Christmas is over for yet another year. However, for those who genuinely aspire to become a better version of themselves, the New Year heralds a wonderful opportunity to leave the past well and truly behind. It’s a time to embrace new beginnings.
So what better time to review the often challenging subject of charging what you’re worth and make 2020 the year that you finally crack this.
Whether running your own practice or an employed fee-earner, you are undoubtedly a highly intelligent, skilled individual who cares about what you do, often working long hours to satisfy your clients’ needs.
Like other professionals, you are not immune to the challenges which the business aspect of your work may pose and with the ever-changing legal landscape, this may be even more complicated for lawyers than other professionals.
Increasing competition, much of which is a race to the bottom on price, the perceived threat of AI and recent changes in the SRA’s regulations may be enough to unsettle even the most commercially-minded lawyer.
For heart-led individuals, who work with clients going through particularly emotional times or are perceived as vulnerable in some way or other, it’s doubly difficult.
Having those money conversations and managing clients’ expectations can be immensely challenging.
So even though your charge-out rate may well be set at the correct level, you may not apply it properly and automatically discount and over-service clients because you just don’t have the heart to, as you see it, add insult to injury by billing the full fee.
And in the case of fixed fees, you naturally under-estimate.
Equally, areas which may be particularly price-sensitive, such as wills or conveyancing, may also be tricky.
So what is the impact of this?
Clearly there’s a financial impact on the firm’s bottom line, at times resulting in a significant loss of revenue year on year.
However, there is an equally important factor which cannot be overlooked and that is the well-being of lawyers themselves, since not charging and managing clients effectively often leads to them working excessively and quite understandably being very stressed, tired and even overwhelmed.
Consequently, it may well be a contributing factor to the increase in mental health issues in the legal profession. So what can be done about this?
Value is the key, the foundation, the heart of the problem and the solution! My own unique formula UV + CV + CD explains this as follows.
1) UV = You must really understand your value at a deep level and then from that profound understanding always focus on the value of each piece of work, before thinking about what to charge.
This then moves you away from the price being the key factor in whether or not a client will buy which is erroneous thinking and just attracts the wrong sort of clients, to value-focused.
Although this is simple, it is not necessarily easy, since one’s value is unconscious. In fact, the more experienced a fee-earner is, the more unconscious is their value.
Since it is human nature to take things for granted, then experienced lawyers take what they do for granted, thinking it is easy. It isn’t of course yet to them it may well be. I know that this is true for me too.
This is a significant part of the problem and process training alone is unlikely to fix this.
2) CV = Learn how to communicate their value to clients confidently as well as being able to elicit the value perceived by the client.
In addition, they need to communicate with the client clearly throughout a project, right from the outset to conclusion of billing and payment on the following:
- Costs including changes to costs due to a variation in the scope of work.
- When the project will be complete and variations to this.
- Any other relevant information, so that the client’s expectations are being met and/or managed and therefore the likelihood of discounting is significantly reduced, if not completely eliminated.
3) CD = Confident delivering costs to the client. If a lawyer is not confident talking about money, clients will pick up on this and may then challenge the fees.
In summary, this simple yet powerful formula, once mastered, will lead you to balance so you are able to take care of yourself while taking care of your client and taking charge of your business.
This will undoubtedly have a significant, positive impact on your bottom-line not to mention yours and your fee-earners’ wellbeing.
Vanessa Ugatti is the author of Amazon Best-Seller, “True Worth: How to Charge What You’re Worth and Get It” and helps lawyers to generate more revenue ethically without having to get more clients, do more work or compromise value or values while creating a more beneficial work-life balance.
