In Search of Perfect Client Service

Ten days ago, I posted a pithy note repeating a speaker's declaration that the billable hour was dead.  Never in my wildest dreams did I expect that post to generate the level of comments it did, especially since I have railed against the billable hour on so many other occasions.  See some of my posts here.  But if this topic interests you, please read the comments to the post and check out this post by Ron Baker on the Verasage blog. 

The only point I want to make in response to Ron's lengthy comment is the paragraph he begins "Pat and Moe."  Ron, I don't agree with a single thing Moe wrote.  But as we have discussed, I think any seller, if it announced it would only give work to those who would agree to do it on a flat fee basis would find a number of takers.  The converse is not true.  When offering a client an AFA, most clients have one of three reactions: (1) they try to figure out how much the matter would cost on an hourly basis and use that as a basis for comparison; (2) they simply exclude you from the candidates for the work because you've created an apples and oranges comparison for them; or (3) they ask for your hourly rates.  The point is that both sides of the equation--seller and buyer--need to be willing to engage in the process.  Who leads is less important that the commitment to participate.

Pat,

Thank you for posting my comment. I agree, I should not have started that paragraph with "Pat and Moe," just Moe (and I corrected this in my post at VeraSage. I understand we both disagree with Moe.

I still disagree with your premise about buyers and sellers both needing to be part of the equation of changing to alternative pricing, but perhaps not for the reason you may think.

This isn't really a pricing issue, it's a value proposition issue. If I can differentiate my firm in the marketplace, and customers want my offerings, then I can dictate my pricing strategy.

For example, if a client wants to work with Anomaly or Crispin & Porter, two of the leading advertising agencies in the country right now, they will get a value price. These two firms will not quote hours, will not respond to RFPs based on hours, and neither keep timesheets.

Now, does that mean they lose some work? Sure. But their attitude is they don't want those clients anyway, so it's a fantastic screening device, saving an enormous amount of time doing RFPs for nothing. Why would anyone want to work with people who don't value them?

And this is in a marketplace dominated--more so than attorneys, if you can believe it--by the billable hour.

These firms didn't ask their customers for permission to make this change. It's how they do business, part of their value proposition and purpose.

Law firms could do the same.

It is your firm's purpose and strategy that drives your pricing strategy, not the other way around.

I also believe the overwhelming majority of customers of law firms would welcome a fixed price, and not try to compare it to hourly rates. But firms who offer this are far and few between.

Hence my believe that the first set of firms who offer it--and they are out there--will have an enormous competitive advantage just based on that, until it becomes as common as the billable hour. Then firms will have to differentiate based on other innovative offerings.

I will reiterate: sellers always make pricing strategy changes, not buyers. I can find no exception to this in the history of commerce (except a couple).