Volume discounts for legal matters
A coaching client of mine presented this fact pattern: He is a contract attorney, doing work for a large firm. During one of our recent sessions, we discussed his fee schedule. After some trepidation on his part, we concluded that it was time to increase his fee and we proposed a new fee schedule that included a volume discount based on a scaled number of hours per month. The managing partner responded by asking that the number of hours and the discount to be applied be reviewed retroactively at the end of each three months cycle.
While my client’s volume discount proposal was based on a prospective guarantee of work, the managing partner of his client-law firm responded by requesting that the volume discount be after-the-fact. The difference between the two proposals is prospective versus retrospective.
My experience is that volume discounts are based on pre-negotiated volume; while it is not unheard of, retrospective discounts are seldom seen. And, if the contract lawyer is seeking to plan his or her workload, a retrospective review is a disaster, fails to offer any security and makes planning impossible.
Without the prospective assurance of volume, there is little or no benefit to the contract lawyer as suggested above; there is every benefit to the law firm. He who has an option usually is in the driver’s seat – Which side of the table do you want to be on in this situation?
I concluded my discussion by asking a question: When partnerships negotiate their partner percentages, or points, do they negotiate those going forward or do they negotiate those after-the-fact? Usually, the points are set in advance even though the actual amount of dollars may be determined and distributed later. And, the pattern of setting compensation traditionally is established in advance of performing the work. So why should the firm treat my client differently?
The answer is simple: If they ask, my client might accept, feeling at a disadvantage, vulnerable and wanting more work/revenue. Sometimes, sole practitioners believe they lack leverage. This is one more benefit of having a coach, having an ally on your side that can see your horizon with different experiences and learning.Tags: Cash Flow - Finances
Categorized in: Cash Flow - Finances