4 Ways to Approach a Fee-Reduction Demand

Your client says, "Give me a 10 percent discount — or else." What do you do?

To put it simply: "else."

Clients who ask for a fee reduction don't really understand how the issue of representation should be framed. The issue is not really so much what your fee is — that is, whether it's $200 per hour or $300 per hour — but what it is costing them to engage you to fight the battle that they need fought. So the best response is not to deal with your fee but rather the overall cost to the client. In other words, what in particular is the client going to have to write the check for?

Looking at it from that standpoint, there are several approaches that a lawyer can take: partnering with the client, budgeting, prevention or efficiency.

Partnering

You need to get the client on your team, helping you. You need to explain to your client that in order to make the legal cost less than what it might otherwise be, he or she needs to become a partner with the lawyer. In other words, the client needs to participate in deciding what actions should be taken for the case. After all, it is those decisions that will impact the cost. In short, if the client spends more time in the decision-making processes, he or she will spend less money in the end.

Budgeting

The second approach that will help lower the cost is to budget the matter, whether a litigation or transaction. A number of years ago, one of my associates told me that her company saved a lot of money by budgeting — I can't remember the exact amount, but it was somewhere between half a million and a million dollars. Her outside counsel had wanted to do some things that the general counsel thought were not really necessary. By deciding against some of those things, the general counsel took a risk, in essence saying, "No, we don't need to do that. We're prepared to take the risk of anything happening as a result of not taking that action."

Prevention

The third approach to lowering a client's cost is to think in terms of prevention. The old expression, "An ounce of prevention is worth a pound of cure" is apt. The lawyer should approach the client with sufficient lead time and suggests to the client ways that the client might act or not act that will avoid legal issues and legal entanglements within the justice system.

Efficiency

A fourth way of dealing with the issue of lowering legal costs for the benefit of the client is to hearken back to the Industrial Revolution, when we learned that saving labor caused efficiencies. In turn, efficiency caused more labor saving, and that effected not only less cost but, obviously, more profits.

And so, in terms of this idea, we need to look at what the process is for a particular case, and, along the spectrum of our legal services, we need to see where we can become more efficient. Unnecessary steps and services sometimes exist only because we've accepted them for so long as standard operating procedure, instead of regularly examining them and updating how we do business in an ever-evolving world. This idea is especially pertinent when it comes to the rapid technological advances of the last decade.

When we use these approaches, we not only become more profitable for ourselves, but, more importantly, we retain the loyalty of our clients because we are addressing the high cost of legal services for them in a way that they can understand—all without reducing our rate.