Should You Discount Your Fees?

The question about whether to discount ones fees comes up frequently. It is especially significant to address for newly-minted lawyers, as well as struggling lawyers during hard economic times. And so it’s not surprising that as the economy continues to limp along, more and more attorneys are wrestling with this issue.

I have written about this issue in the past. In December, 2007 I provided two posts related to this topic: Thinking About Lowering Your Rates? Think Again! and How to Set and Raise Your Billing Rates. In October, 2007 I touched on this again in a post entitled Client Intake — Initial Consultation Fees.

I am a big fan of Allison Shields, the author of Legal Ease Blog and principal of her consulting practice Lawyer Meltdown. I find that she and I are more often than not on the same wavelength. And I have on rare occassion — not as often as I should — written her to let her know I hold her in high esteem and appreciate her work. Her most recent post entitled Real Lessons Learned About Discounting Your Fees hits the nail on the head. Thanks, Allison.

I find that lawyers generally fall at one or the other end of the spectrum. There are those who charge outrageously high fees. They get away with it because they have established a strong brand which differentiates them from their competitors, or because they have an expertise which is rare and formidable. Either way, I say good for them!!

At the other end of the spectrum are the lawyers who have the “I’m not worthy” mind-set. They do not charge anywhere near what they could, and fear the clients will find their rates excessive. They provide free consultations, discounted rates, and more often than not mark down the bills before they go out to the client, and with no indication to the client they have done so. I often hear the justification, “The client just won’t pay that.” OK, how do you know unless you send the bill? Or at least why don’t you get some bang for your discount buck by noting it on the invoice? This “instinct” is more often borne out of insecurity and/or fear than fact or some empathetic psychic connection to the client.

What’s so sad is that my clients who follow my advice and up their rates report that amazingly no valuable client is lost as a result, except for an occasional “bad pay” client who was a pain anyway. Good riddance! The same applies to the discontinuance of “unseen” discounts. I feel sorry for those I cannot help, because I know they will continue to struggle financially, and often needlessly.

Believe it or not, if you are too cheap, the clients will think you are not worth your dollars. If you don’t value yourself, why should they?

I once bought a very expensive sweater at Macy’s. I had to wait for it to go on sale because it was outrageously priced, or so I thought. A few months later I was on vacation, touring the shops on famous Rodeo Drive. To my shock, my coveted sweater was in one of the stores. I ran in to check out the price. It was priced at more than ten times what I paid. And it, too, was on sale. It solidified two thoughts in my mind. First, had it been priced at the Macy’s level, those who regularly shop on Rodeo Drive would have thought it was lacking in quality, e.g. “What’s wrong with this, that it’s so cheap?” In other words, sometimes a higher price is interpreted as meaning higher value to the client. Second, value is subjective and relative when it comes to pricing.

Just think about it the next time you are considering discounting your rate.

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