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Be client focused, not client-compelled

Five strategies to make sure your pricing is fair to the client and fair to the firm

This article first appeared on 9 September 2021 in Legal Practice Intelligence

There are thousands of well-meaning articles stressing the importance of being client-focused. This usually means meeting or exceeding clients’ expectations, being responsive, reliable, and accessible. 

So, what happens if a client asks for a discount?

If your firm has client-focus as a strategic objective, surely the correct answer must be to say, “yes”. A lower fee is the client’s stated expectation. To be consistent with your objective, you must meet or exceed their request. 

My answer is, “no”! 

Just giving in on price is being client-compelled. Client focus is not about acquiescing to the client’s every demand but seeking an engagement that’s respectful of both parties. It’s about negotiating a pricing arrangement that’s fair to the firm and fair to the client. 

Many firms fall into the trap of enduring bad clients and bad deals thinking they are being client-focused. They’re not! They’ve just been taken for a ride.

Rainmaker research

A research study into highly successful rainmakers identified these six defining attributes:

  1. They offer the client unique perspectives.
  2. They have strong two-way communication skills.
  3. They have a good understanding of what’s important to buyers at a personal level.
  4. They can readily identify and refer to the economic drivers of the client’s business.
  5. They are comfortable discussing money.
  6. They can pressure the client.

Whilst 1 to 4 are reasonably self-evident, 5 and 6 are worth exploring further. 

The authors define these latter attributes as, “the ability to assert and maintain control over the [buying-selling interaction.] … It does not mean being aggressive or abusive… but a willingness and ability to stand their ground when the client pushes back.”

This research shows that successful client-focused rainmakers are not just about creating value for the client but are also dedicated to capturing value for the firm.

Root causes

When I ask firms why they endure value-destroying (i.e. client-compelled) relationships the typical responses I get are: we need to retain cashflow; the work we get from them keeps our best people busy/happy; we need to limit brand fallout or reputational damage if they left us; etc. etc. etc. 

While there may be merit in some of these arguments in certain (in my opinion, rare) circumstances, the main reasons bad clients are endured relate to the fear of having difficult conversations.

A Bruce Macewan post on law firm pricing states:

“Compared to the general white-collar population (forthcoming generalization alert), lawyers are, despite all our bluster when donning our zealous advocates’ hats, remarkably insecure… We hate to bring up issues where we may not have all the answers. We’re trained not to ask questions that could lead into unknown territory, or venture into conversations that strike us as frighteningly open-ended. All things considered, the safest course is when in doubt, keep your mouth shut. And when discussing pricing, it all seems to be “in doubt.”

Five options to consider

There are five areas where you can try to be less client-compelled:

  1. Appoint a firm advocate – one of the easiest and most impactful things you can do is to appoint someone to be the firm’s advocate in pricing decisions. This person’s role will be to review every pricing proposal BEFORE it goes out the door to ensure it reflects a value-sharing arrangement that’s both fair to the client and the firm. Most people putting together a new pricing proposal are highly motivated to win the deal and empathise very strongly with the client’s needs. This is great, but it needs to be counterbalanced with someone who can dispassionately ensure the proposal is commercial. 
  2. Eliminate commodity thinking and language  - If you’re selling a commodity then price will be set by the market. Assuming your firm doesn’t just provide commodity legal services, then you should set price relative to the problems you solve, that is, saving the client time, reducing their risk, and/or maximising their net financial outcomes. While market-driven hourly rates might be appropriate for some hard-to-scope matters, negotiating an agreed fee based on the problems you solve is a big step away from commodity thinking. Read this excellent post if you want to learn more.
  3. End the bad deals – go through your client and matter list and identify the top 10 “bad deals”. A bad deal could be low margin or loss-making, but it could also be a client that saps all your emotional energy and makes you feel disrespected. Life is too short, and the opportunity cost of these clients is far too great. It’s time to restore these relationships to one that’s mutually beneficial and respectful. I’ll bet you the biggest regret you’ll have is that you didn’t do it sooner. Once you’ve addressed the first 10, then tackle the next 10.
  4. Improve the tools in your toolkit – there is a range of new applications to assist with your pricing decisions. Ask your financial controller to prepare a set of simple scoping and costing templates on Excel for your most common matters. Use them once or twice and it’ll become second nature. You may be interested in my pricing iPhone app called “Price High or Low”. It helps users find the right price to quote when the client is offered a fixed fee – not too high that you lose the business, and not too low that you leave money on the table. 
  5. Shed more light on strengths and weaknesses – referring to the list of six attributes of successful rainmakers listed above, ask all the people who sell and price work in your firm to self-evaluate these six attributes. If you’re feeling brave, run a 180-degree feedback process where each person is also assessed by two others they work with frequently. Now, armed with an honest assessment of strengths and weaknesses develop a tailored learning and coaching program for each person to fix any problems. Redo the exercise in six months. I guess that both your business development and pricing outcomes will see a rapid and dramatic improvement.