Tag Archive: Management

Fee or Free

 

A client of mine asked me whether he should charge a prospective client a fee for their initial consultation, the meeting before being engaged.

There are three approaches to this issue, long debated amongst lawyers:

1.                   Free initial consultation

2.                   Paid initial consultation

3.                   Paid initial consultation with the payment applied to the total bill if they engage you.

There is no one right answer or magic bullet in response to this question. Obviously, everyone wants to get something for nothing. But, we then also run into the bromide that "you get what you paid for."  In this case, nothing.

Whether you can charge for the initial consultation is normally a question of the client’s trust in you, their confidence in you … and how long it takes to generate those feelings in the client toward you …

I don’t think “free” connotes expertise … and that’s what prospective clients are looking for. In deference to the current economy, and the need attract clients, you might consider alternative #3 …  charge them an initial consultation fee, and apply that amount toward the total fee in the event they should retain you.

This is never an easy choice. But, we must remember that people do believe they get what they pay for … and anything free is usually viewed with suspicion either as to motive or expertise. A discount in an on-going relationship, however, is viewed differently and not to be confused with the issue at hand.

 


View page

Do you know when you’ve succeeded?

The other day, I was cycling up Red Rock Canyon in Las Vegas, NV.

I went from about 2500 feet to 4713 feet. En route, the road was rolling hills. So, sometimes I went down, but then there was an ascent next … all the way to the top, about 7.75 miles from the start.

Before I reached the top, however, I was complaining to myself about how hard this ride was … and whether I could complete the ride as I had intended. When I reached the final plateau, not having ever ridden there before, I was not sure that was the top. I thought there were more rolling hills ahead of me. I asked a couple of cyclists who were descending. When they told me this was the top, I was elated I had made it to the top, relieved that the pain of the trek was over and quite surprised at how hard I had fought with myself.

How many of our clients don’t realize or appreciate the success we bring to the table for them? What have you done to educate them about the process of your representation? I was fighting myself because I had never been in Red Rock Canyon before. Most of your clients have never been involved in the judicial process before. And even sophisticated clients with previous involvement don’t truly appreciate what lies ahead. What have you done to show them a preview of what’s to come? What have you done to make their journey easier? What have you done to shine a flashlight on the road in front of them?

When you shine the flashlight, and they still agree to move forward, the likelihood is that they will pay you your full fee without question and promptly in accordance with your engagement agreement.

Use the flashlight!


View page

Can you afford to retire?

While the economic crisis is being felt by nearly every segment of the working population, one group of workers is faced with particularly tough decisions regarding their futures. Law firms need to be prepared to assist them in making a transition during challenging times. Six-in-ten workers (60 percent) over the age of 60 say they are putting off their retirement due to the impact of the U.S. financial crisis on their long-term savings, according to a survey by CareerBuilder.

I agree with Ron Friedmann that lawyers, even partners in larger firms, are feeling the economic strains of today’s world and therefore delaying anticipated retirement. But one group of lawyers may not:  Sole and Small Firm lawyers. These folks have something of value that they can sell .. converting their equity into cash. Most lawyers never thought their law practice was a saleable asset. So, while their investments may have tanked, they can look to their law practice for ready cash.


View page

Change creates opportunity

One could view the current situation with the attitude that whenever there is challenge (a much over-used word today), there is also opportunity. Certainly better to consider opportunities than feeling like a victim in constant pain.

Our new newsletter is now on the stands.


View page

Lawyers survival – cont’d

I like the comment of Stephen Mabey, who said:

"History should be a guide post not a hitching post and when marketplace adjustments increase in both strength and frequency I think falling back on historical prose that we are different than all other industries / marketplaces is a great way to ensure a repeat of history."

Despite the pain, I’m not sure how many of us can alter our course of conduct. But, clearly, the successful ones will have to make some mid-career alterations.
 


View page

Will the legal profession survive as it is?

Larry Bodine suggests that law firms that survive today’s economic crisis will:

  • Have “customers” not “clients.”
  • Offer flat fees per project or per procedure.
  • Have rates that are markedly lower than in 2008.
  • Will routinely produce budgets for all legal work.
  • Be run like real businesses, which know their costs, can calculate a profit margin, and offer customers “just in time” services at the best price possible.
  • Realize that customers are fickle and expect personalized service.
  • Have lawyers that fly coach and stay at cheap hotels near the client’s offices, instead of the Four Seasons 5 miles away.
  • Have lawyers that know their clients business, their goals, strategies and objectives, and work to help the client make more money or cut their costs.

I have been talking about the difference between clients and customers and patients and customers for a long time. I’m glad that Larry’s first point on his list is the same.  Why should this be so important? Because not all of us are clients; we all are customers. Therefore, we can relate. There was a hit movie years ago where a mean doctor was a patient. Only after his experience did he have more compassion for patients and changed his ways. Today, medical schools are required to teach doctor-patient relations.  When will law schools do the same?


View page

Pay attention to your clients

I was coaching a client today. She pulled at my heart strings by telling me the problems she is having with several of her clients who owe her money, big sums of money.

One of the clients paid her $37,000 two weeks ago and already owes her another $27,000. After complaining about some of the services and getting a $5,000 reduction in billing, he has not yet committed to a date certain for payment of this amount. Oh, yes, you guessed part of it. "The check went out last week."

Should she continue working for this client? My advice was to review your file to make sure it’s clean and not susceptible of negligence claims, make one last effort to collect by telling the client he has to pay what is owed within 7 days or you will file a motion to withdraw because the client has not honored his agreement commitments, and then be sure you are far enough away from trial to have sucha motion granted.

Bottom line, however, while you are taking care of your client, you must take care of yourself! If, while focusing attention on the client’s issues, you ignore your own billings and accounts receivable, you will lose the respect of the client, you will not get paid the full amount owed to you, and you will not get more referrals from this client.  Lawyer Beware!


View page

Leverage and morale

Susan Ward quotes Adam Smith in her blog posting today.

I respectfully disagree with his assertions.  This is what I said in response to Susan’s comments:

It’s hard for me not to disagree more. Leverage always has been, and will continue to be, a motor for profit. Whether that leverage comes from associates or from non-equity partners (another form of associate) is not clear, nor important, for this discussion. Time will tell. And Susskind’s conversation  merely discusses another form of leverage, technology, just not the human form.

In China, years ago (I can’t speak for today because it’s been many years since I was there), the leverage the economy used was people. They couldn’t use machinery because they had so many people who needed work.

Yes, experience is important. But, it is also teachable. Perhaps the more progressive law firms will wake up to how important continuing education is for their lawyers (partners and others) as well as their staff.

Morale is low. Agreed. But, that in part is because of failed expectations. Expectations in BigLaw must be brought in line with economic reality; the business model needs to be adjusted a bit … then morale (with good leadership) will rise.


View page