To Transform Your Practice, Provide Value, not Time

Reprinted from:

November 2005

One of the best-known quotes defining our profession is attributed to Abraham Lincoln: "A lawyer’s time and advice are his stock in trade." Lincoln was a successful lawyer, but I suggest that his point has been somewhat distorted, especially during the past 40 or so years. Lawyers don’t really sell time; we sell a service. Our goal should be to provide value: advice that means solutions to our clients.

Without our clients we have no reason to exist as lawyers. Our profession would be obsolete. We must find out not only what our clients need, but also what they want. We must communicate with them at their level of understanding. We must find out how they best receive information and then provide it to them in a way they can understand.

Losing Our Way

It seems so fundamental a principle, yet in recent decades our profession lost the connection between the value we provide and what we charge. Until well into the post-World War II era, legal fees were based not only on time spent, but also the nature of the service, the result achieved, and the amount at stake. Charging an appropriate legal fee was a matter of professional judgment. That changed in the mid-1960s when clients began demanding detailed billing statements and lawyers used time records as a management tool to seek greater efficiencies. Today, most lawyers are paid by the hour – almost in the same way as an hourly laborer. Our billings are "features" lists: this is what I did, this is the time I worked and this is what you owe me. That approach breeds dissatisfaction among clients, because it doesn’t address value and benefits – the worth, as opposed to the cost, of the service.

Choosing Our Model

The best model for our profession, and the best path to personal satisfaction in one’s practice, is to get paid for the real value and expertise you bring to the client. Earlier this year a lead article in the American Bar Journal observed that the "strategic lawyer" is what clients are looking for; and this kind of lawyer is not easy to find. The strategic lawyer is the counselor, the type of lawyer that used to be the standard of the legal profession, and that law schools need to start developing again Such lawyers provide the best services at the least cost to benefit the clients they serve.

Defining Our Value

"Good service," "value" and "solutions" shouldn’t be vague buzzwords. All lawyers, solo practitioners and members of mega firms alike, can structure what they do to consistently encourage a high client perception of value. Basic elements of that include:

• Establish a return phone call policy. Return or have an assistant return clients’ phone calls within two to four hours.
• Know your clients’ concerns and understand their business.
• Create a client-friendly office environment. Have informative literature in the waiting room, and make sure it's available in languages that reflect your clients’ primary languages.
• Prepare your clients for interactive events such as negotiation sessions, depositions, and testimony so they know what to expect and are prepared for what might happen. Incorporate a wide range of possibilities so that clients are not shocked if the outcome, over which you have no control, is different from what they had hoped.
• Never make promises you can’t keep. Particularly with a new initiative, consider limiting yourself to consistent, well-planned effort on one project only, at least until expectations of value and service are defined by both parties.
• Regularly ask clients for feedback about whether they are pleased with your services. This feedback should be focused on their satisfaction with the service provided, rather than on the results achieved.

Changing Our Value Mix

Such value-added elements will let you generate billing statements that are easy to understand and that clearly list actions taken on the client's behalf while relating them to the time it took to realize that value. These billing statements will be more meaningful to the client, and will go beyond a mere laundry list of tasks performed.

However, even if we are providing and documenting value, all of us know that price pressures can lead clients, particularly corporate ones, to ask for lower billing rates. Value billing does not remove the pressure from clients on fees. The advantage of charging for value, however, is that, rather than lowering our price, we are in a position to take value/services off the table in order to deliver a lower price to the client. In effect, when the client wants a reduced price, we can unbundle the services to accomplish that objective. You are charging a different price for a different group of tasks and functions.

In other words, for X dollars, you will do this and for "Y" dollars you will do that less "abc." While "abc" may not be important, the client gets the message that you're adjusting the price to fit the appropriate level based on the service to be delivered. For example, consider the components of an hourly fee. If returned phone calls within 2 hours are part of your regular hourly rate, take that response time off the table if you lower your hourly rate in response to your client's request. Tell the client that your response time will be 24, or even 48, hours. The point will be clear: you’re not lowering your price; you’re changing the value composition of what the client is buying.

Raising Our Fee

Turn to the positive. Although lawyers are often uncomfortable about raising their rates, you can soften the blow of a fee increase by adding value to your service. In other words, do more things that cost less than the increase. If you handle estate planning, for example, you could add financial planning as a service, either as part of the fee package or for a designated added fee. Sometimes, showing that you provide better-than-excellent service is all you need to justify a fee increase. For example, consider packaging final documents in an attractive folder and hand delivering them to the client. This improved presentation adds only pennies to your costs, but it will be perceived as an example of your caring for and nurturing the client. Faster turnaround from engagement to completion is another way of adding value and exceeding expectations.

Controlling Our Practice

Lawyers, who charge for the concept of value, and not strictly for time, ultimately have more control over their practice. Often, when I coach attorneys who are dissatisfied in their practice, it’s soon apparent that their real dissatisfaction is with measuring their days in six or 10-minute increments and losing focus on the essence of their skills. Lawyers work hard, spending many hours in their efforts to meet clients' needs and objectives. It’s much better to say that our time is measured in value (investment) rather than cost (expense).