Tuesday, August 17, 2010

The Free Consultation And The Fee Secret

A few years ago I was at a seminar where one of the speakers said "who invented the free consultation?"

The answer is PI lawyers. They take no fees upfront, and are paid nothing unless they recover damages. It's an all risk, some reward practice. It's the closest thing to Vegas in the legal profession. Take on a case for free, and if you win, you get paid. If you lose, you get nothing, and lose what you put in to the case.

Most lawyers though charge an hourly or flat fee. That fee is either paid upfront or in monthly installments based on invoices. That fee is set at the initial consultation.

Long ago, lawyers would routinely charge a consultation fee. Often clients would go see a lawyer simply for a consultation. There was no reason to consult for free, as a few consultations a day would add up to real hours.

It still does today, in an age where the free consultation has become the norm in every practice area. Take the lawyer who charges $250 an hour and does 2 free consultations a day. That's $120,000 in free consultations a year. But lawyers who charge for a consultation are deemed "arrogant" or out of the mainstream.

The sense of most lawyers is that a free consultation is "good business practice" and "gets the client in the door." Many lawyers waive the consultation fee if they are retained on the case, so it's really only there to discourage "shoppers" and people who have no intention of hiring a lawyer at all.

I've gone back and forth with consultation fees. My practice now is that if the client comes from a good referral source, I waive the fee. If the client "found me on the internet," or otherwise "found me" somewhere, I advise of the consultation fee policy. I do not understand why lawyers act as car salesmen - thinking that getting the customer in the door, and in the car, will get them to buy. Car salesmen are great at what they do. They never discuss price until they've confirmed the customer loves the car, and the answer to price is "what would you like your monthly payment to be?" It's a game, and it's not for lawyers.

I find that a consultation fee sets the tone with the potential client that your time is valuable and your advice, worthwhile. A consultation without a fee is not a consultation, it's an audition.

Many lawyers scoff at the notion of a consultation fee because "no one in my area charges one." That's a great way to distinguish yourself as a lawyer - do what everyone else does.

I also think it's time we stopped talking fees at the end of the consultation. Lawyers who consult with potential clients regularly know that every meeting with a potential client has unspoken concerns: "can I afford this lawyer?" "Can the client afford me?"

It is a waste of time for both the lawyer and potential client to spend 30 minutes or an hour or more discussing a case when the client has $500 to his name and the lawyer wouldn't consider representation for less than $5,000.00.

Still, lawyers shudder to think about telling a potential client over the phone that "I don't take cases for less than _____________." Lawyers are fans of the car salesman model. "If the client meets me, he'll hire me."

It's time for lawyers to re-evaluate the free consultation and "hiding the ball" on the fee till the end. We are simply wasting time, our time, and the potential client's time.

Located in Miami, Florida, Brian Tannebaum practices Bar Admission and Discipline and Criminal Defense. He is the author of I Got A Bar Complaint.Share/Save/Bookmark


Fat Man Running said...

I don't offer free consultations anymore. I stole that idea from one of your earlier blogs. So far, it's not made any impact in losing out on *good* clients. Sure has cut down on the window shoppers, which in my book, is a good thing.

Another thing I do (which I picked up from a prof--clinical--in law school) is record every phone call and photocopy on the bill, and then waive the charges for copies and any phone call under 15-30 min. That way the client sees how those little things might add up, but they seem to appreciate that I'm not nickel and diming them to death.

Finally, an idea I stole from Matt Homan, I offer all of my clients a "name your price guarantee". That is, if they aren't happy with my work, they can tell me what they think it was worth and pay that. Now, that probably wouldn't work for a criminal/litigation practice, but for a mostly transactional guy like me, it's been great. I work my ass off to deliver and make sure I'm earning what I charge.

So thanks for the "no free consult idea". I think it's a gem. And yeah, maybe I'm missing out on some client opportunities, but I like to think I'm eliminating the stress of clients who don't understand why my services are valuable.

Carolyn Elefant said...

I think that there's a huge gray area between the free consult on one hand and fee-consult on the other end of the spectrum. For example, you can waive consult fees for referrals, or you can offer very limited free consults but charge for immediate consults with easier availability. Matt Homann also talks about offering a fee consult, but then giving the client a coupon for a free consult to pass on to a friend. There are probably many more ideas as well.

My Law License said...

A coupon? A coupon? If I call my printer and ask him to make some coupons, he'll fire me.

Scott Key said...

Quoted a consultation fee on a habeas yesterday that would involve challenging a very serious felony. She said that she didn't know if she could scrape it all up and that she would call me back.

I wonder what she thought the habeas would cost. It's not exactly an uncontested divorce.

I quote the consultation fee when I feel like I'm in a list of names, if I'm getting hit up for free advice, or if the client doesn't sound serious.

I have no "rules" for it. It's kind of a gut thing.


Anonymous said...

Hi Brian,

Thank you for posting. Great article as usual. I read another article of yours on how clients should treat their lawyers. Could not agree more with what you said in both of them.

Here in Canada everyone seems to be feeling that "it is good for business" to give free consultations. In my experience, free consultations only create a steady traffic of tire kickers and/or seekers of free legal advice and do not increase revenue at all. They devaluate our services and make us look like desperate ambulance chasers. If I would be giving free consultations, I would be giving them 8 hours a day, every day, every week so high is the demand for free legal services in business and intellectual property areas. When I charge for a consultation, the demand drops to one consultation a week.

Andrey, http://www.pinskylaw.ca

Joseph Cohen said...

Thanks for the article!

Another good reason for dropping the "free consultation fee" bit is to slow down an increasingly common trend. Although only based on anecdotal evidence, a bunch of my colleague and I have run into situations where a "potential client" will consult with you about an upcoming or active litigation just to conflict you out of representing the other side.