What Apple’s new iPad Mini can teach lawyers about pricing legal services

October 24, 2012 by
Share

So everyone is buzzing about Apple’s new iPad Mini. Comments abound about the features, or lack thereof, but the number one topic of discussion is price.

Many predicted (hoped?) Apple would price the Mini in line with what Amazon, Barnes & Noble, and Google are pricing their tablets, in the neighborhood of $199-$249. They said that in so doing, Apple would crush the competition and own the small tablet market. Instead, the lowest priced Mini is offered at $329.

Many observers are questioning Apple’s strategy. How can they compete with tablets priced so much lower?

The answer is they’re not even trying.

Avi Greengart, research director for consumer devices at Current Analysis, told The Verge, “I think what Apple has done here is create a new category of premium small tablet.” The writer Greengart spoke to summed up Apple’s strategy thusly: “[I]t appears Apple is simply opting out of the low end of the market altogether, much like it’s done with personal computers.”

Greengart continues: “I don’t think this puts Amazon, Barnes & Noble, or Google out of business, but it means that those three — and anyone else entering that market segment — are all competing against each other for the budget consumer.” [emphasis added]

Apple is letting everyone else compete for the low end of the market while it offers a premium product to the smaller but more profitable segment of the market that is willing to pay a premium price.

This is exactly what lawyers should do.

Most lawyers offer the same services at the same prices to the same prospects. Everyone looks the same and says the same things. Nobody stands out. Everyone is average. And so the average lawyer gets average results from their marketing and earns only average income.

The better strategy is to offer higher quality services to those who are willing to pay for them.

Marketing is easier because you have something better to offer. Marketing is less expensive because you’re not trying to deliver your message to everyone. Other lawyers can’t compete with you because they don’t offer what you offer. And your income is higher because your clients are paying more.

You may not have Apple’s resources or “sex appeal” but you can follow the same strategy they do. Let other lawyers fight over the masses while you offer a better “product” to a smaller, more profitable segment of the market.

Most lawyers will never do this. They won’t offer premium services and, frankly, don’t even know what that means. That makes it so much easier for you.

How does Apple compete with Google? It doesn’t. How do you compete with other attorneys? You don’t.

The Attorney Marketing Formula shows you how to offer premium services and get premium fees.

Share
Filed Under: Fees and Billing, Image, Increase your income, Law office management, Marketing legal services Tagged With: , , , ,

How do you handle wealthy clients who want to negotiate fees?

September 5, 2012 by
Share

An attorney asked for advice in dealing with a wealthy client who tries to negotiate every bill. “I really want to fire him but how do I make him understand?”

If you bill by the hour, it is not uncommon for clients to have doubts about your bill. They question whether the work was necessary and why it took so long, and even though they agreed to your hourly rate, they can’t understand why it is so high. That’s why clients prefer flat rate billing. They know in advance how much something is going to cost and there are no surprises.

Whatever fee model you use, you must help clients to see the value of what you do for them. This is primarily done in advance, before they sign your retainer agreement.

Educate them about what you do and how you do it. Explain what they get for their money and why it is necessary. Talk to them about the options and contingencies. Show them other cases you have handled like theirs, explain the time line, and tell them how much those clients paid.

Of course you must also show them what those clients got for their money. What outcomes? What benefits? How were they better off as a result of hiring you?

If you do this right, clients will see the value of what you are about to do for them and they will rarely question your bill.

What about the wealthy client who tries to negotiate every bill? Here’s my advice:

Lawyers should never negotiate fees. It sounds like you have done this with him in the past and unfortunately, this puts you in a weaker position. You have three choices.

  1. You could change your billing model. Quote him a flat rate for each matter, a monthly rate that covers everything, or a hybrid that covers much of what you do flat rate but allows for additional charges in the event of certain contingencies.
  2. You could sit him down and show him the value of what you do, as described above. Do this one time. If he is convinced that you’re being fair with him, he must agree not to question you in the future. Kiss and make up.
  3. You could fire him. Be honest. Tell him it’s obvious that he doesn’t see the value of what you’re doing for him and that you don’t negotiate fees (or will not do so in the future if you have previously). Tell him you can recommend an attorney who charges less than you do.

If a client doesn’t see the value of what you do, it’s your fault, not his. Yes, there are clients who try to negotiate everything (it’s in their DNA), but you must not give in to this. Do what you have to do to get them to see that you are worth every penny you ask (and then some) and if they don’t get it, move on.

For more on how to convey the value of what you do, see The Attorney Marketing Formula.

Share
Filed Under: Attorneys fees, Fees and Billing, Law office management Tagged With: , , , , ,

Would you ever sue your own client for fees owed?

June 21, 2012 by
Share

I was asked that in an email this morning and it’s a great question. How would you answer it?

I never sued a client for fees. I don’t think I would, but “would you ever?” covers a lot of territory. I suppose it’s possible. But unlikely, at least for me. Bad Karma. Better to focus on getting new clients and especially, better paying clients.

If I considered it, I would think about things like

  • How much was owed and for how long
  • Who the client is (corporate or individual, long-time client or first time client)
  • Why aren’t they paying? Are they dissatisfied with something? Having financial difficulties?
  • What is their attitude? Contrite? Jerk? Are they ignoring me or willing to talk about it?
  • Are they willing to pay anything?
  • Could I collect if I won?

I’d also think about what I might lose if I did sue. Maybe if I cut them some slack they would pay me when they could. Maybe they’ll feel guilty and send some referrals. And maybe they will solve their immediate cash flow problem and become long-time, good paying clients.

One thing is sure, if you ever do sue a client, you can be pretty sure they will never hire you again (although it does happen) or send you any referrals.

Of course the best thing to do is avoid getting into this position. Get paid in advance or at least get big retainers, auto-bill their credit card, and never let the balance get too big (i.e., bill monthly).

At the end of the day, there will always be uncollected fees. As long as it’s a small percentage of gross receipts, I consider it an acceptable cost of doing business. If it’s not a small percentage, I know I’m doing something wrong.

Share
Filed Under: Attorneys fees, Fees and Billing, Law office management Tagged With: , , , , , , , , , ,

Why you should consider increasing your legal fees

June 18, 2012 by
Share

Times are tough. Clients are having trouble paying their attorneys. And that’s exactly why you should consider increasing your fees.

When times are tough for your clients, you also feel the pinch. But your overhead keeps increasing, doesn’t it? At some point, some of the services you offer will no longer be profitable. “We lose money on every client but we make it up in volume,” is an old joke. But some attorneys don’t understand, the joke is on them.

What would happen if you raised the price on those services? You may lose a percentage of your clients, but the increased revenue from your remaining clients would provide a profit on every “sale”. And if you lose more clients than you expect, you will have more time to do more (higher paying) work for other clients.

True, you may not have other clients to fill the gap right now, but you will have more free time for marketing so you can bring in new clients, something you may not have time to do right now.

And you may find that you don’t lose many clients when you increase fees. Prices for everything are going up these days, so to some extent, your clients expect you to follow suit.

When an airplane loses cabin pressure we’re told to put the oxygen mask on our mouth first. Once we’re out of trouble, we can help the people next to us. It’s the same thing in a law practice. If your practice is in trouble, you won’t be around long to help your clients with their troubles.

Share
Filed Under: Attorneys fees, Fees and Billing, Increase your income, Law office management Tagged With: ,

Why clients don’t appreciate their attorneys (and what to do about it)

June 12, 2012 by
Share

An attorney mentioned to me that clients often don’t appreciate what attorneys do for them. He said, “. . .[B]ecause they can’t see what we do or because they believe that it’s just templates and forms, [they think our] fees should be low and that we don’t really do much for our fees.”

We shouldn’t be surprised that clients feel this way. After all, we sell an intangible service, something you can’t look at or hold in your hands. We deal in ideas and paper and much of the hard work goes on in our brains.

And attorneys are expensive. When the client earns $30 an hour and you’re billing $300 an hour, or when you get $3,000.00 for “a few letters and phone calls,” you can see why they don’t appreciate what we do.

A detailed accounting of your work helps them see how much effort you put into their case or matter. But this can backfire if they don’t understand why you had to do what you did.

The solution is to teach your prospects and clients as much as possible about what you do. Educate them about the law and procedure. Teach them about their options, the risks and the contingencies. Show them the process and the paperwork.

The more they know, the more they will appreciate what you do for them.

Write articles and blog posts. Tell war stories that illustrate what can go wrong. Provide interviews, Q and A’s, and FAQ’s.

Record videos that walk them through the documents in a typical file or a pile of depo transcripts, tabbed and notated. Give them copies of the full opinions you quoted in your motion, highlighted and with your notes in the margins. Give them copies of everything that comes into, or out of your file.

And explain everything. What is obvious to you is not obvious to them. What you do every day is something they’ve never seen before.

Tell them why you choose A instead of B. Explain why you used to do C (which is what other attorneys do) and why you no longer do it that way.

Don’t hold back. Teach them enough so that they could do all of it, or parts of it, themselves. They won’t even want to try and they will begin to appreciate how hard you job really is.

They won’t understand everything and they don’t have to. They simply need to see that what you do is a lot more than they thought it was.

Educating prospects and clients is also one of your most potent marketing strategies.

When you teach people about what you do, and other attorneys don’t, you have an advantage. All of that information positions you as knowledgeable and experienced. It also positions you as generous. “If he gives away all of this information free, I can only imagine how much he does for his paying clients!”

Educate the market. Provide lots of information. Teach them what they need to know about their legal matter and about what you do. More often than not, they’ll choose you as their attorney and instead of questioning your fees they’ll thank their lucky stars you agreed to represent them.

Share
Filed Under: Blogging, Client loyalty, Client relations, Communication, Fees and Billing, Marketing legal services, Newsletters Tagged With: , , , , , , , , , , , , , , , , , , ,

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

April 6, 2012 by
Share

“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.

Share
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
Share

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.

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

The problem with most consumer law practices

January 25, 2012 by
Share

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.

Share
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
Share

“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.

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

How to make your clients appreciate you more than they already do

October 24, 2011 by
Share

free and discount services for lawyersLast week my wife went to her dentist for a cleaning. The bill arrived with a charge of $84 for the cleaning and $45 for the exam. Then, the bill showed a $45 credit for the exam. In other words, the exam was free.

Why? I don’t know. Maybe because it was a brief exam or maybe he never charges for an exam that follows a cleaning. Whatever the reason, my wife and I were pleased. We like our dentist even more than we already did.

Now, what if he simply omitted the charge for the exam? Would that have had the same effect? I don’t think so. We wouldn’t know that he was “comping” the exam. If we had thought about it at all, we would have assumed the exam was included in the cleaning and not given it another thought.

When you do something nice for your clients, whether giving them a free service, a discount, or something extra, make sure they know about it. Put the charge on the statement and then show a credit for that charge, so the client can see the value of the service they received.

Do this for free consultations, too. Send a bill for the consultation, show a 100% credit, and a zero balance due.

Do you think your would-be clients will better appreciate the value of what you do if they see that the consultation they got free is worth $400?

You bet they will.

Something else. If you don’t have free or discounted services you occasionally give to clients and prospects, it’s time to start. One way to do that is to take something you regularly include as part of your services and “break it off” as a separate item.

For example, if you charge $1500 to prepare a living trust and this includes a pour over will, power of attorney, and living will at no charge, simply send an invoice that shows the ordinary charges for those additional documents and 100% credit.

If you want clients and prospects to appreciate you more, when you do something nice for them, make sure they know about it.

Share
Filed Under: Client relations, Fees and Billing, Law office management Tagged With: , , , , , , , , , , , , , , , , , , ,
« Previous Page