09.10.07
Phone calls and clients and meetings, oh my!
The more I work for others, the more I realize what won’t fit into my vision of a perfect firm. One of the biggest problems I see with the attorney I currently work for are time management, and client management, issues.
The attorney I work for (let’s call him Boss) spends half his day dealing with clients. Boss is constantly on the phone with clients, or sitting with them in his office. There are no designated “phone call” or “meeting” times. A client calls and they get transferred to him. A client walks in and, while they may have to wait a little bit, they end up in his office eating up his time.
One of the reasons for these constant interruptions (at least based on what I’ve heard and seen) is that Boss charges by the hour. Boss constantly has clients in the office or on the phone asking about bills. While the client bills are “detailed” in their listing of what went on during a period of time, it’s difficult for a client to see the value of some of the services. As a result, Boss ends up spending too much of his time dealing with explaining the bill, when he could be working on their case.
I think this is a good argument against the billable hour. In fact, I think this is one of the better arguments out there. I’ve always dismissed the idea that the billable hour puts you at odds with your client (i.e., the conflict of interest theory) because any billing method does that. Let me explain. Opponents of the billable hour often say the following: when you bill by the hour, your interests are in conflict with the client. This is because your interest is in stretching everything out and being inefficient in your work (i.e., take more time, charge more money). Of course, these opponents rarely see the opposite side of the coin: any flat-fee arrangement (whether or not it’s called value billing) puts you at odds with the client as well. When you make the same amount of money regardless of time spent, it’s in your best interest to come to a conclusion as quickly as possible. Either way there’s a conflict with the client.
The difference is this: when you have some sort of a flat-fee arrangement, your clients know what they’re paying up front, and, usually are paying it up front. The money is earned upon payment, so unlike funds in a trust account, the money is yours. If you charge a flat rate, you don’t have to spend time explaining what every little charge is for.
In the perfect practice, there will be a phone system in place that minimizes the amount of time I will have to spend on the phone. Meetings with clients will be when truly necessary and by appointment only. Most importantly, I will use a billing system that minimizes the amount of time I have to spend explaining my bills to my clients, so I can spend more time working for them.
09.06.07
What you can learn from the drop in the price of the iPhone
Apple just announced that it’s cutting the price of the 8gb iPhone and discontinuing the 4gb iPhone. Of course, this has the people who bought the iPhone already upset and the people who have yet to buy the iPhone happy. What’s also interesting about this is that it’s basically the reverse of the standard “introductory rate” package. Normally, when someone is entering into a contract or buying consumer goods, any discount is upfront — think of Columbia House DVDs — get so many for $1 and then buy a bunch for $20. In this case, it’s the opposite — pay so much for it now, pay less if you wait and get it later.
Yes I know that prices for electronics eventually fall. But this is different simply because of (a) the timing [the phone only came a couple months ago]; (b) market demand hasn’t slowed down; and (c) there isn’t a new “replacement” technology.
So what can you, the lawyer, learn from the drop in the price of the iPhone? Take a look at your rates — probably not everyone in your target market can afford your rates as is.
Perhaps you’ve been practicing for a long-time and have slowly increased your rates over that time. Your long-term clients have seen the rates climb slowly and steadily and have been able to adapt to the growing costs. New clients may not be in a position to do this. Frankly, there’s nothing wrong with having different rates for different clients. While a large number of iPhones have already sold, there’s a large portion of the market that simply cannot spend $600 on a cell phone. Those who can and are willing to probably already bought the iPhone if they wanted it. Those that can’t may be able to buy it now that the price went down.
I’m not saying that you should always charge new clients less for the same work — it’s not fair to you and it’s not necessarily good business. However, you should look into different aspects — if you do corporate law, you may want to charge small start-ups a little less for some of the upfront/initial work (articles of incorporation, etc…) and develop them into long-term clients. A few years down the line they may be in a better place and able to pay some of your higher fees. A young couple without a family may only need the most basic of wills — charging a little less when they get them may lead them back to you as their assets and family grow, creating the need for more complicated wills and trusts done at higher costs.
If you have a sufficient client/work load as is, then you don’t need to consider this. If you’ve been thinking of ways to bring in new long-term clients to replace ones that may no longer need your services (i.e., businesses that have been sold, clients who have moved or passed away), then you may want to target them at their inception, at a rate they mind easier to swallow.
After all, if Apple needs to drop the price of the iPhone to reach more of their target market, perhaps you do too.
08.31.07
Gen-Y
Reading some news articles, I came across this site today: ThrasherFunds.com. Basically, this is a new investment firm that is creating funds to market them to the Gen-Y population. While the funds may or may not be more successful than funds offered by traditional investment firms, the important thing to note is that at least this company is trying.
That’s right — most investment firms are not really trying to get the investment money from Gen-Y. Why is that? It’s because we’re a generation with a couple of significant differences from older generations. First, we generally acknowledge that retirement planning and financing is wholly on our shoulders — we can’t count on Social Security or pensions. Second, we’re the first generation to come out of college with the burgeoning student loan debt of today.
So what does this mean? It means that our generation can no longer simply get a job, save some money, and retire. It means taht the first thing we have to do is reduce debt. Credits cards, which anyone who had a pulse at some point in the last half-century can now get, have changed the financial landscape — teaching people poor habits when they’re not in a position to live up to the standards they want (i.e., most college students).
We are also at the forefront of the information age. Gen-Y members aren’t content to simply write checks to a broker who then does all the investing, sending out a monthly or quarterly statement. We want to be active in the management of our finances — for our generation, it’s one of the first major signs of adulthood.
For investment and financial management companies, this means a new paradigm. We want education and counseling. We want to be able to actively participate in our financial futures.
So what does this have to do with the perfect practice? It’s simple — Gen-Y is the up-and-coming generation. Soon we’ll take over the world (quite literally). In the upcoming years, members of Gen-Y will become the executives at major corporations. Members of Gen-Y will create new technologies. Members of Gen-Y will start entering the political arenas.
What this means is the members of Gen-Y will be the new clients. Our needs our the same, but our wants are different. And when it comes down to it, the ability to provide for our wants, as well as our needs, will help determine choice of counsel.
So my point is, any marketing plan needs to distinguish between the needs and wants of different generations. The financial companies aren’t focusing on Gen-Y because it will be several years before, on average, Gen-Y is able to simply invest instead of focusing on debt reduction. Don’t be like these companies — when they are ready to focus on the needs of the new generation, they may find that newer, smaller and more dynamic firms have already snatched them up. The same goes for future clients. If you provide for them now, they’ll come back to you later. If you ignore them now, then later, when they’re your target market, they may already be with attorneys attuned to their wants and needs.
