How Does the Client Define Value, And What is the Lawyer’s Role in Communicating Value?
Last month, the Greatest American Lawyer posted about Clients Who Don’t Understand Value. The post is all about two clients with whom the GAL had to part company, due to a failure on the part of the clients to grasp value billing. For those struggling with the concepts of value billing and the importance of defining the scope of work and clients’ expectations up front, this post is extremely instructive.
As GAL indicates in the post, “early email exchanges” with these two clients made it clear that the clients were going to use the lawyers’ expertise against them by assuming that since the lawyer had handled these issues before, the client shouldn’t have to pay for the lawyers’ work or expertise. The post also notes that both clients had agreed to the deliverables and that the deliverables were actually achieved, but that the ultimate result was not what the client wanted, and therefore, the clients balked at paying the fee.
This is why determining and managing the client’s expectations up front are so important – no lawyer can guarantee a result, and a client that is hell-bent on a particular result and not willing to pay unless that particular result is achieved is a client that is trouble regardless of your payment structure. While the GAL laments that the clients in question sought to discount the legal fees by asking how much time the firm spent, it is doubtful that the client really cared about the time spent – they were just looking for a ‘way out’ of the fee. GAL could have (and probably would have) encountered the same problem with these particular clients had he charged on an hourly basis – but in that case, the clients would have argued about the hourly rate itself, or argued that too much time was spent on the matter.
GAL reports the outcome of the relationship with the clients this way: “In short, all the red flags were pointing to a mismatch between our services and the client. We returned the client’s fee despite having provided all of the deliverables and provided recommendations to two other law firms who specialize in the particular area of law.”
GAL outlines all of the value the client received from their representation, and all of the negatives that would ensue with the client hiring an hourly firm to do the work or with the client hiring any other firm besides GAL. In other words, the post outlines all of the things that differentiate GAL’s firm from its competitors and all of the benefits the client would have received by continuing representation with GAL.
GAL concludes that, “A law firm should never hesitate to monitor “red flag clients”, return their money even when you’ve delivered each and every item and send that client on their way. I’ve always believed that law firms make their money by insuring they receive a solid match with clients. Stated the other way, a law firm can lose a lot of money really quickly on a client that doesn’t understand and realize the value they are being provided.”
While I agree with the the conclusion and am a firm believer that lawyers and law firms must pay closer attention to client selection and to those ‘red flags’ that appear early on in the relationship, there is another message here. And that message is that lawyers and law firms must do a better job of communicating the value that the client receives from the lawyer’s representation and what makes that law firm different from the competition. Did GAL do as good a job of communicating those things to the client up front as the post did after the fact? Perhaps — but in my experience, most lawyers don’t analyze the benefits of their representation that much at the outset, let alone communicate it to their clients.