If you cannot live off the value you create in your law practice, you cannot and should not survive.
Awhile back, when 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 a 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.
3. …looming in the distance…is irrelevance.
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 we’ve been experiencing this past decade 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 continue to fear the commoditization of legal processes and the wealth of knowledge on the web and artificial intelligence and Big Data to enable those who would once pay for our services to become Do-It-Yourself types or get passable legal services for a ridiculously cheap fee. 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 disagreed with Matt when he stated:
..lawyers must begin thinking about a day when the least valuable thing they have to offer their clients is advice.
While I can see his point it doesn’t change my opinion. 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.