What should you do if a client says to you, “Give me a 10 percent discount . . . or else”?
Clients who ask for a fee reduction don’t really understand how the issue of representation should be framed. The issue is not really so much what your fee is—that is, whether it is $200 an hour or $300 an hour—but what it is costing them to engage you to fight the battle that they need to have fought. And so the best response is not to deal with your fee but rather the overall cost to the client. In other words, what, in particular, is the client going to have to write the check for?
Looking at it from this standpoint, there are several approaches that a lawyer can take: partnering with the client, budgeting, prevention, and efficiency.
Partnering with the client
The first approach is partnering with the client. You need to get the client on your team, helping you. You need to explain to your client that in order to make sure that the legal cost is less than what it might otherwise be, he or she needs to become a partner with the lawyer. In other words, the client needs to participate in deciding what actions should be taken for the case. After all, it is these decisions that will impact the cost.
The second approach that will help lower the cost is budgeting. Budget the matter, whether it’s litigation or a transaction. One of my associates a number of years ago told me that her company saved a lot of money by budgeting—I can’t remember the exact amount, but it was somewhere between half a million and a million dollars. Her outside counsel had wanted to do some things that the general counsel thought were not really necessary. The general counsel decided to say no to some of those things. The general counsel took the risk of saying, “No, we don’t need to do that. We’re prepared to take the risk of anything happening as a result of not taking that action.”
The third approach to lowering a client’s cost is to think in terms of prevention. The old expression “An ounce of prevention is worth a pound of cure” is apt. The lawyer should approach the client with sufficient lead time and suggests to the client ways that the client might act or not act that will avoid legal issues and legal entanglements within the justice system.
A fourth way of dealing with the issue of lowering legal costs for the benefit of the client is to hearken back to the Industrial Revolution. In the Industrial Revolution, we learned that saving labor caused efficiencies. In turn, efficiency caused more labor saving, and that caused not only less cost but, obviously, more profits. And so, in terms of this idea, we need to look at what the process is for a particular case; and, along the spectrum of our legal services, we need to see where we can become more efficient.
When we use these approaches, we not only become more profitable for ourselves, but, more importantly, we retain the loyalty of our clients because we are addressing the high cost of legal services for them in a way that they can understand—all without reducing our rate.