One of the commercial challenges when trying to procure professional services (lawyers, accountants, corporate finance) is how to strike a balance between price and value in the selection process. This issue is particularly difficult to calculate when selecting a lawyer for whom even considering the principles of what ROI they deliver clients is as foreign as the proverbial fish on a bicycle. Lawyers are becoming more commercial but that’s a quantum leap in expectations!
On that basis, how does the purchaser of legal services assess value? Indeed, how can the supplier actually show it and where or when does that value become apparent?
I need my garden wall re-built. I’m no handyman and every online guide tells me to steer well clear of some amateur bricklaying so I need to get a builder. My assessment of three builders is pretty easy … price, some references, maybe a picture or two from previous jobs and everything is confirmed. He (or she) goes off to get the materials, I make sure I’ve got enough PG Tips in stock and the wall is done and the value is clear.
Need some legal advice and value is rather more difficult to ascertain. Assess three lawyers, get some testimonials, perhaps a personal recommendation, make a choice and hope for the best. Lawyer does the work, seems to have done a decent job but value is often not apparent for months or years ahead.
So, how to qualify a lawyer at the selection process? Anyone can try to compete on price and many do, but how does a purchaser of legal services compute the value of a lawyer, especially when that value (or lack of it) may only truly emerge long after the event?
It’s been a question posed to our team on more than one occasion since the launch of LawyerFair, our legal comparison service. It is a question posed primarily by lawyers. One or two have even suggested that comparison sites do little more than lead a race to the bottom, where price dictates everything. Well, yes and no.
Firstly, let me declare my hand here – I operate a legal comparison service for business owners at LawyerFair and as business owners ourselves, we set up this up to provide the best lawyers at the fairest price not, to deliver a race to the bottom. That doesn’t provide the quality of advice required and we’re acutely aware in the way that we provide comparisons to illustrate the value, as well as the price. Whilst a part of our process is automated, a good chunk of it benefits from old fashioned customer service based around helping the business owner to understand and the lawyer to explain, the added value element of each proposal.
Secondly, from our experience price doesn’t play the key decision making role that lawyers fear. Sure, it plays some part and in particular with micro businesses and quasi-commodity work but frankly, mid-sized legal firms are having an increasing struggle competing in that commoditised legal world anyway. It’s not the space they necessarily want to concentrate on.
Within the SME market, the value of a lawyer is (or should be) assessed in ways other than simply price. Alongside the work itself … everything from how a lawyer first makes contact and grasps the key issues, to their approach to billing, to the efficiency and honesty of their process affects how the purchaser views overall value.
But let’s go back to price, cost etc. It clearly is a factor and how the lawyer explains their costs and billing can start to paint a wider picture of their commercial approach and the value add of their service to the client. The business owner (particularly in the SME market) loathes the hourly or timed billing, doesn’t understand why it’s necessary or relevant in the modern world and baulks against that uncertainty of uncontrolled costs.
Part of the value add starts with lawyers understanding that the future will be about ‘decoupling hours and billing’ and providing a fixed fee landscape. There also needs to be an ongoing cultural change with firms understanding profit/margin ahead of revenue and that (in the words of Jason Mendelson, a VC attending a recent #reinventlaw conference in New York) …. ”fixed fee is about rightsizing not lowering the price”.
When lawyers get away from the traditional charging model and focus instead on profit/margin, they will start to transform their ability to compete in the new law marketplace and more clearly illustrate that illusive issue of value – alongside the traditional brochure sales pitch of:
- market commentaries and
- reviews from previous clients
- yada, yada, yada
In general, business owners are concerned about cost but also about the wider picture. They want the right lawyer, at the fairest price delivering the best value.
Jason Mendelson further adds that there might soon be a day when the efficient and commercially savvy lawyer can illustrate both value and ROI within a client proposal.
By that stage, the legal world will finally have arrived in the real world.
Andrew Weaver is an entrepreneur, investor, mentor, blogger and Cranfield MBA. Brought up in Cornwall he has since worked in cities around the world including Melbourne, Cairo, Bilbao and London. He has extensive knowledge and experience within the SME sector across a wide range of sectors including professional services, property, distribution, leisure. He was also once a barristers clerk and has incorporated this wide range of experience into the recent launch of LawyerFair, a free to use legal comparison service aimed at increasing choice and competition in legal services. He is particularly interested in how technology and the internet will drive better value from professional services. With a Spanish partner and young daughter, he splits his time between London and Bilbao – including regular trips to San Mames and the home of Athletic Bilbao.