Law Firm Marketing and The Prestige Pricing Strategy™
The strategy I am going to outline for you in this article is not for wimps. If you are not the kind of person who can stare adversity in the face and laugh, then you should stop reading immediately.
Today I am going to share something with you that less than two percent of all lawyers have the guts to implement. I call it The Prestige Pricing Strategy™. This is a strategy that can help you grow your revenue without increasing your workload.
There are two steps to implementing The Prestige Pricing Strategy™.
Step One: Build a Solid Value Proposition
Your clients cannot think of working with you as hiring a lawyer. They must view working with you as a good investment. This means: If you are a transactional lawyer, you make the transaction more valuable. If you are a criminal lawyer, you give the client their best opportunity to fulfill their earning potential by remaining free. If you are a divorce lawyer you give the client the best opportunity to keep his dignity and the assets he really wants.
In The Prestige Pricing Strategy™ you never, ever, quote your fee before you make certain the client understands the value they are receiving. Contrary to the belief of most lawyers, it is YOUR responsibility to make sure the client understands the value. Do not expect them to walk through the door, give you a hug and say “Boy am I glad I found you.” You have to HELP THEM feel that way by presenting the value your legal service will bring to their life.
Step Two: Charge Premium Prices
This is the easy part. If you have done a great job explaining the value of the service you provide, you can charge a significantly higher fee than anyone else in the market. You read that correctly. If you show the client your value, you owe it to yourself to be the highest priced lawyer in town.
Look at it this way: You can be Walmart or you can be Bergdorf Goodman. You can be Motel 6 or you can be The Ritz Carlton. You can be Jet Blue or you can be NetJets. Not everyone can afford the latter choice in these examples but, not everyone is their ideal client either.
Benefits of The Prestige Pricing Strategy™
Attracts the Best Clients
If you are seeing a great deal of crappy clients come through your doors, chances are good you are not charging enough money. Many lawyers believe that clients who pay high prices are more demanding. Nothing could be farther from the truth. The worst clients on the planet are the cheapskates who squeeze you for every nickel and dime. Let those folks work with another lawyer.
This is a mistake I made early on in my career. I never turned away anyone. I thought any business was good business. Boy was I wrong. This is the main reason I am making a HUGE change to my business in 2011. I will only be accepting 12 new one-on-one coaching clients. This forces me to be selective and quote a fair value-based fee with NO NEGOTIATION. This self imposed limit has already changed my own perception of my value. There are some clients who will not be able to work with me. I cannot be everything to everyone.
Allows You to Focus Your Business Development Time
This strategy is not about working less. This is about spending more time on marketing. Think about it: If you raise your fees and you work with fewer clients you will have more time available to concentrate on attracting the RIGHT TYPE of client. This time invested in marketing will help you keep the pipeline of prospective clients full at all times. It may even allow you to hire an associate to take on the overflow work.
In my firm I set up a waiting list for my Strategic Advisory Groups. Earlier this year an Immigration Attorney dropped out of one of my Miami groups. I replaced him with one phone call to someone from the waiting list. That waiting list is stocked with people who come from my marketing.
The Fee Commands Respect
Do you ever have trouble getting clients to do what you want them to do? Charging a fee that grabs the client’s attention will increase their compliance with your requests. In fact, a study conducted by Stanford University shows a strong correlation between price paid and happiness with the experience. The higher the price, the better the experience for the client. Why? Because compliance increases and compliance leads to better results.
My personal experience with this phenomenon has proven it to be accurate. In the past I have made barter arrangements with attorneys, exchanging my services for theirs. This has almost always resulted in the attorney devaluing my service and taking it for granted.
Drives a Wedge Between You and Your Competition
You want to be perceived as a better lawyer than your competitors. Yet you charge the same price as they charge (or less). What does that say about you? Are you worse or just foolish?
There are a few other people in the United States who do what I do. None of them is Ivy League Educated with two master’s degrees and 20 years of practical experience in business strategy. I have earned the right to charge high fees and I’m sure you have too.
Help your clients understand why you provide a better value and then charge accordingly.
Pride in Spending Effect
People want to work with the best. When they decide to hire the best lawyer, they want everyone to know about it. If you want more referrals, charging a high fee will help you achieve that goal.
You must provide an outstanding value. If you do not provide great service, a terrific experience and make an emotional connection with your clients. If you do not, you have not earned the right to charge high fees. Fix your service, your experience and your relationships first. Then raise your fees.Two:
This is very difficult to do with hourly billing. Hourly billing is the longest running scam in the world (perpetrated by many professions but is especially nefarious when used by a lawyer). Since hourly billing creates an inherent conflict with the client, the Prestige Pricing Strategy will not work. If you are a lawyer who is not creative enough to come up with a billing model that works in the client’s interest, you will never be able to command a high fee premium and my clients will routinely kick your ass when it comes to revenue.
So there you have it. The Prestige Pricing Strategy™ has helped more of my clients make more money and live better than anything they learned in law school.
In Marketing for Lawyers Free is Bad
Most attorneys think offering a free consultation is mandatory. Free consultations are no bargain. Not for the lawyer and not for the client. Here’s why:
A Free Consultation Immediately Positions You Poorly
People believe they get what they pay for. Affluent people and business owners keep this ideal present in their minds at all times. Most people have this permanently ingrained in their psyche. Charging nothing means you are worth nothing.
You Welcome Shoppers
There are a handful of people out there who would shop for a bargain in parachute repair. If you want to meet with all of these people, do not charge for a consultation. Free consultations welcome shoppers to your law firm. You can be certain that if you do not charge people for an initial consultation, people will meet with you just to get a number out of you.
You Devalue Your Time
What is your time worth? If you charge nothing it is worth nothing. Not to you and not to your client. It is that simple.
The Quality of Your Clients/Matters Decreases
If you want crappy matters, a free consultation is definitely the way to go. Money tends to be an indication of how seriously someone is taking an issue. If you are willing to spend $250 on something are you more likely to pay attention to the outcome?
You Take on Liability with No Upside
In a free consultation you will often dispense advice. When you do, you expose yourself to liability. If the person sitting across from you implements your advice and things go badly, they will find you. You do this with no compensation in return.
One of the arguments I hear all the time is: “It is customary in my practice area to offer free consultations. Everyone does it.” Following a majority does not always mean you are acting in your own best interest. In fact, it probably means you are doing what the average industry professional will do. Do you want to be average?
This decision should be easy. When someone comes to your office to discuss a legal matter, they should pay you something. That is one of the reasons you do what you do. This is a business as well as a profession. Treat it like a business.
Attorney Marketing: Three Ways to Get a Yes
The client walks into you office, sits down and asks you questions for an hour. At the end of that conversation he says he will “let you know” if he is interested in hiring you.
Has that ever happened to you?
It is not unusual for this to happen to attorneys. In fact, it happens all the time. You can eliminate this terrible experience by making simple minor changes. They may seem strange and unnatural at first but believe me, after you implement them, you will be amazed at the results.
Charge a Consultation Fee for the Initial Meeting
This is an underutilized strategy. It works like this: The client pays a consultation fee via credit card when they make the appointment. This means they will keep the appointment and they will value your time. If they engage you to work on their matter, you apply the consultation fee to your engagement fee.
This works because people value (and respect) things they pay for. A client who pays a consultation fee to meet with you is going place a premium on your time. He is going to hold you in higher regard than someone who does not charge a fee.
You will feel better about scheduling appointments with people who are “shopping around”. Even if they do not hire you, you didn’t waste your time meeting with them. You got paid for it.
This translates into you being more relaxed and confident. That means you will be more likely to be hired.
Interview the Client Before Accepting Him
Every client is not right for your law firm. You must interview the client before you decide to take him on. That should be your mindset.
If you conduct interviews to find the right clients for your practice, you will not only wind up with more clients, you will wind up with better clients. You must control the business development process. If you interview the client, you are in control.
Let the Client Close Himself
Lawyers are always rushing to close the deal with a prospective client. You are far better off if you wait for the client to ask you a question like: “What is the next step?”
You get to that point by simply asking them: “How do you think I can help you?” Or “What were you hoping I could do for you?”
These two questions acknowledge the clients need for assistance.
These three changes do some amazing things for you.
First: They position you as an expert and not as a commodity. You immediately become more valuable.
Next: They position you as selective. You become more desirable.
Finally: Don’t beg or ask for the business. This immediately makes people throw themselves at you.
This three step process works like a charm. The question is: Do you have the guts to make them work for you?
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?
Diversity is Critical in Marketing for Lawyers
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.
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.
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.