Do You Want to be Cheap?

Published April 8, 2008

In several recent “Tips” we’ve discussed when to raise fees and how to stop discounting. There are plenty of strong opinions on both topics, and I recently had the opportunity to share my thoughts online with two lawyers whose views, although they were sincere, seemed contrary to “The Business of Law”® as I understand it.

A Texas lawyer sent an email to my blog—”I know your coaching is aimed at making a law practice more profitable,” this lawyer wrote. “But we as lawyers have a fiduciary relationship to our client. It is part of our job to our client to keep the legal fees low …to advise the client how to get the legal result desired, at the least possible cost.” I congratulated him for his commitment to professional obligations—after all, as we’ve written before, a lawyer’s fee is required to be “reasonable.” However, this is not the same as saying that the lawyer’s fee should be low.

Here we can get into the slippery slope of what the fee should be. If the fee should be low, then is $200 per hour, for example, too high? If so, is $150 per hour too high? I believe the lawyer’s true obligation is not to be cheap, but to be fully committed to a collaborative client relationship that builds trust over the long term. That way, clients will see you as valuable, not expensive.

On a listserv recently, another lawyer requested comments about his proposed letter to his major clients. He wanted to “shout from the highest roof” to his clients that he plans to maintain his current fee structure, that he will NOT raise his fee rates. I responded that larger business clients don’t buy legal services based solely, or even primarily, on hourly rates. They, like most others, buy based on perceived value—expectations that you can provide solutions to their challenges and personal rapport. Sending a letter like the one this lawyer proposed puts the focus on price, not service.

My suggestion was that the lawyer should call his clients and merely thank them for their loyalty and continued business. At the same time, a casual statement, such as, “oh by the way, my rates will remain the same in 2008,” would reinforce the lawyer as a source of value, not cost. Such an approach builds client loyalty and lays the groundwork for a possible fee increase when the time is right.

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Audience type: Administrators, Associates, Large Law Firms, Small Law Firms, Sole Practitioners