Every single successful business discounts from time to time – for retail establishments that happens when inventory gets too high or for seasonal reasons to drive traffic to the store.
For lawyers, discounting happens for a variety of other reasons. You feel bad for a client’s situation and want to help, you like the client, want to do good deeds, have some extra time on your hands and don’t want to get bored … whatever the reason, we all discount.
But there’s an inherent problem with discounting up front. Let’s say you advertise in the newspaper for your bankruptcy services. You offer Chapter 7 bankruptcy cases for $2,500 (just picking a number out of thin air here, folks). Client comes into the office, you sign them up, get their money and do the job.
Well done.
Then that client refers someone else to you. Referred Client calls to ask your fee for a Chapter 7 bankruptcy and you say it’s going to cost $1,500 – a lot less than you charged the originating client.
You don’t give a reason, you just give the new fee to the new client.
So the original client talks to Referred Client and is told that you charged this lower fee for the exact same service.
What happens?
Chances are damn good you’re not going to get another referral from that client ever again.
Why not? Because you’ve created within that original client a feeling that they were taken for a ride by their lawyer. Doesn’t matter if you gave great service, got the discharge in record time, made the client feel like a king. What does matter is that this client now believes that he overpaid.
And the client feels like a sap.
How about the Referring Client? They feel pretty good about getting a sweet deal from you and they’re going to refer a ton of business to you. Right?
Wrong. On some level they think you’re inconsistent, that you make up fees as you go along. You’re no longer a reliable lawyer, you’re some mealy-mouthed fast-talker who just wants the bucks.
Bad news, my friends. Bad news indeed.
Don’t believe me? Go shopping for a car and watch how the salesperson comes down off the original price like clockwork. A $40,000 car turns into a $38,000 car in about 15 minutes. How does it make you feel? Like the car salesperson is probably still somehow ripping you off.
So how do you discount without making everyone feel like a sucker?
You tell each client exactly WHY you’re giving a specific fee. And if you discount, you let them know the specific reason why you’re giving them a sweetheart deal. For example:
- I can’t give referral fees so I just give the new client a discount
- People who are referred to me tend to be easier to deal with, so they take up less of my time
- We just instituted a new software program that allows us to do the work faster and at lower cost
- Your case seems a lot easier that the norm because of (fewer creditors, fewer assets, whatever)
- We have a sliding scale based on the client’s income
In other words, give a real and tangible reason WHY you’re discounting. Doing so allows you to preserve the client relationship, strengthen the bonds of trust and rapport, and do so without decreasing the value of your service in a credible manner.
