There are only two kinds of lawyers in the world:
Lawyers who price, and lawyers who don’t. Everything else is lip service, or window dressing, or sleight of hand.
Lawyers who price work very hard to try to figure out what their client’s needs are and what the value is to the client of satisfying those needs. They then come up with a price that is less than or equal to that value, and they tell the client that price before performing the service. The client either accepts that price or does not, and if so, the lawyer does the work at that price. And the price for that service doesn’t change. If the needs unforeseeably change, then a new price will be arrived at. But remember: we’re talking prices, not estimates.
And that’s it. It’s that simple. (It may not be easy, but it’s simple.)
If you don’t do this, then you’re the other kind of lawyer: the kind who doesn’t price.
Obviously, lawyers who bill their time make up the bulk of this category. Telling a client what your rate is and then giving a vague estimate of the time you think you might spend is not pricing. Not by a long shot. Making adjustments to the bill at the end of the month to put the total amount more in line with the value delivered is not pricing. Tracking your time to try to determine any kind of concept of value is not pricing.
Capped hourly fees are not pricing. Blended rates are not pricing. (They’re just a ripoff.) Hybrid fees are not pricing. AFAs (“alternative fee arrangements” — the in-vogue thing to call different alternative billing schemes) are not pricing.
Giving clients a choice between a price and hourly billing isn’t pricing. It’s a copout, and it tells the client that you don’t believe in the value of your services. Tracking your time to see if your “losing money” on priced engagements is the same kind of copout.
Project management is not pricing. Six Sigma is not pricing. Neither is Lean Six Sigma. Or Portly Six Sigma. Or whatever. (And I don’t care if you’re a black belt, orange belt, or a braided-leather belt with a giant John Deere buckle. It ain’t pricing.)
You can go to all the two-day seminars on AFAs you want, but mostly you’ll be learning about Not Pricing. Your time would be better spent learning about your client and how they value the solutions to their problems and whether you can make a profit solving their problems for that amount.
Originally published on The Client Revolution