Edward Poll, The Daily Record Newswire
Every profession that involves service also involves that "sticky" sort of dilemma involving billing for time spent with potential customers. The law profession is no different.
Most law firms, whether large or small, begin a new client engagement with a consulting process: a stated period of time, such as an hour, that a potential client spends with an attorney to discuss the matter at hand and explore whether to establish a client relationship. The consulting process is essentially a business development effort meant to convert prospects into clients. It is marketing in its purest and most immediate sense; at the end of the hour, the lawyer either has a new client or does not.
This consulting process can also be termed the "conversion process," and there is no real standard for conversion rates. It largely depends on the matter and the experience of the lawyer. Presumably, the more experienced the lawyer doing the consulting, the higher the "conversion" ratio.
One important factor that impacts the conversion process is whether to charge a prospective client a fee for the initial consultation. The wisdom of charging has long been debated. There are three fundamental choices in this initial consultation scenario: free initial consultation; paid initial consultation at the lawyer's regular rate, exclusive of any subsequent engagement; or paid initial consultation at the lawyer's regular rate, with the payment applied to the total bill if the consultation results in an engagement.
Free initial consultations
Obviously, a potential client would find it attractive to get something for nothing. However, in terms of a free consultation, lawyers would undoubtedly say, "You get what you pay for," and some clients may well be inclined to agree. Many have attended "free" consultations on time shares or investment products only to find out that they pay far more in the long run.
Paid initial consultations
Charging for the initial consultation can be likened to the ongoing debate over ancillary charges.
Some lawyers charge their clients for "opening" a file on each matter; others charge for photocopying the file before giving it to the client when requested. These are legitimate charges to clients if specified in the retainer agreement. In terms of charges for file photocopying, that the client owns his own file does not prohibit the lawyer from contracting to copy it at the client's expense. However, legitimate or not, your competitors may not charge for such services, and clients can resent being "nickel and dimed."
An initial consultation takes place before a retainer agreement is even signed, which makes charging for it a more debatable endeavor. Given the need to attract clients in today's economic conditions, the third option mentioned above - a charge that can be applied toward the total fee - might be the most practical approach. Many potential clients will undoubtedly balk at paying a professional whom they do not ultimately engage. Once a person becomes a client, he can more easily accept a fee for services already provided.
Conclusion
Ultimately, the issues involved are trust and value. Lawyers help people's lives improve. They should be compensated for that service. However, the feelings of clients and their interest in getting a fair shake must be considered. The objective of all lawyers should be to provide and account for their services so clients understand and accept the value and the cost of what the lawyers do. When that happens, fees are not an issue and lawyers do not have to apologize for what they charge.
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Edward Poll, J.D., M.B.A., CMC, is a law practice management thought leader and contributor to this publication. His website is at www.lawbiz.com.
Published: Thu, Jan 15, 2015
