Doctors Don’t Bill By The Hour: Why Do Lawyers?
How many hours did It take to do your heart bypass?
Imagine if doctors charged by the hour.
Would you want the fast version or the slow version of bypass surgery? Would the doctor drag your surgery out to make more money? Would the doctor have an incentive to keep you sick so he would see you more often and spend more time with you each time he saw you? If the doctor wanted to see you weekly for the six weeks following the surgery would you be suspicious of his motivation? What if the doctor wanted two of his colleagues to scrub in and help him with the operation, would you be suspicious of his motivations?
Give those questions some serious thought.
Now think about how billing works in your law firm.
When a client comes to you with a problem, a serious problem, what do your billing practices say about the way you address that problem?
Now I have just one more question for you:
If you felt the least bit uncomfortable with the doctor analogy above, how do you think your clients feel when they come to you with a serious issue and you start punching a time clock?
Print
EmailMarketing for Lawyers: Diversity is Critical
Diversity is important in all aspects of life. For the purposes of this discussion, we are not going to get into racial diversity (although that is extremely important). In this article we will discuss diversity as it relates specifically to marketing for lawyers. There are three aspects of marketing diversity that are critical to the success of a law firm. These are: Diversity in case selection, client industry and pricing. Let’s explore each of these three areas.
Matter/Case Diversity
One of the first things we teach our clients is that they must focus on a specific market niche in order to command fee premiums and differentiate their law firm from their competitors. You can imagine the strange looks I get when I raise the subject of case or matter diversity with those same attorneys. Although niche marketing is a critical component of marketing for lawyers, it is wise to have two or three areas of expertise within your niche.
For example: A Transactional Immigration attorney can specialize in obtaining visas for people with extraordinary ability and in obtaining visas for temporary foreign workers. Artists, athletes and scientists will be attracted to this attorney because of the first specialty, while international hotel chains will be interested in working with him because of the second.
The diversity of this approach helps hedge against a limit (natural or imposed) being placed upon either of these programs. There are dozens of examples of this in just about every practice area.
Diversity of Client Industry
If you work with clients in only one industry you will eventually get burned. This is particularly true of lawyers in business-to-business transactional practices. I have come across several lawyers who worked only with auto companies for their entire career. Those lawyers are struggling now.
In some of the consumer law practices (criminal defense, family law, probate law) you may think there is an immunity from falling victim to “more of the same”. This is true to a certain extent – unless you live in a company town and the company moves or closes up. Bethlehem, Pennsylvania, Detroit, Michigan and Hartford, Connecticut are all serious examples of this situation.
Pricing Diversity
No discussion of marketing for lawyers can ever be complete without bring up the subject of fees. Fee diversity (pricing diversity) is another critical element of law firm success. A good rule of thumb is: No one client should make up more than 10% of your revenue. The reason for this is to avoid waking up one day to find out that a huge portion of your law practice just fired you. Big revenue clients, clients that allow you to pile up the billable hours, should always be part of a marketing plan for lawyers. But careful attention must be paid to the mix of clients. A good law firm always has its ranks stocked with clients at all pricing levels.
Diversity in this context is critical to the success of any law firm. If you are developing a marketing plan make sure you take into account the mix of clients by industry, case type and price. If you don’t you may wake up one day to find out you need to start from scratch.
Degree of Difficulty is Directly Related to Pricing
Some clients are tough to represent.
It’s not because their case is tough or because they are in the wrong. It’s not because they are morally bankrupt or they just don’t fit in with our expectations for what an ideal client should look like. These situations pose challenges but they are challenges that most attorneys with a little experience have learned to handle.
The clients that are particularly difficult – the ones attorneys hate to represent – are the folks who call fifteen times a day to double check on work you were contracted to handle.
Let me give you an example:
One of my clients (call him Mitch) recently handled a real estate closing for one of these difficult individuals. The closing was straightforward. Mitch gave his client an hourly rate for processing the documents related to the closing and title work. He also provided an estimate for the amount of time he thought it would take to complete the deal. The client shopped around and eventually chose Mitch (after beating him up over price to the tune of a 15% reduction in his hourly rate). While he wasn’t thrilled with this deal, Mitch took it.
This client called Mitch literally everyday during the three months it took for the transaction to close. She also stopped by his office on several occasions. Most of the meetings with the client consisted of her questioning Mitch’s expertise at every opportunity. And these weren’t deal-related smart questions. They were questions related to Mitch’s work style, knowledge and choice of staff.
The aggravation this client caused Mitch and his team was certainly not worth the fee he charged. In fact he wound up reducing his final bill because the client was unhappy with .2 and .3 showing up on various places on the invoice.
How could this be avoided?
Over the years, we’ve found that “price buyers” – people who are looking for discounts on the services of a capable attorney – are always the most difficult clients to work with. They tend to focus their time and attention on the minutia of the legal work and not on the deal points that are critical. This is because they have conditioned themselves to beat people up to get better deals.
The best way to avoid having this happen to you is to avoid these clients altogether. When it comes to clients YOU get what THEY pay for. That means that if they pay for your expertise- and they pay handsomely – they will respect your opinion and take it to heart. They will focus on the outcome and not the means to an end.
You can reinforce this by setting a fair but firm price upfront. Base the price on the value for the client. Help them understand that the value they receive will exceed what they pay for your services by a wide margin. If they don’t agree, or they just don’t get it, don’t work with them.
Price buyers are not nice buyers. Stay away from bargain shoppers. People should be wary of discounts in legal work and parachute sales. Too much is riding on the outcome to go with a cheap solution.
Page 1 of 1 pages
