If It’s Good Enough for the Airlines…

Published July 8, 2008

My colleague Carolyn Elefant, in her My Shingle blawg, has suggested that the airlines’ new fees for passengers who check baggage may be seen as “nickel and dime” fee increases. And she wonders out loud whether lawyers are doing the same thing to clients when they charge for photocopying, long distance calls and other ancillary services.

It’s true that some lawyers charge their clients for “opening” a file on each matter; others charge for photocopying the file before giving it to the client when requested. These are legitimate charges to clients if they are specified in the retainer agreement. But if your competitors do not make such charges, or if your client resents being “nickel and dimed,” it can create negative feelings toward your bill.

Charging for administrative activity is more defensible. Filing a notice of unavailability or a notice of continuance before an extended absence from the office is often in the client’s best interest, and can be considered billable. One can argue that failure to file such notices is a failure to protect the client. If opposing counsel doesn’t know you will be on vacation and files a motion or other action requiring special appearance or a later motion of continuance, the client will ultimately pay more than the original time needed for a simple notice.

An administrative charge may add value, but a client can still insist that the bill is too high. In that instance, a lawyer can legitimately take value/services off the table in order to deliver a lower price to the client. Essentially, when the client wants a reduced price, we unbundle the services to accomplish that objective. 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, if returned phone calls within two 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.

That is exactly what’s going on in the “friendly skies.” An airline has agreed to fly you and one carry-on bag; did it agree to also fly your entire closet of clothes? If they are charging those that do carry “extra” baggage (i.e., more than carry-on), they are not charging others who can fly “lighter” and thus consume less resources. Rather than raise the fees for all, they are being selective and charging those who consume more of their resources. Just because it’s an extra charge doesn’t make it wrong. (I never thought I’d defend an airline practice!) An unintended consequence of the airlines’ new policy, however, may be larger and heavier carry-on baggage, and longer delays in loading and unloading the planes. All of which will lead to even unhappier customers!

Categorized in: Management

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