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To Transform Your Practice, Provide Value, not Time
by Edward Poll, J.D., M.B.A., CMC
One of the best-known quotes defining our profession is
attributed to Abraham Lincoln: "A lawyer's time and advice
are his stock in trade." Lincoln was a successful lawyer,
but I suggest that his point has been somewhat distorted,
especially during the past 40 or so years. Lawyers don't
really sell time; we sell a service. Our goal should be
to provide value: advice that means solutions to our clients.
Without our clients we have no reason to exist as lawyers.
Our profession would be obsolete. We must find out not only
what our clients need, but also what they want. We must
communicate with them at their level of understanding. We
must find out how they best receive information and then
provide it to them in a way they can understand.
Losing Our Way
It seems so fundamental a principle, yet in recent decades
our profession lost the connection between the value we
provide and what we charge. Until well into the post-World
War II era, legal fees were based not only on time spent,
but also the nature of the service, the result achieved,
and the amount at stake. Charging an appropriate legal fee
was a matter of professional judgment. That changed in the
mid-1960s when clients began demanding detailed billing
statements and lawyers used time records as a management
tool to seek greater efficiencies. Today, most lawyers are
paid by the hour - almost in the same way as an hourly laborer.
Our billings are "features" lists: this is what I did, this
is the time I worked and this is what you owe me. That approach
breeds dissatisfaction among clients, because it doesn't
address value and benefits - the worth, as opposed to the
cost, of the service.
Choosing Our Model
The best model for our profession, and the best path to
personal satisfaction in one's practice, is to get paid
for the real value and expertise you bring to the client.
Earlier this year a lead article in the American Bar Journal
observed that the "strategic lawyer" is what clients are
looking for; and this kind of lawyer is not easy to find.
The strategic lawyer is the counselor, the type of lawyer
that used to be the standard of the legal profession, and
that law schools need to start developing again. Such lawyers
provide the best services at the least cost to benefit the
clients they serve.
Defining Our Value
"Good service," "value" and "solutions" shouldn't be vague
buzzwords. All lawyers, solo practitioners and members of
mega firms alike, can structure what they do to consistently
encourage a high client perception of value. Basic elements
of that include:
- Establish a return phone call policy. Return or have
an assistant return clients' phone calls within two to
four hours.
- Know your clients' concerns and understand their business.
- Create a client-friendly office environment. Have informative
literature in the waiting room, and make sure it's available
in languages that reflect your clients' primary languages.
- Prepare your clients for interactive events such as
negotiation sessions, depositions, and testimony so they
know what to expect and are prepared for what might happen.
Incorporate a wide range of possibilities so that clients
are not shocked if the outcome, over which you have no
control, is different from what they had hoped.
- Never make promises you can't keep. Particularly with
a new initiative, consider limiting yourself to consistent,
well-planned effort on one project only, at least until
expectations of value and service are defined by both
parties.
- Regularly ask clients for feedback about whether they
are pleased with your services. This feedback should be
focused on their satisfaction with the service provided,
rather than on the results achieved.
Changing Our Value Mix
Such value-added elements will let you generate billing
statements that are easy to understand and that clearly
list actions taken on the client's behalf while relating
them to the time it took to realize that value. These billing
statements will be more meaningful to the client, and will
go beyond a mere laundry list of tasks performed.
However, even if we are providing and documenting value,
all of us know that price pressures can lead clients, particularly
corporate ones, to ask for lower billing rates. Value billing
does not remove the pressure from clients on fees. The advantage
of charging for value, however, is that, rather than lowering
our price, we are in a position to take value/services off
the table in order to deliver a lower price to the client.
In effect, when the client wants a reduced price, we can
unbundle the services to accomplish that objective. You
are charging a different price for a different group of
tasks and functions.
In other words, for X dollars, you will do this and for
"Y" dollars you will do that less "abc." While "abc" may
not be important, the client gets the message that you're
adjusting the price to fit the appropriate level based on
the service to be delivered. For example, consider the components
of an hourly fee. If returned phone calls within 2 hours
are part of your regular hourly rate, take that response
time off the table if you lower your hourly rate in response
to your client's request. Tell the client that your response
time will be 24, or even 48, hours. The point will be clear:
you're not lowering your price; you're changing the value
composition of what the client is buying.
Raising Our Fee
Turn to the positive. Although lawyers are often uncomfortable
about raising their rates, you can soften the blow of a
fee increase by adding value to your service. In other words,
do more things that cost less than the increase. If you
handle estate planning, for example, you could add financial
planning as a service, either as part of the fee package
or for a designated added fee. Sometimes, showing that you
provide better-than-excellent service is all you need to
justify a fee increase. For example, consider packaging
final documents in an attractive folder and hand delivering
them to the client. This improved presentation adds only
pennies to your costs, but it will be perceived as an example
of your caring for and nurturing the client. Faster turnaround
from engagement to completion is another way of adding value
and exceeding expectations.
Controlling Our Practice
Lawyers, who charge for the concept of value, and not
strictly for time, ultimately have more control over their
practice. Often, when I coach attorneys who are dissatisfied
in their practice, it's soon apparent that their real dissatisfaction
is with measuring their days in six or 10-minute increments
and losing focus on the essence of their skills. Lawyers
work hard, spending many hours in their efforts to meet
clients' needs and objectives. It's much better to say that
our time is measured in value (investment) rather than cost
(expense).
Compliments of:
Edward Poll
LawBiz Management Company
Venice, California
(310) 827-5415
edpoll@lawbiz.com
www.lawbiz.com
About the Author:
Edward Poll, J.D., M.B.A., CMC, advises law firms and their
leaders on practice management, business development, and
financial matters. He is a nationally-recognized practical
guide to profit. His advice has benefited national, regional,
and local law firms. Ed is unique in that he has long-term
experience in both business and law. Ed has practiced law
for 25 years, was the CEO and COO of several manufacturing
businesses, and has been a consultant to small and large
law firms for 15 years.
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