Understanding Perception of Value

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A big part of lawyer marketing is demonstrating the value you provide to your client.

If you want to differentiate your law firm from every other firm in your area, you should consider value based billing as an option.

The first thing to keep in mind is that value resides in the mind of the client.  It is his perception that matters most in this process.  You believe your law firm offers exceptional service at a fair fee.  But we must always remember our role in crafting a fee agreement is to offer a valuable service to the client at a fee that is valuable to us.

Previously we discussed the three step process of value based billing.  Now let’s take a step back and look at the factors that influence the perception of value in the mind of the client.

Here are the eight factors that contribute to a value based fee and the initial questions to ask to begin a discussion about each of them:

The Problem and The Symptoms:

What is the client facing?  How bad is it?  Does he understand how bad it REALLY is?

When a client initially comes to you he usually brings you the symptoms.  It is up to you to help him understand the actual problem.  It is also incumbent upon you to relieve the symptoms and the problem, or at least improve his condition.

Risk:

If the client does NOTHING what is likely to happen?

When it comes to lawyer marketing, you have to motivate the client to take action. Clients rarely do something unless they have to.  Paint a picture for the client and help him see the worst case scenario and the likelihood of that unfolding.  Use case studies and actual scenarios to make your point.

The more risk the client faces, the more value you provide in mitigating the risk.

Notice I mention “mitigation” and not “solution.”  You can never promise a specific outcome.  There are too many variables.  You can only promise to do your best to improve the situation.

Probability of a favorable outcome:

How likely is it that you can significantly improve the client’s condition?

If you have seen similar (or even identical) scenarios before, you should have confidence in your ability to have some sort of positive impact on the client’s situation.  This confidence should be reflected in your pricing.

Again, do not promise any type of outcome.  Simply present case studies similar to the client’s scenario and discuss what you would do to make things better.

Speed of resolution:

How quickly can you make the client feel better?

Clients pay for quick certainty.  Even if the outcome is less than ideal, the client will accept it and begin to move on with life if it happens quickly.

If you can provide speedy certainty, you can command a fee premium.

Emotional impact:

Is this situation keeping the client awake at night?

All decisions are made with emotion first and supported by logic.  Help the client FEEL better and you can name your price.

Financial impact:

How much is this situation costing the client?

Money makes the world go ‘round.  If you can stop the financial bleeding you can charge more.

Possible Alternatives:

Who else does what you do?

If you have no competition, you can name your price.  If your competitors advertise every 2 minutes on TV and radio, you will need to clearly differentiate yourself and your law firm in order to charge more.

Your differentiating factor:

What makes you different compared to everyone else who does what you do?

You have to make the case that there is nobody like you.  You’re one-of-a-kind.  If you cannot be compared to everyone else, you can set your fees as you see fit.  This is probably the most basic element of lawyer marketing.  Differentiate yourself from everyone else who does what you do.

Each of these factors plays a role in the client’s perception of the value you provide.  Your job is to help the client view his predicament (and you as the remedy) through the lens of all of these factors.

Given the totality of his dilemma, and your value as demonstrated through each of these elements, you should be the obvious choice – regardless of price.