Apr 12 2008
clients behaving badly (a/k/a demanding discounts)
Review time. I am quite busy at work, so that should explain my slowdown in posting. I have a articles sitting on my desk and in my email inbox waiting for commentary and posting, but the client’s demands are the client’s demands. (No, I am not going to abandon this blog)
Post of the week for me comes from Korea Law Blog, where Mr. Carr describes his experience with client billing. It is an all too real thing for law firm partners (and associates who bring in their own clients) trying to bring in work. I know. So I wanted to post parts of it because it is so true to life:
Today we got an inquiry (through a referral from their New York lawyers, actually) from one of the peculiar breed of corporate clients who has demanded a 15% across-the-board discount.
Problem is, this new client hasn’t asked for our normal fee structure. Without knowing our rates, fee structure alternatives (such as fixed pricing), general staffing habits (i.e., do we “gang-bang” the client with a bunch of lawyers, or are we generally pretty lean?), the client already knows our prices are too high and that a 15% discount is what ought to be granted by our firm.
Over more than a decade in Korea I’ve run across this kind of client from time to time. Usually, they are bad clients who bully with the promise (undelivered, in almost all cases) of future volumes of work. Or they think their brand name is so awesome that I get some kind of value out of association with their awesome company. In respect of this latter point, they’re onto something—hey, how about a limited trademark license agreement, so I can use your Awesome Corp. logo on my “representative clients” list?
The idiotic “across-the-board 15%” demand merely promotes gamesmanship, posturing, and an unhealthy confrontational attitude—right from the outset of the relationship between the law firm and the client. If you think I’m a crook, why are you hiring me? And the solution, for some law firms (especially many Korean firms, for whom the request for “lean staffing” is laugh-out-loud funny), is easy: You want me to cut the rate? Fine, choke on these hours, cheapskate!
Or, Sure, you can have a 15% discount. Let me mark up the rate 25% first.
Life is too short for that kind of nonsense. It presumes, and encourages dishonesty on the part of the lawyer. And I’m fundamentally an honest guy, so I choose not to roll that way.
Meanwhile, I’ve got other client relationships which have gone as long as my time here in Korea—over 10 years. For one of those dear, cherished clients (a top global brand name which knocks everyone’s socks off), I haven’t raised my rate for six years—not because they demand blood from the turnip, but because we are in a deep and (hopefully mutually) satisfying partnership together.
One of the responses in the comments was quite telling:
i’m surprised that the client is a u.s. corp. from my experience at a big firm in korea, it was always the chinese clients who asked for discounts before seeing the fee rates. as for u.s. clients, they never asked for discounts, but instead, they would ask for our justification for why such and such costs so much. anyway, i love how clients would always promise big volume of work. right.
For the Chinese businesses looking for attorneys: don’t look for the cheapest rates and then demand discounts. Trust me, you won’t be happy with those services and those attorneys are not going to be happy with you. (maybe there is a correlation there) Look for firms that do good work at reasonable rates. That’s why I often preach the benefits of small to mid-sized law firms like my own. Unless you have a $1b M&A going, then yes, maybe you should work with a larger firm at that point. The potential clients who want rock bottom prices for everything–I am upfront with them: you get what you pay for. So if they don’t want to pay my fees, they are welcome to go to some small Chinese “lawyer” (which is often a fly-by-night operation run by paralegals)… where they get themselves into real legal trouble. I can’t complain about the Chinese clients that my firms have had: they pay the bills because they know they are getting good value.
And for the attorneys who aren’t making rain yet, but will in the future, be ready for this. Ironically, Chinese clients of my firms have been very willing to pay what they thought were reasonable fees. So if you are judicious in your billing, they will be fine. In fact, most clients are–except for the ultra-large clients that have restriction after restriction, and hire in-house counsel to scrutinize bills. Those types of clients can be a pain to deal with even if the workflow is good. Good lawyering at a reasonable price really does sell well, so if you can do that (in other words, just be a good lawyer), you will be fine.
