18 Jun Less law, better value

Clients resent paying for a Lexus when a cheap Toyota would have done the job.  They resent paying for unnecessary value. Sometimes we need Qantas quality, but sometimes Jetstar is just fine.

For solicitors, it shouldn’t just be about the legal outcome, but about the service outcome – and that means balancing the questionable value of a ‘perfect’ legal result with other sources of client value such as time, money and hassle. More often than not, a focus on delivering a value-for-money service, rather than just a high value service, will result in solicitors doing less law.

But this isn’t just a positioning challenge – its a client engagement challenge on each and every instruction. The challenge is to collaborate with the client to agree, not assume, exactly how much law will deliver the best value for money for this particular client at this particular time.

Solicitors do not have a great reputation in terms of the above challenge. Sometimes its an inability to really ‘sell’ the value of the work so client’s recognise how different bits of your work benefit them – but more often than not its a failure to understand your own instincts (see below) or recognise that clients might have a different risk tolerance or assessment of how much of your expertise is either valuable or necessary – and to then respect that. The outcome might not be ideal from a legal perspective, but not everyone can afford ideal.

Too often, solicitors simply look to identify what type of matter it is, identify all possible work, and then send the client a costs agreement for all this work on a ‘take it or leave it basis’. Surprise, surprise: clients don’t always respond positively to this approach and question the value.

This often results in some sort of costs dispute, and here again solicitors make the mistake of trying to justify their work and their charges on the basis of time and tasks. The issue isn’t how long it took you to do the work – it’s about client needs and whether all this work was necessary in delivering a value for money service. Its about the value of outputs not inputs.

Over the last couple of years, I’ve seen both individual solicitors and their practices making a big success out of focusing on less law. By developing a reputation for actually listening to broad personal and commercial client needs and tailoring a realistic, commercial scope to suit that delivers a return on investment, they set themselves apart from both the general reputation of solicitors and the reality of most of their competitors.

Over-servicing and mindset challenges

Many law practices, particularly but not exclusively the larger ones, have allowed themselves to develop a reputation for over-servicing. Over-servicing in this sense doesn`t just mean doing clearly unnecessary work, but also any work where the value for money and return on investment can be questioned.

Over-servicing can happen for a number of different reasons:

1. The impact of billable hour targets incentivising more work;
2. The higher profile of negligence risk highlighting the need for thorough, comprehensive attention to potential omissions;
3. ever-greater specialisation lead to deeper expertise, greater risk awareness and the instinct to apply this greater expertise;
4. the pessimistic, risk-averse, perfectionistic nature of many solicitors that leads them to instinctively seek to eradicate any list bit of residual risk;
5. high overheads and profitability challenges, pressuring teams to maximise revenue from each and every file and client; and of course
6. blatant, unethical abuse of the solicitor-client relationship in doing unnecessary work.

Personally I believe that virtuous motivations lie behind most over-servicing. Solicitors just want to do a good job – and they assume that means being thorough and comprehensive. And clever.

I see this particularly in specialists, accredited or otherwise, who believe that clients come to them for their superior expertise – and therefore look to apply as much of their expertise as possible to create the best possible outcome, irrespective of the impact this has on costs and time.

Whilst they might deliver a superior legal outcome, this is different from delivering a superior outcome in the client’s eyes. Whilst clients come to specialists for their particular legal expertise, that doesn’t mean that the need to get a good legal result outweighs all over considerations such as time and money.

Instead of solicitors who automatically seek to be as comprehensive as possible, clients need solicitors who use their experience and expertise to make ‘commercial’ risk-adjusted recommendations about the scope of work which will deliver clients the best return on investment in terms of balancing risk, time, money, hassle and other considerations.

Specialists should be using their superior insights and understanding to make better calls on what is and isn’t necessary – so they can save their clients money rather than simply doing more law. Because they can.

‘Best scope’ collaboration and agreement

The aim should be to always reach agreement with the client about the scope, time and costs that will deliver the best return on investment given the client’s specific needs, budget, hopes, fears, pressures and risk sensitivities. This involves:

• getting behind the stated legal needs to understand the bigger picture business and/or personal needs
• understanding the practicalities of the client`s situation (time, budget etc.)
• prioritising needs and differentiating between the must-haves and nice-to-haves
• discussing the risks and benefits of different alternatives – with a particular focus on likely return on investment.
• discussing what work you propose doing, why you propose doing it, the risks of not doing it ad how all this helps to meet the clients needs – before checking if they recognise the value of all this
• demonstrating ‘costs-conscious behaviours’ by identifying where the client might be able to save money whilst also explaining any risks of this approach

www.gileswatson.com.au