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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Are you worth $350 an hour?

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If you have clients who willingly pay the fees you charge, whether that’s hourly or flat fee or some other basis, it seems clear that you are worth what you charge, at least to those clients.

Ah, but I’m not asking if you’re charging more than you’re worth, in case that’s what you were thinking. I’m asking if you’re charging less than you’re worth, or, more accurately, less than the market will pay.

If you charge $350 per hour (or the equivalent), what if you could get as much work at $450 per hour? What would that do to your bottom line? Who says you couldn’t get $550 per hour?

C’mon, you know you’ve thought about this before?

When you set up shop, you looked at what other lawyers were charging and set your fees somewhere in the same neighborhood, right?

You have to stay competitive, right?

Then, when other attorneys raised their fees, you (eventually) raised yours.

Something like that?

Well, if “average” is okay with you, I understand why you would do this.

But what if you want to earn more than average? What if you’re worth more than the average?

There’s only one way to find out.

Increase your fees and see if the market will pay more.

You can do that with your existing clients. If you lose some, you might make up for that loss by the increased fees paid by the ones who stay, plus the higher fees paid by new clients.

If you lose 20% of your clients but you get 20% more from everyone else, you’re way ahead.

The other way to do it is to hold the line with existing clients (for now) and charge new clients the higher fee.

“What if clients won’t pay more?”

What if they will?

What if you don’t lose any clients?

What if you could increase your income by 30% with the stroke of a pen? What if you’ve been under-charging your clients for a long time?

Before you twist yourself into a knot agonizing over this decision, I have one more thought for you:

Raising your fees might actually help you attract more clients.

It’s true. There’s no competition at the top. The most expensive lawyers in town don’t usually have a shortage of clients.

Yes, there are other factors in play, but how much a lawyer is worth is subjective. If you charge more, in the eyes of many, you’re worth more.

Chew on that for awhile.

This may help you figure things out

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What’s obvious to you is amazing to others

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Author Derek Sivers once said, “What is obvious to you is amazing to others.” From time to time, take a moment to remember that.

You know things most people don’t. Don’t take what you know for granted.

The next time you talk to a client and explain the law, their options, and your recommendations, note the depth of your knowledge, the alacrity with which you’re able to summon it, and your ability to communicate it.

The next time you do a presentation, record a video or write an article, or you are interviewed, review the finished product so you can see how good you really are.

You know things and you’re able to do things. You can quickly spot issues and form arguments for and against them. In a matter of minutes, you’re able to pull essential information out of a client or witness.

Don’t discount your knowledge, your ability to explain things, or your ability to persuade people to your point of view.

Unfortunately, many attorneys don’t appreciate their value. They charge less than they deserve and the market will bear.

What is obvious to you is amazing to others. Don’t forget that.

Marketing is everything you do to get and keep good clients. Start here

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Will your law practice make you rich?

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I was reading one of “those” articles, you know, the ones that give you a list of reasons why certain types of people, habits, or beliefs are more conducive to success.

This one was about what rich people do differently.

One of the items on the list caught my eye because it’s something I did in my practice and something I preach in my sermons to you.

Verily: “Rich People Choose to Get Paid Based on Results”

When I began my practice, I charged by the hour and made a good income “per hour”. I earned a lot more, however, when I moved away from hourly work and focused on cases that paid contingency fees. It didn’t matter how many (or how few) hours I worked on a case. On more than a few cases, I earned the equivalent of thousands of dollars per hour.

If you practice in areas that aren’t conducive to contingency fees, there are other ways to be compensated that aren’t tied to the number of hours you work.

Charge by the matter, not by the hour. Ask for higher fees or bonuses for better results. Work with clients who offer equity instead of just cash. Hire more attorneys and earn the difference between what you pay them and what you bill the client.

If you can’t do this, look for other opportunities, outside of your practice. Because you’ll never get rich trading time for money.

How to do legal billing right

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Why you need to offer more than one option

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Your prospective client balks at signing up for your $15,000 “Standard” package. What do you do?

  1. Show him why he needs it and why it is a good value?
  2. Show him your $9,000 “Basic” package?
  3. Show him your $22,000 “Deluxe” package?
  4. Show him the door because you don’t have any other packages?

Some say that you should “drop down” to the lower priced package because it will appear more affordable next to the more expensive option you first showed him. Others say that if you do that, the prospect will be more likely to see the lesser-priced option as inferior and “buy” nothing.

They say that instead of moving down in price, you should move up.

Moving up in price, that is, from your $15,000 package to your $22,000 package will get the prospect thinking in terms of value instead of price, they say. If money is truly a factor for him, your $15,000 package may now seem more attractive.

My thoughts:

  • Clients are always concerned about price but they are more concerned about making a mistake. If they can afford it, they would rather pay more and make the right decision.
  • It’s not just the price that’s important, it is the perceived value. A more expensive option that includes a lot of “nice to have but not essential” elements is different than a package of “critically important” elements, which is different than a package of “important but can wait” elements.
  • What you should do depends on what you’re offering and what other options the client has, i.e., other lawyers, waiting. Try both strategies (higher then lower, and lower then higher) and see which one works best.
  • If the client still can’t decide and is ready to walk, having an undisclosed third option ($9,000/Basic) might allow you to save the sale.
  • In some circumstances, it might be best to offer all three options to the client right from the beginning.

How’s that for a lawyer-like answer?

One thing is certain: not having at least one other option should never be an option. Always have something else to offer a would-be client because showing them the door isn’t a good option for either of you.

You’ll get more clients signing up when they are referrals

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Who says you have to charge all clients the same fees?

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I’ve had penthouse offices on Wilshire Blvd. in Beverly Hills. I’ve also had storefront offices in not-so-nice parts of town. I charged different fees at each office for the same services.

And why not? Why not charge more at the office with higher overhead and nicer furniture? Why not charge what the market will bear?

What about clients in the same office? Can you charge some clients more than others?

Of course.

If a client gives you a ton of work, why shouldn’t you give them a break? If you provide elite services to some clients who are willing to pay a higher fee, why shouldn’t you?

Insurance defense firms and firms that handle subrogation and collection charge less per matter because of the volume of business they get, less than they would charge if you walked in with a single case.

Living trust mills hire outside lawyers to do the legal work. The lawyers earn less per client than they charge their regular “retail” clients.

By the way, you could do something similar no matter what your practice area. Joint venture with an attorney in a lower-end part of town who doesn’t provide the services you do. He brings in the clients, you do the work, and maintain your other office where you charge higher fees.

(Verily, make sure your bar is okay with this, yada, yada.)

Anyway, people pay different fees for the same goods and services every day. Ever buy a hot dog at the ball park?

Clients will pay different fees, too, because they’re willing to pay for convenience or prestige, or because they like and trust you and don’t want to go anywhere else.

How could you charge more (or less) for your services?

More ideas for joint ventures with other lawyers

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You get what you pay for and so do your clients

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I buy a lot of books. I also download a lot of free Kindle books. Many free books are excellent. Most are not. And since you “pay” for books not just with money but with the time it takes to read them, paid books are usually a better value.

There are exceptions. Some great books are free because they are on a promotion. Some paid books are over-priced because you’re paying a premium for the author’s celebrity or the higher costs associated with being published by a major publisher.

But when it comes to books, you generally get what you pay for.

How about when it comes to hiring a lawyer?

Many clients believe that better lawyers charge higher fees because they’re better lawyers. They have more experience, greater skills, and deliver better results. Clients are willing to pay more for that experience and those results, and fear they won’t get them if they hire a lawyer who charges (a lot) less.

Sure, many clients don’t appreciate this distinction and will opt for the lowest fees. But unless you operate a “discount” law firm (and you shouldn’t), you should avoid these kinds of clients.

Some lawyers take advantage of the “perceived value” concept and charge more than they’re worth. But I find that more lawyers charge less than they’re worth, less than the market will bear.

Most lawyers don’t raise their fees, or raise them high enough or often enough, fearing they won’t be able to compete. When most of your competition does the same thing, it drags down everyone’s fees.

Most lawyers charge what other lawyers charge because they’re doing what everyone else does. They offer the same services and do nothing to give clients a reason to choose them instead of their competition.

Show prospective clients that you are better or different and you won’t have any competition. You’ll be able to charge what you’re worth.

It’s called differentiation and it’s the key to marketing your services.

Here’s how to differentiate yourself

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How to double your income in five years or less

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There is a very good chance that you’re not charging enough for your services. By enough, I mean the amount your services are worth and what good clients would be willing and able to pay.

Why do I make this assumption? Because when I consult with lawyers and we talk about their fees, almost all of them are on the low side. That, plus recent surveys which show that two-thirds of solo lawyers earn a gross income of less than $200,000 per year and 28% earn less than $100,000 (again, gross income), tell me I’m right.

If you have been following me for awhile and have moved away from offering the same basic, “commodity” services most lawyers offer, in favor of higher-level, better-paying work, you’re offering more value and you should be paid for it.

How much more? Perhaps double or triple.

It’s exciting to think about doubling your income without doing anything more than increasing your fees. But you might be afraid to do it, thinking that most of your clients would leave.

Don’t let that fear stop you.

You can minimize the risk of a wholesale exodus by doing it over a period of years.

If you increased your fees 20% starting next year, yes, you might lose some clients. My guess is that it would far fewer than you imagine, perhaps very few or none at all, but if you do lose some clients, two things would happen:

  1. No matter how many clients you lose, if the rest of your clients pay you 20% more than they had been paying, your net revenue for the year would increase, and
  2. Any clients who leave would make room for new clients who will pay your higher rate.

If you increase your fees by 20% per year, in five years your income will double, not including compounding.

Too much? Too soon? Okay, start by charging new clients the higher rate. Once you’re comfortable with this, once you see clients are still signing up, you can begin phasing in higher rates for existing clients.

(For contingency fees, you can “raise your fees” by increasing the minimum size of the cases you accept.)

Look, I’ve seen lawyers (and accountants) who haven’t increased their fees in ten years. That’s not a professional practice, that’s a charity. You are entitled to charge what you’re worth and what the market will bear. You don’t have to settle for less.

How to ask for, and get higher fees

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