Remove Consumption Barriers for Increased Law Firm Revenue

Admin — Thu, 26 Jul 2007 18:47:00 GMT

There are three key strategies for increasing revenue from existing clients:

Make it easier and simpler for people to get what they need
Provide good enough solutions to those with low-end requirements and risk
Remove barriers to consumption

Talk to a small business owner or mid-level executives in larger businesses and you find out that they avoid calling their attorney. Why? Because they know that the clock is always running and can easily escalate into a significant unplanned expense out of proportion to the client’s sense of need or risk.

On a recent trip to southeast France, I went to their version of a grocery store. The Intermarche’ is the French equivalent of Kroger, Publix, Albertsons or Wegmans. There is one big difference. U.S. stores encourage consumption by making the experience convenient for shoppers. The Intermarche’ reflects a French culture that discourages consumption.

Upon entering the store, the only available equipment for gathering my purchases were small plastic hand baskets about the size of those you see mounted on the handle bars of a bicycle. That was hardly what I needed to stock the rented villa for our group of eight. As it turned out, traditional wheeled shopping carts were located in the parking area. However, you had to deposit one Euro coin into a locking device to release the chain securing the cart. Of course, I didn’t have a Euro coin, so I returned to the store for change. The next surprise occurred when checking out. There were no bags, no boxes, and no sackers. You are expected to bring your own bag and sack your own groceries. Of course, I was the only person in the checkout lane with a week’s supply of merchandise. French shoppers limited their purchases. Each had their own shopping bag or individually decorated basket that they reused for shopping purposes.

Like the Intermarche’, law firms have erected barriers to consumption and can increase fee revenue and partner income by tearing down those barriers. Firms need to proactively propose a pricing arrangement that encourages their small business clients and mid-range corporate executives to call. In developing a pricing structure, put yourself in the shoes of your client. Predictability is often more important than actual cost. Department heads, division heads and other corporate executives are held accountable for their financial targets. Proactively offer a retainer arrangement that covers consultation on issues related to the normal operation of the business. The arrangement can provide that law firm services related to any particular matter that (in the judgment of the law firm) appear to require significant individual work shall be undertaken by the law firm only under a separate engagement agreement. The retainer arrangement will eliminate surprises. The clock only starts running when the law firm notifies the client that additional work on a particular matter will be outside of the scope of the retainer arrangement.

The client will call more often. The law firm will cement its position as a trusted advisor. More calls increase the opportunity for the law firm to add value under its traditional billing methods. The client will be happier and the law firm will increase fee revenue and per partner income.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

Hourly is King but Alternatives Add Value

Admin — Tue, 21 Jun 2005 17:49:01 GMT

IOMA, the Institute of Management and Administration, reported that, “Although firms are increasingly using alternative billing options, hourly billing still predominates. The firms queried said that 88% of their gross revenue is derived from hourly billing.”

IOMA’s 2004-2005 annual law firm survey is now available for $249. The results and analysis can be purchased online and is available in soft cover or PDF for immediate download. To purchase, go to www.ioma.com.

The fact that hourly billing accounts for almost 90% of fee revenue is not surprising. Most law firms focus on the client and not on one or a few well-defined packaged services. Most law firms are positioned to be the first responders to their clients, a role similar to the primary physician and their patient. Even when a law firm refers their client to another firm for a specialized need, they tend to stay involved assisting and advising their client. A relationship that may start on a flat fee engagement that turns into a relationship, based on the client’s trust and the attorney’s empathy, invariably reverts to the flexible hourly billing arrangement. That is not to say that alternative billing should not be proposed and used for special situations that arise. In fact, occasional use of alternative billing approaches could be a must in preserving that relationship.

The client, and not the firm, is the key to when an alternative billing arrangement should be proposed. For example, when a major legal matter arises, the client may be concerned about the predictability of legal cost and the firm’s offer to share risk though alternative pricing would be perceived by the client as an added valuable service. That perception is likely to cement the relationship between the client and firm even more firmly; whereas, consistently escalating hourly charges with no end in sight would strain the relationship. There is no one-size-fits-all alternative billing method, but if you have not read the ABA’s publication Winning Alternatives to the Billable Hour, you should, and you should have it on your bookshelf.

Proponents of alternative billing methods tend to lose their arguments by excessive enthusiasm. They want to replace the hourly billing relationship. That isn’t going to happen because of the eclectic nature of the first responder relationship. Nevertheless, there are ample opportunities to both increase the value of the firm’s services in the eyes of the client and to improve firm profitability through selective alternative billing arrangements. The best use of alternative billing is when it is used to improve client satisfaction and, even then, it must be fair to both client and firm.

In the eyes of the client, the best “full service” relationship will include both hourly billing and occasional alternative billing methods. From the firm’s standpoint, alternatives to hourly billing falls short of accommodating their first responder role.

Make More Rain : alternative billing, marketing

Remove Consumption Barriers for Increased Law Firm Revenue

Hourly is King but Alternatives Add Value