Most lawyers, at least those who are interested in keeping their jobs and making more money than they did last year, are familiar with the need to generate revenue. Get new clients. Bill more hours. Work harder. Hustle. Grind…and grind and grind and grind. What if instead of focusing on the same old approaches for revenue generation, you focused on new strategies for revenue growth? What if you started working smarter instead of working harder?
Fixed-fee and other alternative pricing arrangements have nearly quadrupled in the last 10 years, largely driven by client demand and technological advancements. This trend shows no signs of abating, as clients increasingly expect their lawyers to act more like business partners and less like on-call specialists. Clients want to feel as if they’re working with a “trusted business advisor” who’s just as focused on their business as they are—a relationship that’s hard to achieve if the meter is running every time they call. At the same time, firms continue to report that pricing pressure and declining realization rates have impacted profitability and that growth was less than expected. That’s why it is imperative that you develop a competitively priced, replicable business strategy that positions you to grow your business in a tough market. By creating a “legal services product,” often referred to as productization, where parameters such as outcome and timeframe are specified and the price is certain, you will make it easier for clients to want to do business with you and avoid the pitfall of declining realization rates. By developing a legal product that is responsive to a client need you’ve uncovered and pricing your services in a way that separates the solution/outcome from the process used to achieve it, you can create a fixed-fee legal product that increases your odds of generating business and deepens your client relationships.
Are you considering what service and value your clients expect?
Productization of legal services can take many forms, but all legal products share these traits: specified outcome or solution, fixed price and innovative service delivery. A clearly specified outcome or solution, is obviously an important element of a product in order to ensure the parties are in agreement as to the scope of the services being provided. Fixed price and innovative service delivery go hand in hand. What makes legal products compelling for clients is the price certainty and value for services received, but what makes them work for lawyers is the ability to deliver value at a price that profitable for the firm. Applying the lever of innovation to productized services, whether the innovation comes in the form of technology, alternative service providers or new approaches to staffing, enables you to maximize efficiency without compromising profits because your compensation isn’t tied to hours worked. This uncoupling of price and billable hours makes products potentially scalable and competitive because you can lower prices without lowering profits. Additionally, with the price set at the onset of the engagement, write-downs become significantly less of a concern.
Finding the right services to productize requires a keen insight into the needs of your clients. While many attorneys fear that productization will lead to commoditization and lessen their clients’ connection with them, the opposite is often true. When you are able to address a specific need of a client, bring to bear unique ways of servicing that need such as using technology to share information more efficiently or partnering with alternative service providers to provide a turnkey solution and provide exceptional value, you become that “trusted business advisor” that clients are seeking. Products therefore can provide an exceptionable opportunity to connect with a client, understand their business needs from a more holistic perspective and create opportunities for more work. As such, productizing your practice is a revenue growth strategy that you need to consider for your practice if increased revenue is on your to-do list for 2018.
Maraia & Associates has been helping professionals develop and deepen relationships for 25 years. In the past year, we helped more lawyers productize their practice than ever before. If you have questions about productization or other ways to grow your practice and improve your client relationships, let us help you. Contact us today and let’s start working smarter together.Click here to join our next podcast where Mark Maraia and Matt Rowe discuss Revenue Growth Strategies and Productization.