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Jan Copley
Certified Practice Advisor
Atticus, Inc.

530 South Lake Avenue, Suite 250
Pasadena, CA 91101
(626) 696-3145
(626) 421-6747 (fax)
jan@copleycoaching.com

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How Do You Get Paid?

August 29, 2012

Filed under: Billing,Pricing — @ 8:00 am

When I was practicing, I accepted credit card payments for my services. I used what was then the traditional route — a machine to swipe the card. I paid a percentage of the amount charged to the credit card processor.

It worked well. Hardly anyone carries checkbooks any more and people like to get the airline miles and other perks from using their credit cards. It meant that the credit card company financed payments, rather than me having to take installment payments. It also meant something really important — I got paid for my work.

As a result, I’m always surprised when I hear lawyers resisting taking credit card payments. They very often quote the downside of having to pay a certain percentage of the transaction to the credit card company. My response is that if the credit card company is charging 3%, raise your rates 5%. A client that won’t pay the additional 5% won’t pay what your original charge was, either.

Since I closed my practice, the financial world has created other, perhaps cheaper, ways for you to accept credit cards. Therefore, I thought it would be useful to my readers if I passed along the link to a recent posting, “Five Ways to Receive Credit Card Payments” on the Attorney at Work website. I especially like the concept of accepting credit cards that can go to your trust account — that would make it so much easier to keep an evergreen retainer.

Please let me know how this helps you!

If It’s Too Good to Be True…

August 15, 2012

Filed under: Growing Your Business,Practice Management,Prepaid Legal Plans,Pricing — @ 8:00 am

Even lawyers get scammed. Steve Riley, my friend and fellow Atticus practice advisor, forwarded a link to a recent Wall Street Journal Law Blog article, “Despite Warnings, Lawyers Still Fall for Collection Scam.” Apparently, lawyers can be just as easily sucked into promises of easy money as everyone else. So, if it sounds too good to be true, it probably is.

What about prepaid legal? The article got me thinking about other financial arrangements, which, while not scams, can trap attorneys. Specifically, I found myself thinking about prepaid legal plans. Most prepaid legal plans require attorneys to either (1) provide their services at discounted rates or (2) remit a significant percentage of the amount collected to the plan.

The reason why lawyers choose to participate in prepaid legal plans is that they think they’ll see more clients and generate more revenue. That may or may not be true; some plans refer potential clients fairly consistently, while others do not.

You have to ask: will you make money? Generating more revenue may not be what you’re looking for: rather, the question to ask is, will you generate more profit? And the answer may be no. If you’re running your business with a 30% profit margin (which, according to the Los Angeles County Bar Association, is the average profit for a law firm) and paying 40% of your revenue from the matter to the lawyer referral company, you’ve just signed to work at a loss!

Alternatively, if the plan limits the amount you can charge for certain work, make sure that you’ll make money at that price. If the plan limits what you can charge for a specific transaction to say, $1,500, and it costs you $2,000 to provide that service, you’ll be losing money on the deal.

In either case, it seems to me you’re better off using the time you would spend on prepaid legal matters marketing for clients who will pay your full rate.

What quality client will you see? Another concern I have is that a prepaid legal plan member won’t be the quality client you want — you’ll be seeing individuals whose primary concern may be to get a discount. In my experience, people who choose their attorney based only on price are not great clients. As a rule, they’re not great referral sources, either.

Please let me know how this helps you!

More About Your Prices

June 1, 2012

Filed under: Pricing — @ 1:02 pm

I find I spend a lot of time telling my coaching clients to increase their prices. I’ve blogged about it on several occasions, too. One of my clients told me he thinks all practice management coaches tell their clients to raise their rates. He may be right! But there’s a reason why we coaches for lawyers talk to our clients about what they charge for their services — very often, we find that our clients are not charging nearly enough.

So, I felt vindicated when I ran across an article, “Lawyers, Beware Low Billing Rates,” on the Lawyerist.com website. According to the article, lawyers keep their rates low because (1) they think they’ll generate more clients that way, and/or (2) the lawyer feels sorry for the client and charges what the lawyer thinks the client can pay. As far as I’m concerned, this is a terrible way to run your business!

First, very often, the client who hires you because your prices are low is the “D” client you don’t want, because the client’s judgment is based solely on price, and not on the work you do for him or her. With that kind of relationship, the client will always complain, and you won’t be happy, either.

Second, you should charge based upon the value of your services to the client, not because you feel sorry for someone. Additionally, if your charges are low, people may wonder about the quality of work you are providing; as the article observes, people expect legal services to be costly.

So, take a look at your prices and how you set them. Consider raising them. You may lose a few clients, but, as my friend Mark Merenda observes, if you double your prices and lose half your clients, you’ll still be making the same amount of money, and you’ll have time to market for quality clients (or get home in time for dinner). If you keep your prices low, I fear that you’ll always be on the treadmill of working for unappreciative clients and not making enough money.

Please let me know how this helps you!

Be Deliberate About Your Pricing

April 20, 2012

Filed under: Pricing — @ 8:00 am

I’ve been blogging about pricing and making money lately, and I thought it would make some sense to spend more time talking more about your pricing strategy.

Price Strategically. The first thing to remember about pricing is to be deliberate about it. What this means is that you think about what you are charging for your services and why. You base your prices on factors relevant to your business, rather than on what the attorney down the street charges. Thoughtful, careful pricing is a key to the profitability of your business.

Deliberate pricing for profitability requires you to ask the following questions:

  • What’s the value to the client?
  • How much do you want to take home?
  • What’s your monthly overhead?
  • How much revenue do you need to generate to meet your goal?

Set goals and metrics. Once you’ve set your goal, you can put some metrics in place to meet them. For example, if you are an estate planning attorney, based on historic performance in your office, you can estimate the number of trust-based-estate plans, the number of Medicaid planning cases, and the number of trust administration matters you are likely to generate this year.

With this information, you can price deliberately — that is, you can determine how much you need to charge for each matter to meet your revenue goal.

Please let me know how this helps you!

But Will You Make Money? – Part 3

March 23, 2012

Filed under: Pricing — @ 8:00 am

I think there are six rules you should consider when you quote prices to prospective clients. I wrote about the first three rules in my previous posting; here are the other three:

4. Present what you provide to give you pricing flexibility. Sometimes, we get caught in a rut in our services and prices. We may think a client needs to do something but the client may have different ideas and we don’t know how to respond. To give you some flexibility, you might think about the following for your pricing structure:

    a. Consider a range for the services you provide to serve both high-end and low-end client needs and allow the client to choose between the services;
    b. Consider adding new services to add to the choices you provide; but
    c. Remember that any innovation should be designed for growth of your practice and priced for profit; don’t add something that is just a loss leader.

5. Build your selling backbone. I think one reason attorneys have trouble with effectively pricing their services is because they’re scared of a client saying no. If that’s the case, consider (and practice) the following:

    a. Know the value of the services you provide (that is, the value to the client, not just how much time you think a project will take you);
    b. Learn a little about a potential client before you quote a price so you can explain what you provide in terms that are valuable to him or her; and
    c. Don’t negotiate your prices — if you do, you’ve lost all leverage for future dealings with that person.

6. Remember who you are. Although you may not think what you do is special, it is. It takes education and experience to effectively represent someone; you’re also taking on potential liability with everything you do! Therefore, price accordingly:

    a. Tactfully explain how you are better than your competitors and how you do more;
    b. Practice your explanation of what you do (your spouse will find it really interesting!); and
    c. Have justifiable pride in your services, because what lawyers do (e.g., save taxes, keep people out of jail) is extraordinary.

Please let me know how this helps you!

But Will You Make Money? – Part 2

March 21, 2012

Filed under: Pricing — @ 1:05 pm

In my previous blog, I wrote about some things to think about before setting your prices. Since pricing is crucial to the amount of money you make from your law practice, I thought I would continue the discussion in my next two postings.

I think there are six rules you should consider when you quote prices to prospective clients. I’ve derived the rules from R. Holden and M. Burton, Pricing With Confidence (Wiley 2008). The book is aimed at businesses that sell stuff, rather than services, but I think the six rules apply to pricing in every business.

1. Replace the discounting reflex with a little arrogance. Too often, we let our own frugality get in the way of setting our prices. Instead, to set a price that really reflects the value you are providing to a client, focus on:

    a. The client’s need;
    b. How you can solve the client’s problem; and
    c. Quantify the value for the client (e.g., “My charge to protect you from losing all your wealth to the cost of long-term care is about equal to the cost of one month of nursing home care”).

2. Understand the value you offer to your client. I think the best way to price your services is based upon the value you provide to a potential client. So how do you determine this? It’s not so hard:

    a. Find out (don’t assume) what worries the client;
    b. Explain the value in each choice you give to the client; and
    c. Allow the client to maintain control by giving the client choices (“How would you like to proceed?”).

3. Price to Increase Profits. Some attorneys lower their prices, thinking the potential for increased sales will make up for the revenue lost from the lower price. That may or may not be true. When you set your prices, consider the following:

    a. Increased sales don’t necessarily increase profits;
    b. Raising your prices is the quickest way to increase your profitability; and
    c. If you double your prices and lose half your clients, you will make the same amount of money — and probably have a higher profit ratio.

I’ll talk about three more rules in my next posting.

Please let me know how this helps you!

But Will You Make Money?

March 14, 2012

Filed under: Pricing — @ 5:44 pm

One of the things I talk about with my coaching clients is what they charge for their services. Almost always, I find myself urging my clients to raise their prices.

How not to set your prices. It seems most lawyers have not thought through their pricing structures — rather, they’ve set their prices based upon what someone down the street bills for their services. If you’ve followed this strategy, it means that if the person down the street is starving, you probably are, too.

Pricing is crucial. More than anything else, what you charge for your services affects how profitable your practice is. And, by “profitable,” I don’t mean generating enough revenue just to cover your expenses! To my mind, “profitable” means generating sufficient revenue to cover your expenses and take home enough money to enjoy a comfortable lifestyle.

Things to think about when you quote a price. When I read it, I thought Toby Brown’s article, “Wise up Before Value Billing” on the Attorney at Work blog contains good advice about setting prices. Although the article focuses on value billing, I think the advice applies to any situation in which you charge for the work you do for your clients. According to Brown, you should consider the following things when you set a price:

  • Know how sensitive the client is to the charge. If the client is too price-sensitive, the matter may not be worth your while.
  • Know how much the retention is going to cost you. Calculate the amount of time you will spend, how much you will have to pay your team for their services, your out-of-pocket costs, etc. Don’t just guess at this!
  • As yourself: is the case worth it? Do you like the case? Or will it keep you awake at night? Even if a potential retention includes a big retainer up front, it may not be profitable in the long run.

Please let me know how this helps you!

I’m Too Busy to Bill

September 23, 2011

Filed under: Billing,Practice Management,Pricing — @ 8:00 am

I am not kidding, I’ve actually had lawyers tell me that they are “too busy to bill.” That comment always makes me wonder how that person is eating, much less paying the rent!

Now, I know that many attorneys practice because they love the law, but most of us are in it to make a living, too. And making a living requires collecting payment for the services we provide to our clients.

Unfortunately, law school doesn’t teach cash flow management, and many of us start up our business without thinking about the steps involved in actually getting paid. To that end, I have a couple of suggestions:

Be rigorous about billing. Designate specific days, at least once a month, to get the bills out. Don’t schedule any meetings that day, and don’t plan on doing any client work.

Don’t work with deadbeats. Only work with clients who are willing to pay you. If the first words out of a prospect’s mouth are “what is it going to cost?” send that person on his or her way. You don’t lose money on the cases you don’t take.

Figure out a way to capture your time. If you bill hourly and have trouble tracking your time, ask your assistant to interview you at the end of the day about what you have worked on. Have him/her actually create the time records. If you do this, it’s likely you won’t lose as much billable time because you haven’t documented it, and you won’t be subjected to the physical task of logging your time yourself.

Raise your prices. Make sure your prices are high enough so you make a profit. I know that many attorneys are afraid that if they charge too much they’ll lose clients. However, a wise man once told me to think of it this way: if you double your prices and lose half your clients, you’ll still be making the same amount of money.

Please let me know how this helps you!

Ten Ways to Boost Profits

August 10, 2011

Filed under: Growing Your Business,Practice Management,Pricing — @ 1:51 pm

I’m still not sure how I got on the mailing list CPA Trendlines, an email newsletter for accountants, but I certainly enjoy it. The latest edition contained an article about boosting profits. There’s enough similarity between accounting and law firms that I thought it would be useful information to pass along to you.

I especially like the following points:

    • Don’t be shy about raising your prices.

    • Get rid of unprofitable clients.

    • Set goals for everyone in the office.

    • Not everyone who breathes is a potential client.

    • Set goals and focus on them.

I bet if you implemented at least one of these strategies, your profitability would go up!

Please let me know how this helps you!

Show Me the Value!

July 8, 2011

Filed under: Pricing — @ 1:12 pm

When I first started charging for my work as an estate planning attorney, I struggled with setting and quoting my prices. It was hard for me to decide what my services were worth. When I spoke with other people about it, one response I got was to “show the value” of what I was doing. Unfortunately, I could never quite figure out how to show the value to a potential client.

It’s not about you. Well, I think I’ve finally got it. Show the value of what you do by letting your clients tell you what’s important to them. Value is not an issue of how much time it takes you — clients care about the results, not the internal processes in your office. And, it’s not that much about your legal expertise or training, because the client assumes you know how to do your job.

Listen, listen, listen! We often make the mistake of assuming what’s important to the client without really checking in with them. You may think a wealthy client is concerned about saving taxes — and the client may well be — but, with careful listening, you might find something else is more important to him or her. If you insist on spending all your time talking about taxes, the client will realize that you’re not all that interested in what the client has to say and take his or her business elsewhere.

Let the client tell you what the value is. On the other hand, if you do take time to find out what a client’s real concerns are, reflect the concerns back to the client, and assure the client you can solve his or her problems, the client is much more likely to (1) trust you; (2) retain you; and (3) pay you a fair price for what you do. And those are the clients you want, right?

Let me know how this helps you!