The New Normal
Don’t Give It Away: Value Doesn’t Mean Cheap or Free
Posted May 2, 2012 1:47 PM CDT
By Susan Hackett
Scott Bishop wrote a worthy post on his blog, Real Time Marketer. It’s his position that you shouldn’t give away what you do for free or for a discount in order to generate future client business or loyalty.
I have to agree.
In this market—in which so many clients are trying to cut or control rising costs by asking for freebies or discounts, and so many firms are willing to accede to their demands—this is a hard lesson to learn and apply for lawyers and firms that are hungry for business or opportunities to create stronger institutionalized relationships.
Don’t get me wrong. I’m the last person to suggest that we stop looking for ways to lower our costs, increase our value, and improve our pricing and value proposition. And I’m certainly not endorsing a next wave of firms focused on improving their profitability by raising their fees. That’s not value. That's just expensive.
But when responding to clients who want to cut or control costs, the solution isn't to slap a discount on your price. Not at least without without having engaged in the discipline of improving efficiency or business processes in order to offer services for less while still enjoying a healthy profit margin. My point is that you won’t develop more or better client relationships by giving away your valuable services for free. All you’ll do is create frustration for those who did pay. They’ll feel they got ripped off by paying “rack rates.”
I can offer up my own experience as an example. For years, as the general counsel of the Association of Corporate Counsel, it was my job to speak to all kinds of legal groups "for free" because I was paid to do so as part of my job at ACC. I got really good at it, and was in high demand. I also had the opportunity to network and benchmark leading practices of hundreds of law firms and thousands of law departments, so I could offer great “free” consults to members who called with thorny problems they knew I’d been exposed to elsewhere or had experience in helping others resolve.
When I started out on my own as a consultant, there were many people and groups who wanted me to continue the tradition of speaking at their events without paying me a fee for my service or answering their requests for consults for free. Some of them suggested that because I was getting off to a new start, speaking at their event or helping their firm or department would lead to great exposure, might lead to future paid business, and would allow me continued exposure as a thought leader.
While I am often able to help people who call to get to what they want easily, if the issue is complicated, or involves a substantial commitment from me, or requires that I offer up what only I can deliver because of my expertise and experience, I write them a proposal and attach a fee. It’s hard to make that transition: for them and me. It’s really tempting to continue to do what I’ve done in the past in exchange for their continued trust, their continued engagement with me, and because I do learn from them and do need to continue to be recognized as a great “connector.”
But I resist the temptation. I say "no" to a lot of folks I would like to stay in front of or engage with. More accurately, I tell them that receiving my service requires them to pay my fee in return.
I think that clients value what they pay for, and that they often don’t value what is openly available, free, or cheap. I recommend you consider this as you market your services in this tight market.
I took a lesson from one of my mentors, Pat Lamb at Valorem Law. I tell those who invite me to address their groups that I am available to speak for my fee, and that I will guarantee their satisfaction. The promise is based on Valorem’s service model: If I don't perform to their expectations, they can adjust my bill to the level of value they think I provided.
I’ve taken a lesson from another of my heroes, Lisa Damon at Seyfarth Shaw. If someone who wants my advice, service or time says they can't afford it, rather than discount my value, I'm happy to think about a way I can serve them in an alternative fashion that still compensates me consistent with my value, but respects and accommodates their budget concerns.
When neither of those strategies work for a client, I respect their situation, and I recommend other people they can contact (including my competition), or I point them toward self-service resources.
Following this path has made me busier than ever, and I’m being paid to do the work I’m busy with. I save my free contributions for the charitable groups I support. I encourage every lawyer to offer free services, but to do it for groups that earn lawyers’ volunteer and professional commitment through their commitment to public service and pro bono service for the needy, not for clients whom you think will be impressed by your willingness to give away your time and service.
When it comes to clients, sticking to my value proposition has raised my value, not lowered the number of my opportunities. Those who truly can't pay appreciate my candor when I respectfully decline; they often recommend me to others, or budget for my participation in their next event or project. Steve Cannon—one of the best lawyers I know—put it this way: Once you've set the floor for the price of your service as something less than you believe it's worth (whether it's a discounted fee or a freebie), you've also established a ceiling for what you can charge that client in the future. You've now defined both the price and the value of your service.
Value can be recognized and provided in a number of ways. I encourage you to offer clients value by assessing, staffing, and pricing your service based on what the work is worth (it’s not simply how long it took some lawyer to do it). And I encourage you to look at how you can drive down the cost of performing work by increasing your efficiency and creatively pricing and managing matters. But I discourage you from undervaluing the work you do for a living simply for the sake of preserving meaningful opportunities to perform future work for those who are currently asking for free service, for yourself and for the sake of loyal clients who do pay for the value you offer.
Susan Hackett, CEO of Legal Executive Leadership, is the former senior vice president and general counsel of the Association of Corporate Counsel. She can be reached at hackett [at] lawexecs [dot] com. You can follow her on Twitter at @HackettInHouse or @LawExecs.
Editor's note: The New Normal is an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, Patrick Lamb, founding member of Valorem Law Group and their guests. New Normal contributors spend a lot of time thinking, writing and speaking about the changes occurring in the delivery of legal services. You're invited to join their discussion.