AOL 139: Pricing Law Firm Services to Win
Today I wanted to talk about something that we’ve all had to think about and deal with at some point in our law firm start-up career: pricing law firm services.
The tough part about pricing law firm services is that there is no set pricing schedule.
There is no industry standard.
And no one shares their prices.
For those reasons (and some other psychological factors I talk about in the podcast) pricing law firm services can seem extremely difficult.
But it doesn’t have to be.
All it takes is a little thought, a little intention, a minor shift in perspective, and some guts.
Check out the podcast to get the whole scoop.
P.S. – I’ve done it! I started my second six-figure law firm in under 4 months! Want to know my secret? Networking! And I’m sharing my tracking system with you for free. Click Here for Access.
Pricing Law Firm Services Transcript
On this episode of the show we are going to talk about pricing. Hey everybody this is Christopher Small and this is episode one thirty nine of the Art Of Lawyering. I am outside on the deck in my office as you can probably hear that huge truck just go by. Cloudy day and I was planning on giving you an added boost. I’m going to, I think start filming all of these podcast episodes live via live stream on Facebook and then put them all off on Youtube as well. So if you want to be a first watcher or listener of this and get some questions asked. Because I think I’m gonna ask, answer some questions why. And probably put in here on Facebook or on here on the podcast. I’m going to do that a bit before the podcast. Do a bit after for everybody. For showing up and saying hello. So if you, if you want to be able to get in there and do that’d be awesome. I’d love to see you there. All you need to do is go and like my Facebook page. The Art Of Lawyering and what I’ll probably do, I’m going to try to do these around nine thirty every morning and what you’ll see is, you’ll see the live stream of when I do these posts.
And oh, well and you need to go like my regular page of CMS Law Firm. If you want to see me live stream my Rich Life Lawyer shows. And you may want to do that just so you can see how I do it so that you can try to do it yourself. So go and do that I’ll send that little nuggets, a little notes before I do each thing but thought that’d be cool to do the fun and easy way to interact with you guys and to really just talk directly to you. So we’re going to do that. So do that. The talk about pricing. Pricing, this is something I talked about on my Rich Life Lawyer podcast. I have a podcast that I talk a lot about what’s going on in the business and what we do to make our law from the best for clients. And then I have a Rich Life Lawyer Show which is a video show that, where we talk about estate planning stuff. You know like legal stuff. So I talked about why and how we value our prices and I wanted to talk to you guys about it today. So that you can really make sure you’re pricing your services correctly. Now, to begin with the answer really when it comes to pricing or legal services is whatever you’re comfortable with.
With the call you at that whatever you’re comfortable with. And immediately need to increase it by at least ten percent because you are under valuing your services. Everybody does. Now, when it comes to picking a number for your services. I don’t like to really think about the timing involved or the cost involved. That so, if you’re thinking about, oh I have to print ten pages blah blah blah. Or it’s going to take me three hours blah blah blah. I don’t like to think about either one of those ways and the reason for that is that, that is not translatable to the client for something that they’re going to want to pay for. For example. Example, if a plumber comes to your house and he tells you it’s going to cost you two hours to fix your toilet. Do you care? Do you care how long it’s going to take? Not really. What you care is that it’s going to be fixed. So if he instead of saying it’s going to cost you two hours at sixty bucks an hour. If he just say, it’s going to cost you two hundred bucks and you said yes, and he fixed it in an hour. You still would be happy to pay that two hundred bucks because you’re getting the value, right.
So what it all boils down to is, you want to price your services on value, not on time. This is something that’s very difficult for people to get their heads around. And it’s very scary for people because they think there’s a lot of risk associated with that but in reality, the sooner you start doing this, the happier your clients will be, the happier you will be because you won’t be changed on the clock and the more you’ll make more money that way too. Because there will be an emphasis on you doing things more economically and efficiently rather than drawing everything out. And I don’t care who you are. If you say that being on the clock doesn’t come into play when you’re thinking about providing your legal services and billing, then you are lying to yourself. I’ve done hourly billing and it’s the same way you look at the clock, you think to yourself, how could this only have taken me fifteen minutes. This thing is going to save this client’s life and you wish that you would have dealt, built that out on a flat fee basis. So that you could actually get paid for the value that you provide.
The story that I always use for this is the story of the guy, the cruise ship. Cruise ship breaks down, the engineers on the ship cannot figure out how to fix the engines. They call an expert. He comes in, he looks at the engine and he says, I can fix this for you. It’s going to cost you ten thousand dollars. The captain of the ship says no problem. It’s totally worth that to me. We’ve got a crew full of people here and we need to get going. We’re all going to leave. We’re going to pay them all back. So he says, okay great. So he looked around for a little bit, about you know thirty seconds to a minute. He grabs a hammer, he pounds the engine with a hammer three times, the engine starts up. He turns to the captain and says that would be ten thousand dollars. The captain looked at him kind of incredulously and says, really? Ten thousand dollars for that? And he says, yeah cost you five dollars to pound the engine. It cost you $9995 to know where to hit the engine and that’s what we provide as lawyers, right.
The paperwork is not where our value is. Our value is in our counsel. And being able to see unintended consequences. And being able to see around corners. And see into the future. And plan for things that our clients wouldn’t even be able to think of. And wouldn’t even know to think of. That’s what your value as an attorney. And when you bill by the hour. You can’t reflect that. When you bill by value based doing what you can. For example. Another example, someone comes to me. They have three million dollars in their state in Washington State. Anything over two million dollars it’s taxed at twenty percent. They come to me, that they don’t even know this. And then once they do know it, they don’t know how to take care of it. So I tell him, I can solve this problem for you. You don’t have to pay any tax on the extra one million dollars. They say great, I say great. It’s only going to cost you ten thousand dollars. So of your two hundred thousand dollars tax bill, it’s going to cost you ten thousand dollars or five percent of that, okay?
When you break it down like that, people may be willing to do that and they may be willing to accept that because you’re giving them a tremendous amount of value. They’re paying five thousand dollars to save two hundred thousand dollars. The same thing that goes into the way you should think about my services for you by the way. To spend ninety seven dollars a month on a coaching service that can make you tens of thousands of dollars over the course of a year and hundreds of thousands of dollars over the course of a year or more. Then, you should take advantage of that value because it’s there. And people inside will tell you that. But it’s the same thing, right. So I think the way that you think about value and the way that you describe with your clients is going to make a big difference in the number of new clients that you have and the amount of money that you are able to charge. Now what about those times when you have to do way more work than you thought and you don’t get paid for that. Well here’s the deal, that’s going to happen sometimes.
It’s going to happen and way way less frequently than you think. And it’s only going to take a couple of those times for you to really learn how to choose your clients correctly, how to scope your services correctly, and how to charge correctly as well. So if you’re taking on shitty clients, that’s your fault. You need to take on better clients. You need to see the work scope more clearly. And then you get paid accordingly. All right so, I hope this helps you. There is no right answer and what your competitors are charging probably isn’t correct and it’s probably not enough. If you’re giving a good service. So think about that. Internalize that. Look at the way your valuing and billing and selling your services right now and change them. Change it if you need to. So that you can get what you are providing for the clients. Get paid for that. That’s the key, alright. So that is it for today this is episode one thirty nine. Remember go to the Facebook page The Art Of Lawyering and like it. Go to my CMS Law Firm page and like it. You will not be disappointed. You’re going to see some cool stuff there. So that’s it. See you tomorrow.