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Productivity Tips

(The Lean Law Firm Blog)

E54: Pricing Legal Services: When does the real work start?

Oct 14, 2020
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Too many lawyers lose money because they create too narrow a definition of what they think they should be paid for. Say you need to create an estimate or budget for a complicated matter with a lot of contingencies and variables. It may take several hours of reviewing the facts and circumstances before you are able to come up with a reasonable estimate for the “real work.” And that is the problem, distinguishing between the effort it takes to make a preliminary assessment and the so called “real work.”

This week’s tip: If you frame your preliminary assessments in a way that delivers value to your clients—and that value is obvious to your clients—then you absolutely should be charging for them.

Today’s tip comes out of a coaching session with Aileen Leventon that was provided to our Practice Accelerator Membership, but it’s so good we wanted to share it with you.

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Complex Litigation = Complex Estimate

Imagine you are asked to estimate the cost of a complex litigation matter. Estimating the fees or coming up with the budget may require a detailed evaluation of the case itself, including its merits, the possibility of settlement before trial, and the likelihood of success at trial.

Your client’s reasons for litigating will impact their perception of the value, and, therefore, their willingness to pay for certain kinds of activities. You will want to determine their level of commitment to winning the case. Does the outcome of the legal work have a high value to them personally or to their business?

  • How hard are they willing to fight? Is this a high stakes, “bet the farm” matter?
  • How toxic is the relationship between the parties?
  • Is there any hope of settling?
  • How vested is the other side?
  • Is this “just” a matter of money, or is someone’s integrity being called into question and their reputation at risk?

I know from experience that the legal spend sometimes becomes a secondary consideration when someone’s professional reputation is at stake. Pyrrhic or not, the focus can become vindication at all or any cost.

Whether you charge for the time, energy, and effort involved in your preliminary assessment depends very much on how you frame the assessment and characterize its value to the client.

 

The Real Work Starts with the Estimate

You may not be drafting statements of claim, interviewing witnesses, or preparing your arguments, but if your preliminary assessment helps define your strategy for the litigation, then frame your assessment in that light. If you take a phase-based approach to the matter, the preliminary assessment becomes phase 1, and it can be done on a fixed fee or an hourly rate basis.

Bottom line: Dont start from the perspective that the “real” work doesnt start until you have fixed the estimate with your client and therefore you can't charge them for your assessment. Instead, assess the value of that preliminary assessment to the client. If it delivers value, and you frame it in a way that makes that value clear, you will be able to bill your client for the preliminary assessment.

If you found Aileen’s tip useful, check out the Practice Accelerator Membership. Inside the Membership, you will get access to regular coaching on pricing and project management, among other things, so you can build a more efficient, profitable, and productive practice.

And if you would like to get tips like this regularly, sign up here!

Thanks a lot everybody!

 

 

 

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