharp increase:
- 50% of firms now report rising client demand for financial transparency, up from 30% just a year ago.
- 47% report an increase in requests for budgets, alternative fee arrangements, and client reporting.
In other words, the pressure for transparency is accelerating – yet many firms are still slipping backwards.
When estimates are vague, or when discounts are applied without a firm grasp of value, the pricing model unravels before work has even started.
The best pricing teams don’t just crunch numbers; they equip partners with the insight to hold confident, data-rich conversations. That combination of transparency and credibility is what wins trust while protecting margin.
Discipline in engagement
If transparency is the foundation, discipline in engagement is the structure that holds profitability together. Budgets are one of the most effective tools available to firms – and the data proves it.
- Nearly 70% of firms that use budgets report realisation gains of +9%.
- Yet, astonishingly, more than half of firms (53%) only mandate budgets in 11-20% of matters.
Without budgets, scope creep becomes inevitable. Engagement letters risk being reduced to vague promises rather than robust financial guardrails. Each unbudgeted matter is a roll of the dice.
By contrast, firms that make budgeting a standard part of engagement consistently see pipeline converted into profit.
Closing the commercial acumen gap
Last year, I highlighted the importance of commercial acumen as the missing ingredient for law firms seeking lasting change. I had hoped to see progress, but this year’s data suggests the opposite.
- Firms reported a 4% decline in the amount of profit information lawyers see for their active matters.
- There has also been a 6% decrease in the amount of work in progress and accounts receivable information provided to them.
The disconnect between lawyers and the financial performance of their work is widening.
In the context of the Pitch to Profit model, this is worrying. Realising margin is a firm-wide effort, and it cannot succeed if those doing the work are kept at arm’s length from the numbers. Without financial fluency, lawyers weaken pricing discipline in every client conversation.
Closing the gap means embedding commercial awareness into daily practice. Technology can play a vital role, providing lawyers with real-time profitability insights and the confidence to speak credibly with clients about cost, value and scope.
Equipped with that knowledge, firms can finally stop margin leakage at every stage of the process.
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