Live Off The Value You Create…or Die
If you cannot live off the value you create for your clients, your practice will not…and SHOULD NOT… survive.
While I was watching David Lat from Above the Law interview Steve Brill of The American Lawyer, I was struck by a statement made by Steve Brill. The discussion centered on whether or not publications who go on line should charge for content. Steve argued if you create value, they will pay. But his exact words were, “Live off the value you create.” To support his argument he noted certain publications are successfully charging for content rather than relying upon advertisers. Create value so customers will support your endeavors. The financial relationship should be between you, the service provider, and the end user.
Then separately, I read this post by Matt Homann and I was further struck by his statement:
What do you see as the biggest challenge facing the legal industry now and in the upcoming year?
Most lawyers are focused on returning their practices to profitability — which is a near term problem for many of us. However, I think a far greater challenge is looming in the distance, and that is irrelevance.
For far too long, lawyers have taken their clients and customers for granted. Quietly, real alternatives are emerging that are making lawyers less necessary to clients. In just the last five years, we’ve seen more and more consumers turn first to the web as they draft their will, start their LLC, etc. This is a trend that will only continue, and lawyers must begin thinking about a day when the least valuable thing they have to offer their clients is advice.
There’s a lot going on in these two statements made by two separate individuals in two separate industries and let’s see if I can coherently knit these thoughts together for you.
1. Create value for your client they are willing to pay for.
2. Live off the value you create.
And:
3. …looming in the distance…is irrelevance.
Conclusion:
If you don’t create value for your clients they are willing to pay for, you will cease to be relevant. And you cannot..and should not.. survive.
We are at the embryonic stage of the ‘new’ legal profession. (Some may effectively argue it is a forced return to the roots of our profession). As more and more people seek alternatives to traditional attorney/client relationships, those lawyers and institutions who cling to the old ways will cease to be relevant…and die.
It is the crux of the argument behind value pricing, alternative billing and those who will see the billable hour die. (Strangely, though, many who espouse alternative pricing structures are still focused incorrectly seeing it as simply a change in pricing strategy…not the 180 degree perspective shift it needs to be.) It also is the driving force behind some of the most creative and revolutionary lawyers (and non lawyers) out there who are going to the extreme and advocating letting clients name their price for services. We can no longer dictate ‘value’ based upon our personal needs and grounded in a false billing model, failing prestige and mind-numbing student loans.
This perfect economic storm (The Great Recession) is transforming the workforce and is forcing both Big Law, small firms and the solo back to the roots of our profession, our raison d’etre – The Client. And the profession will be better for it. The Client will determine if you live or die based upon your value proposition, your relevance to them.
The key to your success lies in how you professionally respond to this statement – ‘Live Off the Value You Create’. If you don’t create value… you die.
Many in our profession fear the commoditization of legal processes and the wealth of knowledge on the web to enable those who would once pay for our services to become Do-It-Yourself types. This fear, combined with the economic challenges we all face is the basis for the prediction (in my opinion, incorrect) that a lawyer’s advice will become irrelevant and something of such little value clients will no longer pay for it.
I disagree with Matt when he states:
..lawyers must begin thinking about a day when the least valuable thing they have to offer their clients is advice.
When we realize that our value proposition is ‘knowledge’ and not the forms, the relationship of an adviser and not the provider of templates, the analytical and creative thought process but not necessarily the execution of these same ideas, that’s when we will truly be able to compete with the web and these highly disclaimed ‘we’re not giving legal advice’ sites. I can give someone a fully equipped car, but if they don’t know how to drive, can’t maneuver around obstacles, can’t handle rain slick roads or another car swerving into them head on, they are going to crash, possibly die. At the very least they will certainly not get to their destination with any confidence they are in the right place.
Your value proposition is in providing whatever legal services clients both cannot nor want to do no matter what free information, inexpensive forms and non-legal ‘guidance’ is available to them. Your job, if you want to survive, is finding out exactly what that is worth to this client so he would rather pay you than struggle beyond his own comfort level. Discomfort has a value. Your job is to successfully convey what he needs to hear to make the decision to engage you the only realistic choice.
Your relationship may be a hybrid of services, review of client-completed documents and advice. It may be guidance in a process (as allowed by your jurisdiction) for a flat fee and in stages at a price the client has determined is right for him. You may end up creating an a la carte menu of fees based upon the combination of services you offer. You may create a virtual law office operating remotely offering unbundled legal services.
The bottom line is, it can no longer be solely about what you need or think you are entitled to. It has to be about what the client wants and is willing to pay. And in reinventing your practice or creating a new practice that refocuses on what the client wants combined with what the client is willing to pay based upon the value you provide, you will have successfully entered the 21st century of the legal profession. You will be capable of living off of the value you create because you have positioned yourself as very relevant to today’s consumer.
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You’re exactly right. The world has changed significantly in the last five, ten, and twenty years, and the legal world must change with it if it wishes to remain relevant.
More and more, clients are able to get everything they need online–including free advice from their peers–so you really need to consider how to market yourself so that you’re still deemed useful. Is it that you, as the professional with years of schooling, are more knowledgeable and more reliable of a source than the online unknown?
This also brings about the question of how much free advice lawyers should give. One of the best ways to find clients is to create a relationship with them before they need a lawyer, through the use of seminars and blogs. The information you give away for free is an investment in future business, but there is a fine line between too much and too little. If you give the potential client too little information, then you create the impression of being useless and only full of advice they could easily find on their own. But if you give the potential client too much information, then they’ll have no reason to hire you.
I cannot agree with Julie E. Fleming on the consequences of giving too much information. I have seen in 4 years of practice that when you give free advice (little or a lot) it is always fragmentary and people who think this is enough will NEVER be your clients, either charged or for free. The people who think free fragmentary advice is enough will NEVER appreciate your service NOR any other service. You do not want them as clients. That is for sure. This has been my experience. Thank you.
>>More and more, clients are able to get everything they need online–including free advice from their peers–<<
I think this is probably the place where clients really get themselves in more trouble, at least from what I can see in my soon-to-be practice area (healthcare licensure issues). That advice from peers (or even worse, state regulatory investigators!) is often less valuable than free.
One of my future collegues, Latonia Denise Wright, has recently written on her blog, “Nursing Law & Order” that she regularly gets inquiries from nurses who have taken “legal advice” from state Nursing Board investigators and are surprised when that advise does not help and sometimes hurts the nurse. Or when they don’t think the problem is a “real” problem (http://advocatefornurses.typepad.com/my2cents/2008/07/i-didnt-think-the-nursing-board-would-revoke-my-license-for-this.html).
The leads me to completely disagree with Matt Homann’s statement about our advice being the least valuable we have to offer; au contraire, I think our advise (counsel) is absolutely the most valuable thing we have to offer to clients. Information is a commodity and not particularly valuable by itself. The ability to synthesize that information is where we can create that value. Thus, giving away information costs very little – the potential client will get that information from some other source if I don’t provide it to them. But it will show good faith and help show the potential client that I am at least in touch with the basic information applicable to their situation.
Marc
When lawyers blog about their practice areas, address hypotheticals or analyze a case making the headlines, the knowledge is not specific to an individual but showcases the depth of the attorney’s knowledge. This context is critical. It does bring in business, the kind of business the attorney wants.
The same information, fragmentary and generalized but used by someone who is gathering ‘free’ advice to avoid hiring an attorney, they will never hire an attorney unless they screw up.
You don’t have to worry about the type of client who will never hire you. You have to satisfy the client who would be inclined to hire you.
The fine line is important. Give out enough information to let people know you know what you are doing. And do so in a context that no one could believe an attorney/client relationship is established.
I tend to think that “giving away” as much information as possible is the way to go. Empowered by the information, some potential clients may choose to go the DIY route. But my sense is that many others, once informed, will appreciate the value that lawyers add and will be happy to pay for their help. To steal Chuck Newton’s analogy, if Jiffy Lube posted on its website detailed instructions on how to change my car’s oil and linked to vendors selling the supplies I’d need to complete the job, would I be more or less likely to hire Jiffy Lube in the future? I’d be more likely – because I’d be able to judge how inconvenient and expensive it would be to do it myself. I’d also really respect Jiffy Lube for not hiding the ball.
I’m not even a lawyer and loved this thinking. I’m in the Trust Coaching business and work with business owners to map our the future post Great Recession while figuring out how to Trust God while doing it.
What I hear in the blog is that the legal world has fundamentally changed and to survive you all have to focus on the “real value”. My Current Best Thinking (which parallel’s what was said here) is that the recent economic change is fundamental and involves very different business priorities. They, in order, are:
1) RELATIONSHIPS – are the most important resource we as business owners have. Invest in them without regard to money.
2) COMMUNITY – using our relationships to establish communities around our values.
3) VALUE – with these first two in place we can now focus on providing real value.
4) SERVE – first, exchange for money second. Serving is the key.