Seth Godin is a stupidhead

April 27, 2012 by
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Okay, not really. He’s actually quite brilliant, as his best-selling books and large blog following attest. And I agree with him most of the time. But about a week ago, he said:

The easiest customers to get are almost never the best ones.

If you’re considering word of mouth, stability and lifetime value, it’s almost always true that the easier it is to get someone’s attention, the less it’s worth.

Let’s think about this, shall we. . .

HARD TO GET CLIENTS

  • Make you sell them on why they need legal services and why they should hire you instead of any other attorney
  • Shop around, interview you, take forever to decide
  • Are skeptical and question everything; trust is paper thin
  • Bargain over fees (and question your bills)

EASY TO GET CLIENTS

  • Are ready to sign up, pay your retainer, and follow your advice

I’ll take the easy clients, thank you.

Easy to get clients usually come through referrals. They trust the party who refers them, who trusts you and can attest to your trustworthiness and value. Easy to get clients might also be frequent readers of your blog or newsletter. They may have heard you speak or met you through networking. They might be friends or followers on social media.

Easy to get clients are easy to get because they know, like, and trust you. When they need (and want) your services, they’re pretty much ready to go.

It’s true that hard to get clients can turn out to be some of your most loyal clients and ardent fans. They have examined you with a fine tooth comb and found you worthy. Having passed inspection, you get their business and their referrals. But this doesn’t necessarily make them better clients or worth more to you than their easy going counterparts.

And then there are those who are neither hard to get nor easy to get. They are the folks who saw your ad or found you through search. They require a bit more effort before they will hire you but that hardly makes them “hard to get” or less valuable as clients.

I think Seth may be referring to those big clients who have lots of firms competing for their business. These clients know they are valuable and take advantage of that. They demand, and get, the lowest fees and the most concessions. They cut into your margins and make you miserable trying to keep them happy.

You can have them. I’ll take the easy clients, thank you.

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Filed Under: Attorneys fees, Closing the sale, Marketing legal services Tagged With: , ,

Are you paid enough for the risks you take in your law practice?

April 6, 2012 by
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“The choice isn’t between success and failure; its between choosing risk and striving for greatness, or risking nothing and being certain of mediocrity.” — Keith Ferrazzi

Every day you make decisions in your law practice. You’re usually right but sometimes you make a mistake. It’s okay because when you make a mistake, you can usually fix it. If you can’t fix it and your client suffers a detriment, you have insurance.

Your clients pay you to make decisions. It’s what you do. It’s what you get paid for. Every time you make a decision, however, you take a risk. But are you being compensated for those risks?

In business, the bigger the risk, the bigger the potential reward. When you are the principal, your fortunes rise or fall on the outcome. As advisors, however, we are paid by the hour or the case or the work product. Other than contingency fees, our compensation is almost never commensurate with the risks.

You prepare a “simple” will. You get paid a few hundred dollars. But what if the client needed something different? What if you leave something out? Hundreds of thousands of dollars could be are at stake, but you are paid a few hundred dollars.

It seems to me we should be paid according to the risks we take in our work. Our insurance carriers are. Our business clients are. But we are not and we probably never will be. We can’t charge thousands of dollars for a simple will.

But while we probably won’t get paid more for taking risks in our legal work, we can get paid more for taking risks in our marketing. Ironically, these are risks most attorneys avoid.

If you want to reap bigger rewards in marketing your services, you need to take bigger risks.

Time, money, ego–invest more, risk more. Yes, you might waste that time or money, or take a big hit to your ego. But you might also get rich.

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Filed Under: Attorneys fees, Fees and Billing, Law office management, Legal industry, Marketing legal services Tagged With: , , , ,

Why the average lawyer earns average income (and why you don’t have to)

March 1, 2012 by
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In yesterday’s post I made the point that most clients don’t price shop, that price isn’t at the top of their list of hiring criteria. A lawyer posted on Facebook that he sees price shopping all the time, the result of the commoditization of legal services.

Who’s right? We both are.

If the services you sell are just like everyone else’s, you have a commodity and if a client can buy it from someone else for less, they often will. In the age of the Internet, it’s easy to find dozens of lawyers who offer the same services. If the attorneys advertise their fees, as many who offer commodities do, it’s even easier to compare prices. When all the client has to go on is price, price becomes important.

At the same time surveys consistently tell us that price is not the number one criteria among clients. It’s not irrelevant, they are just more concerned with issues of trust and quality.

So, we have a dichotomy. Clients say price isn’t the number one factor in choosing a lawyer and yet many clients do compare prices. How do you reconcile these two statements? More importantly, how do you avoid the price shoppers?

There are two ways. The first is to not offer what everyone else is offering so there can be no comparison. When every other attorney is offering apples, you offer oranges.

Package and promote your services so that they are different from what other lawyers offer. The average lawyer offers a commodity, you don’t. You offer something different and better.

If you handle consumer bankruptcy, for example, look for ways to add value and scope to your services and offer a comprehensive bundle of benefits that goes beyond the core services you now offer. This might include loan modification, tax lien negotiation, foreclosure defense, and credit repair. You might offer these additional services yourself or partner with other professionals who do. If not a complete service, at least offer information and advice so the client can get the solutions they need.

Don’t just treat the disease, cure the patient!

Put on your thinking cap and get your creative juices flowing. But don’t start with your services, start with your clients and the problem they want to solve. What caused the problem? What do they need to do to fix it? How can they avoid having this problem in the future? What other problems do they have? What problems have they had in the past or are likely to have in the future?

The answers to these questions will allow you to create a unique bundle of services that distinguish you from other lawyers and allow you to charge more than they do.

If you offer what everyone else does, as the average lawyer does, you will continue to see price shoppers, and in today’s economy especially, downward pressure on your fees. If you offer what nobody else does, or if you promote your services in ways that nobody else does, you will be (or appear to be) unique. You can sell your oranges for more than average attorneys sell their apples.

The second way to avoid price shoppers is by getting referrals. Referred clients come to you pre-sold. Somebody they trust already checked you out, took the risk of hiring you, and gave you a passing grade. If the referred client does go looking at what other lawyers are charging, they still won’t know if those lawyers are any good. And they know they will have to “answer” to the friend who refers them if they decide to go somewhere else.

If you combine the two strategies, packing your services in unique ways and getting most of your business from referrals, your income will be anything but average.

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Filed Under: Attorneys fees, Fees and Billing, Increase your income, Marketing legal services Tagged With: , , , , , , , , , , , , , , , , , , ,

How much should you charge for your legal services?

February 29, 2012 by
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Most lawyer’s fees are too low. They don’t want to scare off any clients so they quote a rate they think is in the ballpark of what other lawyers charge. As a result, they charge less than they could.

You’re not like other lawyers. You’re different. Better. You offer more and you can charge more. At least I hope you feel that way and can back it up (or are working to get there).

Charging what other lawyers charge isn’t a good strategy anyway because most clients don’t price shop. Price is not at the top of their list of criteria. Trust, responsiveness, availability, and added service are all far more important. And clients who are aware of what other lawyers charge will still hire you if you charge more, but only if you’re worth it. So be worth it.

Okay, so you’re worth more and you raise your fees. You may get some resistance. That’s to be expected. In fact, if you don’t get any resistance you’re probably still not charging enough.

If you owned an apartment building and had zero vacancies for an extended period of time, barring other problems, you would know that your rents are too low. If you raise the rents and your vacancies get too high, your profits will suffer. And so you adjust your rents until you find the right balance. There’s a sweet spot for apartment vacancy rates, probably in the 3-10% range depending on location and other market factors. Smart apartment owners continually adjust their rents to stay in that range and maximize their profits. You need to do something similar.

If you raise your fees and lose some clients that’s okay too, so long as you replace them with clients who are willing to pay the higher fees. The hard part is losing clients before the higher-paying clients show up. Be bold. Take a chance. Make room for some new, higher-paying clients. You’re worth it, remember?

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Filed Under: Attorneys fees, Increase your income Tagged With: , , , , , , , , , , , , , , , , , , ,

The problem with most consumer law practices

January 25, 2012 by
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Most consumer oriented law practices have a big problem. Lawyers who practice family law, bankruptcy, criminal defense, estate planning, personal injury, real estate, and other areas, have a preponderance of “one time” clients. Once the initial case or engagement is completed, the attorney gets no additional revenue, or at best, very little.

The problem is worsening. It costs more to bring in a new client today, and overhead and manpower expenses to service those clients are also higher. But clients aren’t willing to pay more, and they don’t have to. With more lawyers competing for the same clients, clients have more options.

I just spoke to an attorney who is spending $13,000 a month on yellow pages. The good news is that her ads bring in a lot of new clients. The bad news is that she loses money on every one.

The solution to this problem is for attorneys to develop their “back end”–services and other profitable initiatives they can offer their clients after the initial engagement.

In any business, most of the profits are made on the back end. There is a cost to acquire a new customer, and while it is hoped that this can be done at a profit, it’s not required. So long as the business can make enough profit after the initial sale, if the back end is big enough, most businesses are willing to lose money on the front end.

How can an attorney develop a back end?

Some attorneys are branching out into new practice areas. So the bankruptcy lawyer who sees a downturn in new clients starts offering family law or estate planning services. The problem with this is that it makes it much harder to get referrals from family law and estate planning attorneys with whom you are now competing. It’s also more difficult to market a general practice than a specialized one.

Instead of taking on new practice areas, here are two things an attorney can do to develop a back end:

  1. Expand and systematize referrals. Focus on getting more referrals, better referrals, and more frequent referrals from your clients. In this way, each client you bring in on the front end represents more profits on the back end. If you spend $1000 to bring in a new client who pays you $1000 on the front end, but you earn an average of $3000 from their back-end referrals, you can afford to bring in as many “break even” clients as possible. You can even lose money on the front end.
  2. Market the services of other lawyers to your clients. Instead of you taking on a new practice area, associate with other attorneys who are specialists in those areas and offer their services to your clients in return for a share of the fees (if ethically permissible) or in exchange for marketing your services to their clients. (You aren’t limited to working with other attorneys; you can also market the services of other professionals and businesses.)

A key number every attorney must know is the “lifetime value” of a new client. This includes the value of their repeat business, their referrals, and other revenue derived as a result of having them on your list. Take some time to determine this number and then work on increasing it.

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Filed Under: Advertising, Attorneys fees, Fees and Billing, Increase your income, Marketing legal services, Specializing Tagged With: , , , , , , , , , , , , , , , , , , ,

“It’s the cases I don’t take that make me money”

November 18, 2011 by
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“Besides the noble art of getting things done, there is the noble art of leaving things undone. The wisdom of life consists in the elimination of nonessentials.” -Lin Yutang, writer and translator (1895-1976)

Last night, I spoke at an event. One of the topics I talked about was “The 80/20 principle,” aka, “The Pareto Principle,” the idea that a large percentage of our results come from a small percentage of our activities.

Afterwards, I was chatting with a man who works for a bankruptcy attorney. He liked my talk and was telling me about their practice and how busy they were. He quoted something his employer said, but I wasn’t sure I’d heard him correctly so I asked him to repeat it:

“It’s the cases I don’t take that make me money”.

He explained that the attorney was very selective about the cases he accepts. A lot of business comes knocking on his door, but he turns down a large percentage. He turns down the lower-end of the spectrum of clients, the ones who don’t have enough for a retainer, who need installments, price shoppers, etc., in favor of those who can pay his higher than average fees.

A lot of attorneys will take the lower-end clients, figuring that whatever they pay will contribute to overhead. But this attorney understands that those clients would actually cost him money, and not just in the literal sense of “not paying,” but because they would take up a disproportionate amount of time and energy.

And, he doesn’t have the extra overhead he would have if he accepted the lower end clients.

By eliminating as much as eighty percent of the possible client pool, he is able to run a lean and profitable practice. I’m sure he also makes it home for dinner.

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Filed Under: Attorneys fees, Career satisfaction, Fees and Billing, Increase your income, Productivity Tagged With: , , , , , , , , , , , , , , , , , , ,

Can pro bono legal work help you grow your law practice? Yes it can.

November 1, 2011 by
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marketing legal services with pro bono workWhen I opened my own office shortly after law school, I had an abundance of free time and a lack of clients or experience. Once or twice a week, I volunteered the day at a legal clinic for women. The clients had mostly domestic violence and other family law issues. When I began, I knew very little about family law but I quickly learned. I was able to use those skills in my private practice.

Last week was “pro bono” week. This article presents the “Top 5 Reasons to Do Pro Bono Work“. I’m sure I can lay claim to all five. The article misses a reason, however. My pro bono work helped me to build my practice.

The clinic I worked at allowed us to offer our paid services to the clients. Granted, most of them had little or no money, but I did get some paying work. And little or nothing was definitely better than nothing. It allowed my nascent practice to stay afloat, which allowed me to continue to volunteer.

I also got some referrals from those clients. Yes, most of them were in the same financial shape as the clients who referred them, but not all of them.

I was also able to network with the administrators of the clinic, their benefactors, and the other attorneys who volunteered. I met people who introduced me to others and as my network grew, so did my practice.

I’m not ashamed to admit that growing my practice was one of the reasons I volunteered at the legal clinic. I don’t think any of the hundreds of clients I saw for free or almost free would have any objections.

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Filed Under: Attorneys fees, Career satisfaction, Image, Increase your income, Marketing legal services, Networking, Referrals Tagged With: , , , , , , , , , , , , , , , , , , ,

Rocket Lawyer, Legal Zoom: How the Online Law Business Affects Your Business

August 12, 2011 by
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The success of Legal Zoom, the online legal forms service which advertises heavily on the web and on talk radio, has apparently demonstrated that there is money to made in the low end of the legal services industry. Wherever you find money, you’re sure to find Google, which recently invested in Rocket Lawyer, the newest contender in this growing market.

What does this mean for your practice?

For most lawyers, the answer is “not much”. Online legal services are still small relative to the size of the market and inasmuch as they primarily provide forms and access to inexpensive legal advice, provide no direct competition. Unless of course your practice targets the same lower end of the market and in today’s economic climate, more and more attorneys are doing just that.

I don’t have a crystal ball but here are a few of my predictions:

  • No matter what the economy does, the online legal services industry will continue to grow and continue to take business from attorneys who offer commodity-level services to consumers and small businesses.
  • Attorneys who continue to target the low end will find it harder to compete with the simplicity, speed, and lower costs available online.
  • The attorneys who survive this trend will be those who (a) abandon this market altogether, in favor of higher level services (e.g, “asset protection” vs. “simple Wills”) or offer services where the hands-on advice and ongoing involvement of an attorney is mandated, or (b) get very good, and very creative, at marketing and finding under-served niche markets where they can carve out market share.
  • The growth of online legal services will expand the overall legal services marketplace, ultimately leading to more work for all attorneys. How that work is distributed and at what price points is the multi-billion dollar question.

Never fear competition. Embrace it, learn from it, prepare for it. Competition will make you a better attorney and, in the end, make you more money.

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Filed Under: Attorneys fees, Increase your income, Legal industry Tagged With: , , , , , , , , , , , , , , , , , , ,

Hourly billing is dead. Long live hourly billing.

December 6, 2010 by
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hourly billing or alternative legal feesLawyers haven’t always billed by the hour. In fact, it wasn’t that long ago that fixed fee schedules were mandatory in some states. Legal fees were regulated by state bar associations and everyone was required to charge the same amount for the same service.

Today, hourly billing is the norm but many attorneys advocate alternative fee arrangements. I’m one of them.

When you equate what you do with the amount of time it takes to do it you put artificial limits on your value, and your income. In contrast to the oft-quoted statement, lawyers have far more to sell than their time.

We sell our experience, our creativity, and our problem-solving abilities. We do more than write documents, argue, or negotiate, we save lives and preserve fortunes. We help the free world stay free.

Clients prefer fixed fees, too. They want to know how much it’s going to cost them to hire you. They want to know they won’t be giving you a blank check. Lawyers who offer alternatives to hourly billing are thriving.

Not everyone agrees. Some lawyers defend hourly billing. Maybe their clients are different.

I’m not an expert on alternative billing models, but I do know that the world’s highest paid attorneys, the ones who earn the equivalent of thousands of dollars per hour of work, don’t charge by the hour. Not if they’re honest, anyway.

Attorneys can begin to earn more (without working more) by embracing the idea that they have far more to sell than their time.

I’d like to hear from you. Do you use alternative fee arrangements? If not, why not? If so, how have you benefited?

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Filed Under: Attorneys fees, Increase your income, Law office management Tagged With: , , , , , , , , , , , , , , , , , , ,
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