When times are tough, law firms increasingly need to focus on ‘why they’re worth it’
According to a recent survey by Accenture and S&P Global, business confidence is at its lowest since 2009. One consequence of this gloom is that professional service providers are coming under intense pressure from clients to reduce their fees.
This is a red light for law firms, the market I serve, who routinely undervalue themselves, often lack the confidence to negotiate on their own behalf, may be worried about imminent or actual declines in work, and so are vulnerable to being bullied about what they charge. Surprisingly helpful guidance can be found in a jar of face cream.
Oil of Olay is owned by Proctor & Gamble. Over the years, discounting had given it a downmarket image. By 1990, mocked as “Oil of Old Lady” it was sold mostly in convenience stores at $3.99 (£2.30). It needed urgent surgery. Rebranded “OLAY”, its composition was much improved, and it was repackaged to look good on the shelves of upmarket stores as well as mass outlets.
P&G then tried various price points: $12.99, $15.99 and $18.99. The last was most successful. Expensive enough to be regarded as premium, but good value against competitors, it became a market leader at almost five times its original price.
This story of OLAY shows that whether it is cosmetics or counsel, clients will pay good money if a product or service is important to them, providers demonstrate a sincere commitment to excellence, and skilfully articulate their value.
For sure, we need to be sensitive to the current pressures on our clients. It matters that we offer good pricing options, are transparent, flexible and willing to share the pain. But we need to be bolder and smarter too. It matters equally that we are confident in fee discussions about explaining the skill and resources we bring to delivering the quality clients demand, and the value of our work to them at some of the most important moments in their lives.
The most successful firms are as thoughtful and resolute in how they position themselves and protect their own interests (“because we’re worth it”) as they are in the service of their clients.
What is the key to clients agreeing that we’re worth it? Like cosmetics, it’s true of professionals that clients may not remember exactly what we did – but will remember how we made them feel. This is especially true at times of struggle. Clients want two things: results and a relationship. We are good at focusing on the first but often not so good at the second.
The great consultant and academic David Maister once asked: “Are your client relationships more like a romance or a one-night stand?” Taking a transactional view is easy; you have the expertise; they have the need; you don’t have to be friends, just do your job. Every second you spend is chargeable; there is none of that pesky wasted time getting to know clients and their world. You may think that this suits them too. They want something done: if they want a relationship, they’ll go on a dating site.
Yet putting professional detachment on a pedestal and spending only chargeable time with clients has baleful consequences. They notice when their advisers make clear that the relationship is strictly business and show no interest in going beyond. They feel short-changed. It encourages them to be adversarial about fees, the opposite of ideal. The technical quality of our advice will always be the first consideration, but clients want empathy too, a feeling that relations are not entirely dictated by a pound sign.
As Maister says, many client relationship plans are nothing of the kind. They are sales plans, designed to win business and generate cash. Yet healthy relationships, business or personal, are characterised by give and take. Indeed, successful rainmakers prove time and again that the more generous they are, the more comes back to them.
The defining emotion of the one- night stand is regret. It’s as true in this context as in our private lives. Too late to lavish more attention after a disillusioned client, seeing no reason to be loyal, has run off to the arms of another.
Skin-deep relationships never last, so be a romantic. It may be more effortful and expensive, but there is a far greater chance that you will still be loved in the morning – and for all the mornings to come.
