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Fee Simple, Part 2: Priced to Sell

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As we discussed in the previous installment of this short series: most attorneys settle when it comes to their rates.  By and large, lawyers will determine a pricing model based on what ‘they’ve heard to be good’, without putting much more thought into it than that.  Then, they’ll sit on that fee structure, perhaps even as long as for . . . ev . . . er.  There are, of course, better ways to set your fees, and to revise them, yes.  Now, it most nearly defeats the purpose (of setting competitive rates), when you’re settling on a fee structure, in large part, because it is not that far off from what other similarly situated attorneys are already doing.  Another, less mindful, way to set your fees is to endeavor to be ‘the undercutter’, where you set yourself up as the cheapest game in town, and endeavor to charge less than every other attorney in your practice area, in the area.  Of course, that’s a race to bottom with the next guy, or gal, who has the same idea; and, if your calling card is that you’re real cheap, well . . . you’re gonna to get the sort of clients who want real cheap lawyers–in other words: just the sort of clients you don’t want.  Rather than because you’re the ‘cheapest’ option around, you should want clients to select you because you’re the ‘best’ choice they know of, or have heard of, because your excellent reputation precedes you.  Another one of those, often unthunk, decisions (the third, if you’re scoring at home), is to settle upon an hourly rate just because it seems to be some sort of consensus (again, not necessarily a good thing), or because it’s ‘easy’/‘easier’ to track time and charge based on billable hours.  Some potential clients are wary of hourly rates because there is no cap in site; for those clients, flat fees, for example, are attractive, as being representative of something like a cost certain.
If, instead of relying on what you’ve heard, or what your best guess is as to where you should be headed, consider, based on market research, your experience, the time and effort involved in moving your matters, and other, relevant factors, whether an alternative fee arrangement might better serve your clients, and your business.  The desire, on the part of savvy lawyers, to offer clients uniquely effective rates, and to better attain a return in value for the work they do, has led to a (very slow, but . . .) steady increase in the number of attorneys who have moved away from the traditional billing hour rates in favor of alternative fee types, like flat fees and unbundled legal services.  Driving these changes, and most all changes, really, is money.  Lawyers wanting to get paid best must recognize consumer demand, and seek to meet it at discovered, tolerable price points.
Setting effective rates, then, is not some sort of white tower exercise.  As you’re trying to keep the lights on, your distinct interest is in creating pricing terms that are appealing to your potential clients.  And so, you must think of your pricing options as differentiation points between you and your competitors, rather than trying to slot yourself within some contrived numbers game.  Attractive pricing options and effective payment plans can, in fact, be the differentiation points for potential clients who are choosing between you and other lawyers.  Even if your ability to sell your services is a combination of your reputation and your fee structure, there are other attorneys in your area (geographic, sphere of influence) who are also well-regarded, and who do a good job, too–just like you.  The most meaningful contrast, in that instance (assuming you’re not both charging $150/hour), is likely to be price/pricing–such that, the uniqueness of your pricing scheme, and the cost control (to the extent that’s possible) and payment flexibility that you can offer potential clients, will probably make the biggest difference.  And, payment flexibility includes offered methods for accepting payment, which can include modern, convenient options, like taking credit card payments, using online payment services (like PayPal) and/or applying a tool like Square, for accepting payments where you’re mobile.  Though, taking credit card payments from clients requires special attention, especially in cases where retainers are being charged, for deposit into IOLTA accounts.  And, you must also be aware that most online payment services will charge a transaction fee, too, which becomes potentially problematic in the case of trust account deposits, too.  If you’re looking for a more comprehensive method for managing credit card payments, check out LawPay, which is a discounted affinity benefit program of the Massachusetts Bar Association, as well as for a number of other bar associations (and their members), throughout the United States.
*Ahem*  Of course, your ability to tweak your pricing is not boundless.  What you can do with respect to setting your fees will be limited by your practice area, statutory rules and ethics rules, including rules respecting contingent fee arrangements and for determination of reasonable fees.  Keep in mind, as well, that nonrefundable retainers are not allowed in Massachusetts, no matter how you try to phrase the arrangement.
. . .
Liner Notes
It’s about time for some Strait Talk.
And, Who doesn’t love George Strait?  Raise your hand.  . . . Don’t you dare raise your hand!
I’m sorry, I just get a little emotionalwhen I’m talking about George Strait.  The guy’s a national treasure.  Sure, he’s not a prolific songwriter, and mostly other people write his stuff (in fact, he’s taken to covering Delbert McClinton of late (which I have no problem with), like so, and here; or, if you prefer the originals: like so, and there), but he is an iconic singer, country-labeled or otherwise, and represents, probably, the popular apogee of the Western Swing movement.  I mean, he’s had 59 #1 singles, which is just insane.  What more do you want from the man?  I guarantee you you’ve heard a George Strait song before, even if you didn’t know it.  And, I’ll tell you what . . . there’re worse ways to spend a Friday night than listening to some George Strait.  It’s a good thing I’m here, right?  Here’re some of my favorite George Strait songs, for your listening enjoyment:
Twang’, off of ‘Twang
Blue Clear Sky’, off of ‘Blue Clear Sky
Heartland’, off of ‘Pure Country’ (moviesoundtrack)
That’s Strait butter, baby.  Better Straiten up and fly right.  Damn Strait.
(Okay, I’ll stop now.)
CATEGORIES: Client Relations | Law Firm Management | Marketing | Risk Management

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