If you’ve followed this blog any length of time, or if you subscribe to my e-zine, The Profitable Practice (you can do so in the side bar), then you know I advocate that lawyers follow a fixed fee, value pricing model.  I believe that model to be superior to an hourly billing model.  If you haven’t already done so, I invite you to read my white paper on the subject, titled Pricing for Maximum Profit.  It is available under the resources section of this blog.  In it I discuss ways to command premium fees and how I use the fixed fee value pricing model in my own divorce practice.

In this article, however, I want to emphasize the importance of setting fees in your law practice on the high side of your market.    I believe that your goal should be to charge premium fees for premium service.

As a new lawyer, I had difficulty quoting higher fees.  I was afraid that my prospective clients would not pay me unless I was right in line with what others with similar experience were charging.  As it turns out, the problem was not with my clients, it was with me.  The problem was a self image problem.

I have since learned that you will never get paid more than you think you are worth.  That may sound like psycho-babble.  Perhaps it is.  But, it is still the truth.

If you are doing the things in your practice that you should be doing (e.g. choosing a niche, being the expert in that niche, providing exceptional client service, etc.) then you’ve earned the right to charge more for your services.  But, unless you believe that, your prospective clients never will.

And, here is one more reason for you to believe it: you never want to compete on price.  There is no doubt that you can build a business entirely by offering the lowest price.  But, why would you want to?  Would you rather have 4 clients paying you $25,000 each, 100 clients paying you $1,000 each, or 1000 clients paying you $100 each?

Of course, the question is rhetorical.  But the answer is instructive.

Additionally, when you compete only on price, all someone has to do to take a client is to offer a lower price.  When you compete on EXCELLENCE, VALUE, GUARANTEED SERVICE, etc. it is much more difficult, if not impossible for a competitor to steal your clients.

Of course, there is another point about price.  Your prospect believes “you get what you pay for.”  If that is the case, do you want to hold yourself out as the “low price lawyer”?  Put another way, do you want to be the Mercedes of law firms or the Hyundai of law firms?  The Nordstrom’s or the Dollar Store?

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So, Jack and I were ready to discuss the “moment of truth” - that point where your prospective client is in your office for a consultation and has to decide whether they sign a contract to engage your services or not (assuming you have decided you want them as a client).  All of the lead generation and follow up activities that we’ve implemented thus far are meant to get qualified prospective clients to meet you with the expectation that they will engage you as their lawyer.

I explained to Jack that there are a number of ways to mess this up, and many lawyers do.  Many lawyers have trouble simply getting the client to take that ultimate action (what sales people call closing).  As Zig Ziglar says, “timid sales people have skinny children.”  But, we did not want Jack to come off as some type of pushy sales person that tries to “close” his clients.  I explained to him that he did not need to worry about that - I did not do that in my own law practice, and don’t expect him to do so either.

The fact is that you must be confident enough in your knowledge, skills and abilities to convert a prospect to a client.  But, the most effective way that I have seen to convert prospects to client is to “pre-condition” them such that they want to be your client before they ever come meet with you.  There are many ways to do this so a full exploration is beyond the scope of this brief article, but here are a few:

1. be the expert - when you know your stuff, it shows in your confidence and demeanor.
2. be known as the expert - publish, speak, get pr and media coverage.
3. promote your client list as an exclusive club - you don’t just accept every case that walks in the door (or you shouldn’t) so make sure that fact is explicit in your written marketing materials and in your conversation with prospective clients.
4. use social proof - if your jurisdiction allows, utilize testimonials and case studies in your marketing materials.
5. send a prospect kit to client’s in advance of their meeting that incorporates each of the preceding four strategies on this list.

As Jack and I worked on this process for his firm, we developed an impressive prospect kit as well as scripts that the staff would use when setting the appointments and that he would use during the client interview to make sure we took full advantage of each of the strategies listed above.  We began tracking his conversion percentage (the numbers of prospects that hired him divided by the total number of consultations he had) when I first started working with him - so we had a few months worth of data to compare.  I assured him that utilizing these strategies would result in a significant increase in the 34% conversion rate that he had experienced so far.

Coming Next: Lesson 7 - Client Delight:The Ultimate Retention and Referral Strategy 

Links to the other articles in this series can be found at the Lawyer Marketing 101, et. seq. post.

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Well, I’m a bit later getting this eBook completed than I had intended, but it is now complete. You can download a free pdf copy of Pricing for Maximum Profit from the Resources section of this blog. The eBook discusses value pricing as I do it in my own family law practice, as well as practical steps you can take to command premium fees in your own solo or small firm law practice.

I hope you profit from it. And, I’d love to have your feedback either in the comments section of this post or directly by e-mail at msherman @ lawforprofit. com.

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What can we learn about marketing our law practices from the recent iPhone phenomenon?

First consider this quote from a recent Bloomberg news story about sales of the much hyped iPhone:

Apple Inc.’s U.S. debut of the iPhone drew thousands of shoppers over the weekend, emptying most of AT&T Inc.’s inventory and causing network glitches as the flood of customers began activating the device.

Shoppers snapped up as many as 200,000 iPhones the first day after the device went on sale June 29, according to Global Equities Research. While it was still available at all 164 Apple stores yesterday, AT&T said most of its 1,800 stores no longer had the phone in stock. AT&T is the only mobile-phone service that works with the iPhone.

“A lot of our stores have sold out,” said Mark Siegel, a spokesman for San Antonio-based AT&T, the largest U.S. wireless service. “We’re restoring our inventory as fast as we can.”

So, what can we learn about marketing our law practices from Apple’s example?  If you guessed that it has to do with supply and demand you are correct.  Later in the article, Jobs is quoted as saying that Apple tried to estimate demand and increased manufacturing. “We’ve taken our best guess, but it wouldn’t surprise me at all if it ain’t enough,” Jobs said in an interview with the Wall Street Journal.

There is a valuable marketing lesson we can learn from this Jobs quote.  It is subtle, but extremely important.  To get it though, you have to understand that when discussing supply and demand there are actually three different aspects to consider.
(1) There is the objective supply and demand - this is the supply and demand as it really is.  There really are x number of iPhones available to be purchased.   This is what most people think of when they consider supply and demand, but it is the LEAST important aspect of the supply and demand formula;

(2) There is your subjective perception of your own supply and demand - i.e. if you think “I’ve got so much time on my hands”, “I need more cases”, “I wish the phone would ring”, or any such other desperate thoughts then the demand for your services (at least based on your subjective perception) is far less than the supply of it.  This is not a position you want to be in.  You want Jobs attitude - the supply will probably not meet the demand.  Attitude does matter, and it not only effects you but it also effects your prospective clients and referral sources.  But, this is still not the most important aspect of the supply and demand formula.

(3) There is your prospect’s perception of supply and demand - now this is the one that matters most.  And, again Jobs gets this.  Do you think it a coincidence that he is quoted in the Wall Street Journal the week before the release stating that he won’t be surprised if the demand for the iPhone outweighs the supply?   Of course, it is no coincidence.

The question for you is what are you doing to foster the perception in your prospect’s minds that the demand for you outweighs the supply of you?  And, to be clear I am not suggesting you lie or deceive your prospective clients.  I am suggesting that you cultivate a particular perception.   I will get into this in much more detail in the e-book I am working on regarding Premium Pricing (there’s a hint right there about one way to cultivate that perception).  That e-book (ok, book is being generous-it’s really a report) will be ready in about a week.  I’ll post to the blog when it’s available in the resources tab.

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The ubiquitous Seth Godin recently posted an article to his blog that is relevant to the recent discussions we’ve had on this blog related to Premium Pricing.  You can view his post in its entirety here.  His point is essentially that it’s easier to make a million dollars selling a $10,000 service to 100 people than it is to make a one dollar profit selling to a million people.  The point is exaggerated for emphasis, but nonetheless it is still a valid point.

As lawyers running our own law firms the question we should ask ourselves is whether the pricing strategy in our law practices more closely resemble Wal Mart or Neiman Marcus?  There is an entire discussion that can be had on exactly how to command premium fees in your law practice, and I plan on addressing that very issue in the free e-book on that subject that I’m publishing the next couple of weeks.  But, first you have to understand it is a superior model.

I know a divorce lawyer who has been practicing 30 years (twice as long as I have) and whose technical skills are very well respected in his community.  However, he takes the Wal Mart approach - low fees, high volume.  I have often been opposite him in cases where, despite my having half his experience, I made literally two to three times the fee he did in the case.  When he and I talk about this he essentially admits he is afraid to raise his fees.  He thinks he will lose business.  He doesn’t realize that would be a good thing (despite my repeatedly telling him so).  He could double his fees and even if he lost half the volume (which he wouldn’t because of his reputation) he’d make more money, work less and be able to deliver a higher level of service to his clients.  That’s a win all around.

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In this post at Build A Solo Practice, Susan does a good job of setting out the factors that lawyers should consider in deciding whether and how much to charge for the initial consultation.

Personally I do charge for consults and recommend other lawyers do the same. There are several reasons. Here are a few:

1. I do it for positioning in the mind of my prospective clients. I charge premium fees for premium service in my divorce practice. If I gave the consult away for free, it undermines that position.
2. People value what they pay for more than what they get for free.
3. You avoid the “tire kickers” who can’t afford you and are shopping for the low cost provider (which, even setting the fee aside, generally make the most difficult clients).
4. It makes it more difficult (though not impossible) for someone to get a consult for the sole purpose of conflicting you out.
5. It pre-qualifies the prospect. If someone is not able to pay my $300 per hour consult fee (which I apply to their flat fee if they hire me) then they will not be able to pay the fee to hire me. If that’s the case, it wastes there time and mine for us to talk for an hour.

In Susan’s post she makes a compelling case for new lawyers just getting started to give free consults. And, certainly you can make the argument that an hour spent for free with a prospective client is better than an hour spent twiddling your thumbs in your office. But, in my book, the sooner you can get to the point of charging for the consult, the better.

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