“I’m going to have to lower my fees.” This thought hovered in my mind as the COVID-19 pandemic took hold. I suspect many lawyers had this exact thought about their own practices. I resisted that urge and instead decided to raise my prices. There are steps I’m taking to ensure that I keep getting clients.
First, some background: I launched my estate planning practice in mid-2019. My plan was to start off with below-average fees and by the end of the first year increase them to the high end of the market. I offered my friends and family substantially discounted fees via my law firm announcement letter.
Once I worked my way through those clients, I started charging the fees that were published on my website, which were about average for my geographic area.
As 2020 began, I was hitting my stride and felt it was time to increase my fees. At the time, I was in the middle of a marketing program and decided to hold off on increasing fees until after I updated my website with new marketing content.
Then the COVID-19 pandemic hit.
The first few weeks were a blur. My wife is a BigLaw attorney, and our kids are 1 and 3. My days were spent cooking, cleaning, disinfecting everything and trying to keep the little ones busy. We’d trade shifts of working and taking care of the kids.
During this time, I was able to keep my clients moving along—estate plans were getting drafted, approved—and for the ones that wanted, signed. But I was treading water. My marketing plan—networking and presentations—needed an overhaul. And I wasn’t making any progress on big-picture projects.
As May approached—and with it, a measure of normalcy or at least predictability—I revisited the fee issue. The plan had been to raise fees. But now my gut told me to lower them or at least keep them the same. Could I really raise my prices during a pandemic? Would my practice survive?
I ultimately decided to raise them for two reasons.
First, my vision for my firm entails charging premium prices for premium services. I refuse to accept that the only way that small firms and solo attorneys can compete is on price.
Let’s step outside the legal world for a moment. Consider the market for overnight accommodations. Familiar companies in this sector include Motel 6, Holiday Inn Express and Ritz-Carlton. Each of these companies are household names and offer overnight accommodations.
Yet they’ve each chosen a different business model. Motel 6 unabashedly competes on price—the “6” in its name represents the original $6 nightly rate at its first location.
On the other end of the spectrum, Ritz-Carlton’s website states that it “embodies the finest luxury experience” and that its logo—a lion and crown—represents “elegance, refinement and noble bearing.”
Holiday Inn Express falls between these two poles. It defines its customers as “smart travelers” looking for a “clean, consistent, and comfortable stay.”
While each of these companies is selling overnight accommodations, they’re each going after a different segment of the overall market. Their offerings, their room rates and—importantly—their marketing approaches each reflect this difference. And they’re all making money.
Consumers of legal services are no different from consumers of overnight accommodations. Every potential client is simply looking for a solution to a problem. But not everyone is looking for the same solution. For some, a no-frills, bare-bones solution is what they want. They’re shopping on price, and cost is what’s most important. For others, cost isn’t the determinative factor but just part of the overall equation.
For some law firm clients, price really isn’t much of an issue. Chicago divorce attorney Raiford Palmer finds potential clients “usually stick with their gut feelings.” He says: “You’d be surprised to learn that people do very little price shopping.”
I decided before the crisis that I wanted to target the high end of the estate-planning market. Pandemic or not, lowering my fees for the same service wouldn’t be in line with my vision.
Second, the likely consequence of lower fees is less profit, not more.
The argument in favor of cutting rates feels intuitive: At a lower price, more consumers will demand your service. That may be true in an introductory economics textbook.
In practice, however, the result is the exact opposite. “Cutting prices rarely does anything in terms of increasing the volume of business,” according to law practice management guru Lee Rosen. “What it generally does is decrease your revenues for the same work.” And lower revenue means lower profit, unless there are corresponding cuts to expenses.
Right now, I’m a true solo practitioner. I’ve cut back some of my expenses, but my overhead was low before the crisis. There just aren’t enough expenses for me to cut to make up for a decrease in revenue. So, for me, a price decrease comes right out of profit.
But I’m not just raising my rates in isolation. Doing so would be a serious mistake. Ponder what would happen to Holiday Inn Express’ revenue if it increased its rates to those of the Ritz-Carlton without making any changes to its marketing and its offering.
Instead, I’m employing empathetic marketing and making sure to excel on the little things that matter to potential clients.
What do I mean by empathetic marketing? Empathy is the ability to understand the feelings of others. The goal of empathetic marketing is to demonstrate to the potential client that you understand their emotions and what they’re going through. It takes more than just knowing the legal contours of their problem. You must fully understand your clients’ feelings and convey that understanding through your marketing message.
I do estate planning. My marketing focuses on my potential clients’ fear of death and their desire to protect their families. These emotions are in tension. They know they need to get their affairs in order. Yet, thinking about their mortality makes them uncomfortable, so they avoid it. My goal is to show them I understand what they’re going through.
If I’m successful, they’ll trust me. And if they trust me, they’ll hire me.
As to getting the little things right, I was surprised to learn how many law firms come up short when responding to potential client inquiries. According to the 2019 Clio Legal Trends Report, the vast majority of law firms struggle with responding to emails and phone calls.
Clio called or emailed 1,000 randomly selected consumer-facing law firms. It requested information such as the firms’ rates and overall cost, what to expect from the process, and the next steps.
Sixty percent of the law firms Clio surveyed did not respond at all to an email inquiry. Of those that did, 71% provided an unsatisfactory response. More than half of the email responses Clio received requested that it call the firm’s office instead of communicating by email.
By phone, firms fared somewhat better. Fifty-six percent of calls were answered, 39% went to voicemail, and the remaining 5% went unanswered. Of the firms that received voicemails, 57% did not call back. By Clio’s assessment, once it got firms on the phone, only 16% provided a good or excellent response. Sixty one percent provided unsatisfactory responses and the remaining 22% provided adequate responses.
The takeaway: Lawyers who provide potential clients with the information they seek in a timely manner, whether by phone or email, will set themselves apart.
So that’s the goal I’ve set for myself. When a potential client emails and asks how much estate planning costs, I don’t hesitate to tell them. And I also include substantial information about my practice, the estate planning process and the next steps needed to move forward. So far, this approach has been successful.
As we all move forward and continue adapting to living in a COVID-19 world, I’m confident that my decision to raise my fees will serve my practice well and enable me to bring my vision to life.