I spoke at the American Bar Association (ABA) Mid-Year conference in Atlanta, Georgia last Friday. Nothing like thousands of us lawyer getting together! One panel discussion I found to be particularly interesting was regarding fee structures within the legal community. Traditionally, lawyers and consultants charge an hourly fee for their services. However, for many years the conversation has turned to the implementation of a value-based fee instead. This is where, instead of billing hourly, the client is billed a flat fee sum based on the value to be provided. Often the entire sum is paid up-front by the client. The rationale for a value-based fee is that it reduces conflicts of interests on the part of the lawyer and increases a relationship built with your clientele over the long term.
On the panel were representatives from several companies that use value-based fees with law firms they employee. These corporations included Wal-Mart, Pfizer, and DuPont. All of the representatives said the same thing basically: value-based billing builds client trust and a strong future relationship. The rationale is that the corporation feels like they are employing your service because of its true worth and value and don’t have to keep worrying about you running up the bill instead of focusing on providing quality service. According to the law firms represented on the panel providing value-based fees, not only is it a profitable model but good for marketing and client development.
Each of these law firms had a strong marketing plan and had done their homework regarding fees and client needs. They had also done the risk/benefit analysis concisely. After all, switching your fee model is not an over-night strategy and not one to be taken lightly because of its far-reaching consequences.
What was most interesting to me was the way in which the corporations viewed the law firms with which they worked based on value-based fees. Maybe I was the only lawyer in the room that was listening with a marketing ear. It seemed to me that each corporation felt a deeper connection with the individuals at the firm with whom they worked and felt they could carry on business with the firm for the long term. Each lawyer in that firm had personally branded themselves as affordable, cost-conscious, ethical, effective, forwarding-thinking and flexible.
I’d like each of you to stop and think about your current fees and pricing. This thinking and marketing strategy does not just apply to lawyers. Your fees are a direct reflection of your personal brand and your corporate brand. After all, people buy people because the people serve within the companies. I’m not suggesting that value-based fees are for everyone. However, fees have to be set based on your type of business, target market, and competition. Fees have to be reviewed regularly with an eye towards the changing times. What you choose to charge and how you structure your fees is a direct reflection of how people view your personal brand. Do you and your company look greedy and inflexible or do you have fees that make you competitive and about the value you can provide your clientele?
