How much should you charge?

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How much should you charge for your services? Well, how much are your services worth?

You don’t want to charge less than what you’re worth. That’s not fair to you or your kids.

But you can’t charge more than you’re worth because that’s not fair to your clients (or sustainable).

When it comes to fees, follow The Goldilocks Rule: Not Too Hot, Not Too Cold (but how much is ‘just right’?)

Well, you have to consider:

  • The size and complexity of the problem or goal
  • Clients’ willingness to pay to solve that problem or achieve that goal
  • Clients’ ability to pay
  • Urgency (deadlines, risks, pain, associated problems)
  • Your experience and reputation
  • The clients’ sophistication and experience in working with lawyers
  • How much other lawyers charge
  • The economy
  • And other factors

Yeah, it’s complicated. You can’t figure this out with a spreadsheet. So, let the market give you the answer.

It starts with you. How much do you want? Quote a fee and see what clients are willing to pay.

Willing buyer, willing seller.

If most clients complain or try to negotiate, if they hire you once and never again, you may be asking more than your services are (or appear to be) worth.

If most clients pay without blinking, however, you may be asking less than you could. A common affliction among our kind.

But if most clients pay what you ask, readily hire you again and refer others, your fees are probably about right.

But that doesn’t mean you should set them and forget them.

Over time, your kids (and creditors) want you to increase your fees and continue doing that until the market tells you no more.

But that’s not necessarily the last word on the subject.

If you want to increase your fees but the market says “too much,” you have three options:

  1. Add more value so more clients are willing to pay more
  2. Improve your marketing and salesmanship and increase the perceived value of your services
  3. Target a different market

The market tells you how much you can charge. But you have to ask. And listen.

The lawyers’ guide to stress-free billing and collection

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Your fees are too high

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Ever heard that? Maybe not. A lot of prospective clients will simply tell you they want to think about it, or some such, and not tell you what they really think.

But what about those who do?

How do you respond when they say you charge too much?

I’d find out if they understand what’s at stake. Talk to them about what it could cost them if they don’t hire an attorney, i.e., do nothing,, wait, or try to fix the problem themselves.

How much would it cost if the other party got a judgement against them or the tax man cometh and taketh away?

And what’s the value of knowing the problem is being properly taken care of and they can stop worrying about it and get on with other things?

More than anything, we sell peace of mind.

There’s a cost to hiring an attorney, but there’s also a cost of not hiring an attorney. So when someone talks about your fees being too high, show them what it might cost if they don’t hire you.

But suppose they mean your fees are too high compared to what other attorneys charge?

How do you respond?

I’d tell them it’s true, you don’t have the lowest fees in town, that you’re actually higher than most.

And then I’d tell them why.

You have more experience; you provide more benefits than other lawyers; you deliver better outcomes; you charge flat fees so they know up front what it’s going to cost (unlike other firms). . .

You charge more and you’re worth it.

I’d prove this by providing a boatload of testimonials and reviews attesting to your wonderfulness.

I’d follow that by offering to refer them to one or two other lawyers who charge less (because they don’t have as much experience or whatever) and might be a better fit for their budget.

They’ll see you aren’t defensive, you don’t try to talk them into anything, and you don’t negotiate.

Refreshing, isn’t it? Damn good posture.

You’ll often find that this is all you need to do to win the hearts and minds and retainers of prospective clients.

Here’s how to write your bill to show them they made the right decision.

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A simple way to lose clients

You want to increase your fees. It’s time, you deserve more, but, like many lawyers, you’re nervous about it because you don’t want to lose any clients who can’t or won’t pay more.

Understood.

There is a right way and a wrong way to do it.

The wrong way is to do what a certain app company did not long ago when they wanted to increase their revenue. They alienated a large percentage of their customers by taking away from them a bundle of features those customers were used to getting free and would henceforth have to pay for.

That’s a no.

Don’t take things from customers because when you do, you’re taking away something they already own (even if they got it free).

The company lost a lot of customers, suffered a slew of bad reviews and a loss of good will. Apple told them that they had violated their terms of service and they were forced to reverse course and come up with a different plan.

And that’s the plan I’m going to recommend to you.

Grandfather in existing customers (clients) and charge new customers or clients the higher rate (or make them pay for things your old clients got free.) Who says you have to charge all clients the same rate?

New clients won’t know and old clients won’t care.

You keep your old clients happy, at least until a suitable point in the future when you can justify raising rates for them, too. But whatever you do, don’t take away from any client anything that’s “theirs”.

Get the Check: Stress-Free Legal Billing and Collection

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https://www.attorneymarketing.com/2022/03/04/13297/

Pro bono as a marketing strategy

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If a client asks for a discount on your fees, don’t do it. For a lot of reasons, you’re just asking for trouble.

And if you’re ever tempted to proactively offer a discount, to an individual client or across the board, be very careful. It might be the right thing to do, but too often, it isn’t.

Instead of discounts, consider offering free services.

Whereas discounts can make you look hungry, even desperate, free services can do just the opposite. They can make you look successful, generous, ready to help people who need help but might not be able to afford it.

They can also be an effective marketing tool.

Pro bono work for a non-profit can help you build your network and get you some free publicity. It also looks good on your CV.

(NB: get a letter from the non-profit specifying how much your work was worth to them; you might get a nice tax deduction, too.)

For regular business or consumer clients, giving away an entry-level service (e.g., a basic will or incorporation), offering free consultations, a free second opinion, and “first hour free,” can bring a lot of business to your door that might have knocked on another lawyer’s door.

But again, you need to be careful.

Whenever you’re inclined to offer a free service, consider making it a short-term promotion and tying it to a holiday or other special occasion, e.g., to celebrate the opening of your second office, your firm’s anniversary, or your birthday.

You might also limit the offer to new clients, to returning clients, to members of a certain class or group or organization, or the employees or clients thereof.

Done right, free services can make you look good and bring in a lot of new business.

Start small and test your promotion. If it’s working, you can repeat it or expand it; if it’s not, you can modify it or quietly retire it.

Fee and billing strategies you need to know and use

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How much do you charge?

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When you hear from a prospective client who’s first question is, “How much do you charge?” that’s not a good sign.

A prospect who is more focused on price than value, on your fees rather than your solutions to his problem, means you may be dealing with someone who’s going to question everything you do for them and every bill you send them.

So don’t answer that question.

Instead, ask them questions, to learn more about their problem (and pain), to find out what they’re doing now or have done before, and to find out what they want from you, so you can tailor your answer to their situation.

And so you can control the conversation.

You want them to sell you on accepting them as a client, instead of you selling them on hiring you. You do that by asking questions.

When you know enough to quote a fee, you can give them a number or present their options, e.g., Service A or Service B, Package A or Package B. Do this in person or on the phone, if possible, so you can read them, respond to any objections, and close the deal.

Or you can turn the conversation over to a surrogate. “My office manager handles all the fees and billing. . .”

Because someone else can edify you and your capabilities in ways you can’t.

Before any of the above, make sure you have a page on your website that provides general information about your fees and billing practices. No, don’t post your fees. That invites price shopping and discourages prospects from contacting you.

Keep it general. Tell them you bill by the hour or offer flat fees or contingency fees and encourage them to contact you to learn more.

Whatever you do, don’t say “low fees” or “competitive” fees or otherwise suggest you charge less than other lawyers.

Because you don’t (or shouldn’t). And because that’s what attracts people who’s first question is, “How much do you charge?”

How to quote fees and get clients to pay them

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The best piece of advice I ever received as an attorney

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I didn’t learn it in law school. I don’t remember my father (attorney) talking about it. I didn’t read it in a book.

The best advice I ever received came from my grandfather.

He wasn’t an attorney, he was a business owner, farmer, and commodities trader. He made and lost fortunes in his lifetime and taught me a thing or two about business and life.

When I passed the Bar and opened my first office, he visited me, pointed at the top drawer in my desk, and told me that when I get a new client, the first thing I should do is open that drawer and tell the client to drop the cash in it.

Indelicate, yes, put but sound advice.

And I wish I had always followed it.

Clients who didn’t pay me, or pay me in full, were usually the ones I didn’t ask to pay in advance.

Lesson learned.

I hear from lawyers with clients who haven’t paid or slow-pay or try to weasel out of paying in full. Maybe you’ve had one or two.

Getting paid in advance, or at least getting a big retainer, will eliminate most of that, I tell them.

Yeah, but it will also eliminate them from hiring me, I can hear them thinking. And that’s true. But is that a bad thing?

Even if you need the money and believe it’s worth the risk, in the long run, having a (reasonably) strict policy about getting paid up front will serve you well, but not just in terms of cash flow.

It will also help you build your practice with a better crop of clients.

Clients who can and do pay you, on time or early, refer other clients who can do that, too. These types of clients also tend to have more legal matters and are prepared to pay higher fees if you give them what they want.

Should you ever make exceptions? Sure. But make them exceptions, not the rule.

Get the Check: Stress-Free Legal Billing and Collection

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Your fees are too high

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What do you say to a client or prospective client who says your fees are too high?

Do you negotiate? Offer to reduce your fees?

Yeah, don’t do that.

Do you tell them that’s what you charge and they can take it or leave it?

Don’t do that, either.

Instead, say something like, “When you say my fees are too high, what are you comparing this to?”

Let them tell you about other lawyers who charge less.

And then show them why you charge more because you are worth more–to them.

Show the client what they get with you they won’t get from other attorneys.

The best way to do that, of course, is to let your other clients do it for you. Show them your positive reviews and testimonials and share success stories about what you’ve done for other clients.

But maybe the client doesn’t have anyone they’re comparing you with, they think all lawyers fees are too high.

In that case, go over their current problem or situation and ask how much this is costing them now, in terms of time and money and mental anguish.

Let them see how they will be better off hiring you than continuing to live with their current situation.

Finally, if they can’t see things your way, say something like this:

“I don’t want to take your money if you don’t think this is going to work for you. I understand you want to solve this problem but I don’t want to work with you if you’re not committed to working with me to solve it”.

C’mon, you know you want to.

Referred clients make the best clients. Here’s how to get more

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What to say to a client who asks for a free service

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It happens to every attorney. Clients ask for a lower fee or a free service. It’s not a big deal but how you handle it might be. Here are some of my thoughts.

First, the best way to handle this is to avoid it in the first place. Create a clear statement of your fee and billing policies and give a copy to every new client.

Second, when someone (inevitably) asks, be nice about it. Don’t embarrass them, tell them you understand why they’re asking, you’re sympathetic to their situation, you’d like to accommodate them, and you’ll see if you can work something out.

No matter what you say after that, they’ll see that you respect them and considered their request.

Third, focus on value, not cost. Make sure the client understands the value of what you do and, ideally, that it is worth more to them than what they pay.

Show them what might happen if they didn’t hire you, and why they get more value than they would get from other attorneys.

Fifth, don’t make it about you. Frame your response in terms of “the firm” or “our practice,” instead of you. Use phrases like, “the value of our services” (even if you’re a sole practitioner), and say “we” instead of “I”.

Even better, frame it in terms of the client. “The value you get,” or speak broadly–“Our clients tell us they appreciate. . .”.

Sixth, be firm but flexible. Providing discounts and free services tends to devalue what you do, so don’t do it as a matter of course. Instead, suggest a smaller engagement or offer to defer some of their bill.

If you want to give a client a break, make it clear that you’re making an exception and tell them why you’re doing it, e.g, they’ve been with you a long time or you realize they’re going through a tough time.

For more on fees and billing, get my book, “Get the Check“.

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How much should you charge?

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How do you determine your fees?

No doubt you consider your overhead, how much you want to earn, and how much other lawyers charge.

But there’s something else you should consider:

How much is it costing the prospective client who doesn’t get the benefits and outcomes you offer?

How much are they spending in direct costs, lost opportunity costs, and emotional costs?

If a business owner isn’t collecting money owed to them, how much are they losing each month?

If a estate planning client doesn’t have the protections they need, how much are they putting at risk and how much could it cost their estate if they die or become incapacitated?

If a family law client is seeing a therapist to deal with unresolved emotional issues, how much are they spending each month?

When you know what the prospective client is spending or risking, you can show them how your services provide a better value.

People make “buying” decisions based on emotions and then justify those decisions based on logic.

If you can show them how hiring you actually saves them money, the logic becomes undeniable.

How to take a quantum leap in your practice

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Thinking small pays big

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I’ve written before about the wisdom of regularly examining your expenses and ruthlessly cutting them. All those $5 or $25 per month charges may seem insignificant but they add up.

When you cut them, you not only reduce your overhead and increase your net income, you increase the overall value of your practice because one of the most important elements in the value of your practice is your cash flow.

Cutting $20 per day off your expenses will increase in net income of $600 per month. That may increase the sales value or borrowing power of your practice by five or ten times that amount.

It also frees up cash you can invest in marketing.

The same dynamic applies to increasing your income. Adding a few hundred dollars per month to your (net) income via additional fees will similarly improve your bottom line.

So, what if in addition to targeting bigger cases and clients you also paid attention to bringing in some smaller ones? All those $1000 fees also add up.

A few new small clients per month might allow you to hire more staff or buy more ads which could bring in many times what they cost. And, don’t forget that smaller clients and cases can lead to bigger ones.

You should also regularly consider your options regarding increasing your fees. A five or ten percent increase in your billing rates or fees could have a profound effect on your net income.

Don’t obsess over any of this but if you want to increase your net income, don’t ignore the little things.

Because every dollar counts.

How to increase your fees without losing clients

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