BIG LAW SUMMIT: Talk about price and value with clients at the start

Vanessa Ugatti, known as the true worth expert, has challenged the profession to have “the right conversations” about price with clients at the right time.

She was speaking to delegates at the inaugural virtual Big Law Summit conference about charging what you are worth, a particularly timely issue in the current climate; and urged them to focus on their value rather than price.

Many lawyers, observed Ugatti, are “lovely people who really want to help their clients and they do that at their own expense”.

She highlighted three key challenges facing lawyers when it comes to charging.

First, not having the right conversations at the right time.

“So if a prospect comes in”, she explained, “it’s about right at the beginning, have that business conversation.”

For example, the lawyer might be charging a fixed fee, but what they do not always clearly do is to define the boundaries or the scope of that fixed fee – “so when it changes, they don’t necessarily go back and have another conversation with the client”.

Ugatti said what they need to do is, “at the beginning say: this is the fixed fee; this is what it covers; if the fixed fee changes dramatically then we’ll have to have another conversation about what it will cost you”.

And if the scope or work changes (as it often does), “they either don’t even notice it, or they do notice it but if they haven’t had that conversation they just feel too uncomfortable” to go back to the client.

“They get to the end of that piece of work”, comments Ugatti, “and realise how many hours they’ve overworked on it, but it’s too late to go back and talk to the client about paying extra because they didn’t have that conversation.”

Secondly, she said lawyers tend to lead with price – because that’s what the client asks.

“There’s no discussion about value”, she said. “Price and value have got nothing to do with each other.

“You need to switch the client off the price to the value.”

Ugatti said that the problem is, we don’t realise our value because the more you’ve been doing something the more unconscious it is, “so people are unconsciously competent. And then you think it’s easy because you’ve been doing it a long time… So it can then be devalued.”

Lawyers have to learn to understand their value, she said.

“Then they’re in a position to have a conversation about their value with their clients, but if they don’t understand their value, they’re in an impossible situation.”

So how can someone start to understand their value once again?

Ugatti shared a simple exercise with delegates which lawyers have previously found helpful.

It involves getting two lawyers together and one asks the other, ‘what value do you give to your client?’

The other answers, and the first lawyer then responds ‘what else?’; and it is repeated.

Ugatti said it encourages “a deep understanding of the value that you bring to your clients”.

There is also the impact of covid-19 where there is an element of fear, particularly now we are coming to the end of furlough and redundancies are on the horizon.

“Redundancy means fear”, said Ugatti, “and when people are in fear they will discount more, and over-service, doing all they can to keep the client satisfied.

But the trouble is, she likened it to desperation which is likely to push people away.

She pointed out that people are not just worried about losing clients but also losing their job; and so they “want do everything they can to keep the client on board, and that could end up at the expense of not charging”.

“I see it as an equilateral triangle”, said Ugatti, “so you’re creating value for the clients... you’re then creating value for the business and also taking care of yourself - and that’s really important.

“When you have each of these three equal, you have balance.”

So how, in such times as these, can lawyers charge what they’re truly worth?

Noting that there are always people who are driving prices down, she said firms need to have the right structure and the right staff, “then you decide, who do I want to actually work for?”.

She explained: “Whatever the economy is like, you have to decide who are my clients; who is my market; what is worth charging for us to have a sustainable business where our lawyers are happy and our clients are happy… and let go of doing that cheap work which doesn’t bring anything to anybody.

For those who are just grabbing anything, she said: “Get off the treadmill, get out of that pattern of behaviour and think, is this the best way forward?”

And it’s ok to say ‘no’ to a prospect.

“If you get a feeling someone is going to be a pain… then don’t take them on.

“It’s about confidence as well as mindset.”