Could you make it on Rodeo Drive?

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Years ago, when I lived and worked in Beverly Hills, I wore Brioni suits, had a penthouse suite on Wilshire Boulevard, and was busier than a one-legged Irish dancer. So when I needed a haircut, naturally I shot over to Rodeo Drive and visited Vidal Sassoon.

Expensive? Yes. But worth it, at least to me at that time in my life.

They saw me on time and got me out quickly so I could get back to work. Everyone treated me like royalty. And it was peaceful–no chemical smells, bright lights, or incessant chatter.

There were other amenities: easy parking, pretty shampoo girls, soft drinks and snacks of my choosing.

A very pleasant experience, one that I looked forward to as a respite in my tumultuous day.

Oh, they gave a pretty good haircut, too.

I was reminded of those days when I read about a barbershop that charges more by providing better service than most barbershops. The article profiled a customer in New York City who couldn’t imagine paying more than for a haircut but who found, as I had, that it was worth paying more.

But enough about haircuts. The question of the day is, “How much more would your clients pay you for better service?”

Could you charge 20% more? 30% Double?

Doubling your fees is crazy, right? Well, I’m pretty sure I paid Sassoon triple what I would have paid elsewhere. Depending on what you charge now, perhaps double isn’t out of the question.

Next question: “What would you have to do to get that much?”

I can’t answer that for you, but I can tell you it always comes down to the little things. The little extras that make the client feel important, appreciated, and safe. The things that make them say, “Yes, I pay more but it’s worth every penny.”

Now, you may be thinking, “There’s no way my clients would pay a nickel more, no matter what I do.” I’m pretty sure that’s not true, but if it is, you need to get some new clients.

You don’t need to be on Rodeo Drive to be able to charge more. You might want to hire some pretty shampoo girls, however.

Marketing is easier when you know The Formula

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How to eliminate 80% of your law firm’s past due accounts

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According to a survey by LexisNexis, 73% of law firms report having past due accounts. Lawyers in small firms reported that up to 39% of their total client base is past due.

What causes this? And what can be done about it?

More than 80% of the law firms surveyed said that client financial hardship was the biggest cause. This suggests that the best way to reduce past due accounts is through better client selection. If you refuse to accept clients who are having financial issues, you will eliminate the number one reason clients fall behind.

Make sure clients have the ability to pay you before you do any work. Ask them to submit a financial statement before you accept them as a client.

This is not always possible of course, and financial statements don’t always reflect reality, so in addition, make sure you get a sufficient retainer at the time of the engagement, and make sure this is replenished when it falls below a certain threshold. You can also request collateral and personal guarantees, and get set up to accept credit cards and other financing arrangements.

Next, make sure that you bill promptly and frequently. A delay in billing is one of the biggest factors in clients’ falling behind. If you want to get paid on time, send a detailed invoice no less than every 30 days.

Finally, if you want to avoid large unpaid receivables and write offs, make sure you have procedures in place for addressing late payments immediately after they occur. Don’t let a small unpaid balance become a big one.

These three strategies, better client selection, sufficient retainers, and prompt and frequent billing, should help you eliminate 80% or more of your billing and collection problems and increase your cash flow. For more strategies, get my ebook, Get the Check: Stress-Free Legal Billing and Collection, as a PDF or on Kindle.

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Miscellany Friday (no, it doesn’t rhyme)

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Today, I thought I’d share a few miscellaneous items with you and let you choose what interests you. If you like “round-up” posts like this one, let me know.

1. Find Out How Much You Are Overbilling Your Clients

A discussion about how lawyers who delay recording of their billable hours, usually until the last two days of the month, routinely overbill clients by an average of 23%.

Don’t forget to check out my ebook on the subject: Get the Check: Stress-Free Legal Billing and Collection

2. Longer is Better for Blog Content: Truth or Myth?

Do longer blog posts draw more search engine traffic? Apparently so. But do most people read 2000 word posts, and do you have time to write them?

I’ve written before about this subject and have concluded that you need a mix of longer, authoritative posts, to draw traffic, and shorter posts to engage browsing visitors.

3. Legal ethics: Are blogs governed by advertising rules?

Is writing a blog advertising? I don’t think so, and neither does Kevin O’Keefe, the author of this post. And yet various jurisdictions seek to regulate blogs as advertising. Frankly, I don’t think we need specific rules for lawyer advertising at all. General rules (don’t misrepresent, full disclosure, et. al.) do quite nicely.

4. OneTab extension for Chrome saves up to 95% of memory

I always thought I was pretty good about staying focused on whatever I was doing. Throughout my day, I’ll keep a couple of browser windows open, each with six or seven tabs. No problem for a stud like me, right? Boy was I wrong.

I just installed OneTab, an extension for Chrome. It’s a simple thing that collapses all of your open tabs (or whichever ones you designate) into a single tab with links you can click to re-open those tabs. I’ve found that not only does this reduce the drain on memory, up to 95% we are told, so everything works faster, videos don’t stall, and so on, it’s also making me way more productive.

For example, instead of checking email every 15 minutes, I check it when I’m done with whatever I’m working on. Stupidly simple, but it works.

I’m sure there are equivalent extensions for different browsers and platforms.

So, there you go.

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Why some attorneys earn more than you do

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With my CLE compliance deadline approaching (I finshed, thanks for asking), I’m being inundated with emails offering all manor of courses. I noticed that some companies charge much more than others. In fact, prices are all over the place. I could get all 25 credits for $299 or for $60. Are one company’s courses five times better than another’s? Probably not.

So why would attorneys pay more for something they could easily get for less?

Because some companies are well known to them and have good reputations. Lawyers will order from a familiar company because it’s safe. They don’t need to check them out. Click, order, done. They may realize they are paying more but the convenience and peace of mind are worth it.

I’m sure some attorneys equate a higher price with higher quality. They assume that by paying more they’re getting better courses. Or conversely, that if they pay a low price they will get inferior quality.

Other attorneys simply don’t want to take the time to shop around. They’re busy.

Still others never considered looking at anything else. They simply order from the company they ordered from the last time. They are a satisfied customer. When they get an email from “their company,” they just order.

Make sense?

Well guess what? The same things are true for buying legal services. People will pay more to hire an attorney who is well known to them or who comes through a referral. They will pay more to attorneys who make it easy and convenient to hire them. They will pay more because they believe they are getting more value than they would get from a “cheaper” attorney.

Yes, some clients shop price. You don’t want them. You want the low-hanging fruit, the clients who are willing to pay more for intangibles that are important to them.

And that’s why some attorneys earn more than you do for the same services.

Want to get paid more? Get the Check: Stress-Free Legal Billing and Collection shows you how.

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How much do lawyers earn?

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How much do lawyers earn? A lot, apparently. According to a recent study, law firm net profit margins were among the highest in the world of commerce, at nearly 20 percent. In contrast, the average net profit margin for private companies is around 7 percent.

But so what? Does knowing this help you in any way?

Unless you are an economist (or the mother of a lawyer) there’s no point in comparing the legal “industry” with any other. You are not the industry.

In the same way, there’s little point in comparing your profit and loss statement with that of any other lawyer. True, you may learn that you are spending too much on rent or employees or advertising, relative to your gross revenue, and maybe you could make some adjustments. But what really counts isn’t how much you spend running your practice, it’s how much you take home.

If your net margins are “only” five percent but you take home millions, who cares that you spent a fortune on advertising or payroll?

On the other hand, if your net income is one-third of revenue, much higher than the average, but your gross is only $150,000, you don’t have much to brag about.

I’m not suggesting that you pay no attention to the cost of overhead. In fact, I’m a big believer in keeping fixed costs as low as possible. But, your number one priority isn’t low overhead, it’s net profit.

How much did you take in? How much did you spend? How much was left?

Don’t forget to subtract the value of your services before you calculate your net. If it would cost $150,000 to hire an attorney to do what you do and your net income is $150,000, your net profit is zero.

A cynic would say, “you don’t own a practice, you own a job”.

Yeah, but I’ll bet you’re the best boss you’ve ever had.

Get more clients and increase your income. Get this.

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How to get more business clients

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An article in Entrepreneur, “Hiring a Lawyer: Five Mistakes to Avoid,” tells startups what to do to save money and avoid getting hurt when hiring a lawyer. If you want to get more business clients, you might want to know what kind of advice they are listening to.

Here are the “five mistakes,” followed by my thoughts on how you can use this information:

1. Hiring a lawyer too soon.

Summary: Some startups hire a lawyer before they know what they want and need. See if there is a pro bono legal clinic at a law school where you can learn about the issues and process. Consider “hiring” them to do some basic work.

DW: What can you do? How about offering free information that does the same thing? Educate your target market about the issues, process, risks, and options. How about holding your own “clinic” where startups and young companies can come and learn (and network) and maybe even get some basic work done free?

You might get endorsed by a business school or community organization, perhaps the chamber of commerce, and get some publicity for your good work in helping the community.

2. Hiring the wrong lawyer.

Summary: Avoid hiring someone who does not specialize in what you need. Get referrals and interview several attorneys before you choose.

DW: Clients prefer specialists (and articles recommend them). Specialists earn more, too. So if you don’t specialize, maybe you should. If you do specialize, start promoting the fact that you do and educate your market about why this is important to them.

3. Hiring a big firm when you don’t need to.

Summary: You will pay more and you may not need to. Many smaller firms have great lawyers, some of whom came from big firms.

DW: Educate your market about the advantages of hiring a smaller firm. Not just lower fees. Smaller firms usually give more personalized attention. Make sure clients know why this is a benefit to them.

4. Not haggling on fees.

Summary: Negotiate fees. Offer equity in partial payment.

DW: Never negotiate fees. You can be flexible about retainers, payment options, and offer alternatives to hourly billing, but never negotiate (reduce) your fees. If you do offer alternative fees, promote the heck out of it. Clients like them.

Take equity if you want to. You could hit a winner. But since most startups fail, don’t go “all in”.

5. Seeing a lawyer as just a lawyer.

Summary: If offering equity, you’re taking on a business partner. Make sure your lawyers have expertise in your field and can do other things for you, e.g., lead you to investors.

DW: Every business lawyer has a stake in it’s client’s business, even if they don’t own any stock. As the client grows, they have more legal work. There are more opportunities for referrals from partner companies, vendors and suppliers. You can grow with them, so help them grow.

Use your contacts and knowledge to help your clients get investors, better financing, new customers, and better suppliers. Look for opportunities for them. Make introductions. Send articles about their industry, marketing, and management. And make sure your prospective clients know that you provide this kind of help.

If you don’t have these connections and knowledge, start developing them. Because the world doesn’t need more lawyers who merely deliver competent legal work. It doesn’t need more lawyers who merely “protect and advise”. It needs more lawyers who can help their clients prosper.

Marketing is not difficult, when you know The Formula.

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Overcoming the money objection

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You’re sitting with a new client. At least you think he’s a new client because he needs your help and wants to hire you. But when it comes to the subject of fees, he balks. Too often, he walks.

Overcoming the money objection in it’s various forms–I can’t afford it, I don’t have it, it costs too much, other lawyers will do it for less–is critical. The best way to handle this objection, or any objection, is to eliminate it before it comes up. Here are four ways to do that:

1. PRACTICE AREA AND TARGET MARKET

If you handle contingency fee cases, the money objection usually doesn’t come up. Lawyers who do work for big business and government usually don’t have clients who can’t pay their fees. Targeting well to do consumers for your services will also eliminate or severely curtail the no money objection.

In addition, if you handle legal work where clients must have an attorney or face dire consequences, rather than discretionary legal work, clients who might otherwise be limited in their ability to pay will often find a way to get the money. Someone who is in jail, being sued, or facing foreclosure, for example, has different motivation than someone who needs to update their will.

2. INFORMATION

The second way to deal with the money objection is to provide ample information to prospective clients before they call for an appointment. This means posting information on your website that explains fees, costs, retainers, and payment options. It means mailing or emailing prospective clients this kind of information (“a pre-appointment information package”) prior to the actual appointment.

You don’t necessarily quote fees in advance but you do provide a general idea of what the client can expect if they hire you. Give them a range of fees so they know it might be as much as $10,000 and they don’t come in expecting to pay $1,000. Show them different packages of services you have available, so they can see that while they might not be able to afford package A, they can probably handle package B. Explain the payment options that are available to them, so they can see that they don’t have to have all of the money up front.

This is also how you deal with the issue of other attorneys with lower fees. This is where you build the value of what you offer and make the case for why clients should choose you. This is where you explain how some attorneys don’t tell the whole story regarding fees and costs, until someone is sitting in their office. This is where you show prospective clients the wisdom of hiring someone with your experience and how, in the long run, it will probably save them money.

3. ON THE PHONE

When a prospective client calls for an appointment, or calls to ask questions, make sure they understand how much they will be expected to pay (or the minimum) if they decide to hire you.

Some will tell you it’s better to get them into the office first, that once they have taken the time to meet with you and become impressed with you, they will be more likely to find a way to hire you and less likely to go shopping for a less expensive alternative. That may be literally true, but if they don’t have the money they don’t have the money and you and the client are both better off dealing with this reality before spending any more time.

There are exceptions, but a policy of giving prospective clients a general idea of how much will be expected of them if they hire you, in advance of the actual appointment, and confirming that they can handle that amount, will go a long way towards overcoming the money objection once they are sitting in front of you.

4. IN YOUR PRESENTATION

The fourth way to deal with the money objection is to anticipate the objection and dispose of it in your presentation, before the client can raise it.

For example, explain how some clients sometimes tell you the fee is on the high side. Then tell them that once the client sees everything they get, they realize that in the end, they are actually saving money.

Bring up the subject of other attorneys who charge less than you do. Then explain why it makes sense to choose you instead.

Explain what it might cost the client if he chooses to delay. A client who might otherwise want to wait will now know why he should not.

Whatever objections you have heard in the past, deal with them before the client raises them.

Some clients will slip through the cracks. You will still occasionally hear the money objection. But by taking the above steps to deal with the objection in advance, you should find this to be the exception, not the rule.

Do you discuss fees on your website? If you want to know what to say, get this.

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Do attorneys charge too much?

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A lot of people think attorneys charge too much. But you can’t charge too much. It’s not possible. If someone is willing to pay what you ask, then, by definition, it’s not too much.

Unless, somehow, an attorney has some kind of monopoly–government hook up, union contract, that sort of thing, or someone else is paying the bill–in a free market, the market determines price.

Willing buyer, willing seller, and all that.

Actually, many attorneys fees are too low. They don’t charge what they could. Why? Several reasons:

  • They try to match their rates to what other lawyers are charging, so they can “stay competitive,” and everyone gets locked into thinking that what everyone is charging is the “right price”.
  • They believe they will get more clients by offering rates somewhat lower than other attorneys.
  • They haven’t factored in the costs of overhead or inflation.
  • They start out low and are afraid that if they raise their rates they’ll lose clients.
  • They lack confidence in themselves and their abilities or think they don’t have enough experience to charge top dollar.

How do you know if you could charge more? You raise your fees and see what happens. Start with new clients. If there’s little or no resistance, roll out the increase with existing and former clients. Keep raising fees until there is “significant” resistance. I can’t tell you what that is, but you will know it when you see it.

Here’s the thing: the best clients don’t shop around for the lowest priced attorney, and you don’t want the ones who do. You should never compete on price. You’ll attract the worst clients, and besides, there will always be someone who charges less.

The best clients — the ones who return again and again and refer others — understand that you get what you pay for. In fact, if you charge less than most other attorneys, you’ll actually make them nervous. What would you think if you found out that the doctor who was about to operate on your brain charged much less than other surgeons?

You don’t want a reputation for being “low priced”. Instead, you want clients to think of you as “charging top dollar but worth every penny.” In this way, you get the better clients and maximize your revenues and profits.

Regularly survey the market and keep your fees at least in the upper one third of fees in your area. You don’t have to be the most expensive in town to get the best clients (although that may be an effective strategy for some lawyers), but you do want to be among that group.

Will you lose some clients as you raise your rates? Yes, but far fewer than you might imagine. And the revenue you lose by their loss will be more than made up for by the gains from other, higher-paying clients.

In fact, you may find that by raising your rates you actually find there is more demand for your services. More clients at higher rates? That would be okay, wouldn’t it?

The Attorney Marketing Formula: How to Earn More Than You Ever Thought Possible. Click here.

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How do you find out why they didn’t hire you?

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In yesterday’s post, How often should I call a prospective client? I said you should follow up with a prospective client after a free consultation, but not call them because calling is bad posture. In response, I got an email from an attorney who said, “If you don’t call them how will you find out why they didn’t hire you?”

It’s a good question.

If they don’t call you within a suitable period to give you the go ahead on their case or matter, you can send them a form letter seeking feedback about your office’s “customer service”. Were you well treated, Did we answer all of your questions, that sort of thing. Then, ask if they plan to go ahead with their case or matter and if not, why not. You might provide multiple choice answers for them to tick off, and room for additional comments.

Send this with a cover letter about how you are constantly seeking to improve your services to your clients and you would greatly appreciate it if they would fill out the survey and return it in the envelope provided. You might offer to send them a free report or a $10 Starbuck’s gift card to say thank you.

Anyway, this should give you some feedback on what you’re doing right and what you need to improve. But there’s an even better way to find out why someone doesn’t hire you: ask them while they are still in the office.

 

Before you hand them a retainer agreement and pen, ask if they see the need for your services and how it will help them. If they do, ask if they are ready to get started. (There are other ways to close). If they aren’t ready, politely ask why.

If they need to discuss it with someone, that’s your cue that the next time you set an appointment, you need to find out if you are speaking to the decision maker and if not, make sure they come, too.

If they are reticent to share their reasons, there’s a good chance it’s money: they don’t have it or they think you’re too expensive. If they don’t have it, you can remind them that you take credit cards or have a payment plan. If they think you’re too expensive, you need to do a better job of building the value of what you do before they see you (i.e., on your web site) and during the consultation.

By the way, “I want to think about it,” almost always means they have another objection. Ask them what they want to think about: Is it the need? Is it the fee? Is there something else that’s holding you back?

The best time to get feedback is when they are in the office, feeling a little guilty for turning you down.

Do you have The Attorney Marketing Formula? If you want to get more clients, you should. Click here.

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Increase your income: offer a premium version of your legal services

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A simple way to increase your income without increasing your fees is to offer a premium version of your legal services.

If your basic service is $2500, you might offer a deluxe package for $2950 which allows clients to get additional services they will probably need down the line. They can get everything taken care of all at once and save a few bucks.

What options, extras, or “nice to have” additional services could you offer to new clients? The best time to present these extras is at the initial engagement when they are in a buying mood. They see that it’s “only a few hundred dollars more” and it’s an easier decision than if you went back to them later.

Having a deluxe version also allows you to offer prospective clients a choice between the two versions, which is better than offering them a choice between hiring you or not. No matter which version they choose, you have a new client.

You can create a deluxe version of your services by adding something to what you ordinarily do. Or, you can leave out something you ordinarily do and call that your basic package. So, if you ordinarily do A, B, C, and D, your basic package would now be A, B, and C and your deluxe package would include everything.

You could also create a deluxe package by including services from another lawyer. For example, your basic version may be a business start up package and your deluxe package might include an employee manual produced by an employment lawyer. If you are an estate planning lawyer, your deluxe package might include a mini-plan from a financial planner you work with.

A deluxe package doesn’t necessarily have to include additional services, however. It might be a higher level of service–quicker turnaround or priority handling, for example.

Offering a premium version of your services is a simple way to increase your income. Even if only a small percentage of clients opt for it, you come out ahead.

The Attorney Marketing Formula: The 6 Keys to Higher Income. Click here to learn more.

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