Never Negotiate Against Your Own Self-Interest
Every lawyer is a businessperson. Your practice is your business, and if you do not work to ensure its profitability, no one else will. Some lawyers, however, do not grasp this truth, and risk undermining their business by their own actions.
I recently spoke with a lawyer who focuses on intellectual property – a practice that is much in demand today. A prospective client approached this lawyer with possibility of work, and in return asked how much the lawyer was willing to discount her $295 hourly rate. The advice I offered to this lawyer was threefold:
• First, state that your billing rate is $295; you do not talk about discounts, reduction in fee, or any other modification of your hourly rate. To do so would be to negotiate against yourself and against your self-interest. If in the same breath you quote your fee, then start talking about discounts, you are saying that you are not serious about your own fee.
• Second, if the client asks whether $295 is the least expensive rate you can charge, raise the idea of a volume discount. You are prepared to discount your rate from $295 to, for example, $270 – if, and only if, the client is prepared to guarantee 20 hours of work per month for a minimum period of time, say six or nine months.
• Third, if the client is willing to commit to the amount of hours and the time period, they should pay the discounted fee of $5,400 (20 hours at $270/hour) at the beginning of each month. In other words they have to pre-pay that amount. If the client needs more than 20 hours of work in any given month, the additional work will be billed at the discounted $270 rate under billing terms the attorney typically uses (for example, payable within 30 days of the billing).
Approaching the idea of discounting this way says that you are a businessperson; that you have certain policies in place; and that you are willing to treat clients fairly when they treat you fairly. In other words, the quid pro quo for a discount is a guarantee with payment up front. Taking care of your own interest makes sense and tells your client that you merit his confidence, that you will protect his interest as you do your own.
Tags: Cash Flow - Finances
Categorized in: Cash Flow - Finances