HOW CAN LAWYERS STOP GIVING SUCH LARGE PRICE DISCOUNTS?

Traditionally, lawyers have charged for the time spent on a matter and so the only variable has been the rate applied to the time spent. Until recently, many clients thought that they could not challenge the suggested rate and they just accepted it. Today, everyone knows that everything has a value and that to have one rate for everything is not right. Clients are very comfortable challenging rates and prices now.

In fact, some clients will go on courses where they are taught what to say to get bigger discounts. It is probably fair to say that many clients are more skilled and used to having pricing negotiations than their lawyer.

THE NEED TO PREPARE FOR DISCUSSIONS WHERE FEES WILL COME UP

It is naïve to believe that you will be given some work by a client without any discussion about the fee for the work. Providing an understanding of how clients will try to negotiate fees and what lawyers can do to maximise their chances of winning the work at a price that will still be profitable is important.

Simple tools can be introduced that will help a lawyer to plan a piece of work and which will show them the fee and the profit that will be earned from the work. Without such tools, the danger is that the fee will be quickly discounted to win the work, without any real understanding of the impact on profitability.

WHAT CAN BE DONE TO WIN GOOD WORK AT GOOD RATES?

Confidence around pricing

Lawyers know that clients are likely to demand discounts and they are nervous that they might not get the work so they naturally discount quickly.

Lawyers need to be given more confidence to start higher which will most easily be achieved by getting them to talk to a colleague before talking to a client.

Given that clients might shop around for a better price perhaps lawyers should learn to give more options when pricing to reduce the need for other firms to quote.

Help can therefore be provided around what are the alternative fee arrangements that clients seem to like and which are potentially more profitable for the firm.

Improved negotiation skills

Given that most clients will raise an eyebrow when a fee is suggested, lawyers need to be trained how to deal with this pressure.

Refusing to negotiate might result in the client walking away but negotiating in a professional way should mean more work is won and at a better price.

Trading, where something is offered to a client which costs little to the firm but is valuable to a client, is always better than discounting which comes straight off the bottom line.

Ensuring a premium service is delivered

People will pay more for a service which is “better” than what they would have received fr om those offering a cheaper service.

What the lawyer thinks is “better” may be at odds with the perception of the client.

Lawyers therefore need to understand what clients want and value and make sure that their pricing reflects the additional level of service that will be provided.

The benefits of improved pricing