In this "Great Recession of 2008–09," or whatever we'll end up calling it, there is a temptation among law firms (and other companies) to panic over the need to garner new business. This panic can result in an uncontrollable urge to discount and compete on price. This is dumb.
A client will pay what he or she thinks a lawyer is worth, and no more. A lawyer's pricing directly affects how clients and prospects perceive that worth. "If she's only billing at $250 an hour," they say to themselves, "that must be all she's worth."
Don't get me wrong: I'm not suggesting that lawyers do what 71% of the nation's largest firms did this year — raise their rates. Now is not the time for that.
But lowering your prices in the hopes of capturing new business is self-defeating. You are sending a signal that your value is lower than it was. You are also sending a message that you're willing to compromise to get new business. And what will you compromise? Effort? Quality? Availability? Thoroughness? Reliability? Training?
I railed against law-firm discounting a while back at our sister blog, Gruntled Employees, and republished that post on this blog here: "Legal advice: 30% off! (Why discounts don't always save you money)." The always-excellent JD Hull showed his contempt for discounting in a recent post at What About Clients? entitled "Don't compete on price, especially now." JD's key line:
If a client comes to your firm for price, it will leave your firm for price.
Instead of discounting and taking the easy way out, deliver exceptional service and price according to the value the client receives. As JD writes, "It's very hard, and it takes thought." But it's worth it.
You need to let clients know that you're worth it.