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December 10, 2008

When Pricing Your Legal Services, Understand Your Clients

Today, I learned that after 22 1/2 years at AT & T my brother was being laid off from his management position. He was two and a half years away from his pension.  He was given one year's salary as severance because of his longevity.  He has five kids, two in college.  Fortunately, his home is paid for. He is considered middle to upper middle class.

Those who assess unemployment numbers in this country won't reflect his status for a while. The ripple effect of his loss of a good income throughout the economy also won't be reflected immediately because even after a job loss it takes a while to adjust household spending due to the psychological shock.  He will get another job because he has to but he will most likely be UNDER - employed because of what is happening across the country and the world.

His story is not unique.  In some ways he is better off than others because he got severance, his health care is still in place although at a COBRA premium.  But we now need to look at him as a client for your legal services.  For the sake of this post let's create a new persona Jack and make him a prospective client in today's new economy. One who is angry, panicked and depressed.

Jack's a very bright guy. He knows he has to pay his mortgage, put food on the table, pay his non-negotiable bills first in order to not lose what he already has and to physically survive. IF he is presented with an optional legal matter (optional being in the mind of the individual) he will likely not pursue it or at least not pursue it in the same way clients have done in the past and the way in which you have relied.

If it is an emergency legal matter, if the price tag is too high or the payment options are not workable he will be the one who attempts to take care of his legal matter pro se.  After all he's smart and now he has time.  And he has the internet. Unless it is a serious criminal matter, or a contingency case with no out of pocket costs to him, chances are he assumes he can can create his own Will (which, by the way, many unfortunately consider 'optional' or simply not on their radar), negotiate a speeding ticket (after all trying to negotiate a deal and still having to pay the ticket can be seen as cheaper than hiring an attorney because now he doesn't even have to calculate time away from the job), attempt to figure out bankruptcy, even try to work through a divorce.

This is the mindset you will be up against. Survival. Resentment. How do you educate Jack that doing it by himself is not necessarily the right or best answer even with his current circumstances?  How do you show Jack it is not only smart, but affordable and cost-effective versus the disadvantages of the pro se options as well as the legal landmines?  How do you show Jack you understand what he is going through and will work with him?  How do you do this while still turning a profit and paying your own mortgage and putting food on your own table?  How do you do this when many lay people believe lawyers are somehow handed money the minute they pass the bar even though most of us know this is sadly not the truth?

This post is not about the answers.  This post is about getting you to think about your current business model including overhead, your pricing strategies, your current client education programs and how you plan to reach out to Jack and show him you are the better alternative to going through the stresses of handling a legal matter on his own?

Related Posts:

"Marketing Defined" - It's Not a Dirty Word

Will Bartering Legal Services For Chickens Come Back In Vogue?

How Do Your Clients Find You?  Or Do They?

(And in case you didn't see, check out our recent faculty announcements at Solo Practice University.

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Wanted to update this important post with some recent data:

"From August to December, the average savings account was halved to $5,500. Fortunately, credit card debt remained roughly constant, but investments declined by 24%, while loans (mortgage, HELOC, student loans, and personal loans) increased by 11%.

… But what the data, the hard facts, mean for you – if you run a consumer business – is that your customers are spending $400 less each month than they were a year ago, have burned through half of their savings, and on average have taken on an additional $5k in debt."


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