Tips on Negotiating a Rise in Fee Rates

Some firms struggle to negotiate increases in fee rates. As Oliver Twist demonstrated, it can be hard to ask for more.

But with staff getting annual salary increases and with inflation rates starting to go up, it becomes more important to have these conversations and to do them well.

Here are some tips:

Negotiate face to face. You may want to ask for a meeting by email but try to avoid ask for a fee rate increase by email. I appreciate that this can be a challenge for international clients. A phone call might be ok as a last resort, but probably only suitable with a long-term and trusted relationship.

Pick a time of least pressure and distraction for you both to have your conversation.

Emphasize your value to the client, not what you need to make your life easier. Remind the client of the value added you have provided.

Try to take a “What’s in it for them?” approach when you outline why fee rates need to be raised. Examples might include benefits and risks, such as:

  • more experienced staff able to provide greater added value,
  • improved efficiencies through greater experience working with the client,
  • the importance of creating win-win for a stable long-term relationship,
  • risks of cost cutting to maintain margins that might diminish benefits to the client,
  • continuity of supply, etc)

Avoid ultimatums. Remember this is a collaboration. Ultimatums can damage your working relationship seriously.

Suggest your percentage figure. Allow your client to put questions and challenge. Have your supporting evidence. This might include information about the client’s product price increases. It seems fair that if the client’s prices have gone up, yours do too!

Have a list of other requests that might be open for negotiation should fee rate increases not be available or be negotiated down.

Follow-up with your requests but be professional at all times. For the long-term success of your relationship, you need to be seen as a trusted advisor.

Give it a go! After all, Oliver Twist ended up well!

 

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Are Some of Your Partners Losing Their Mojo?

As a coach I meet lots of partners who are admitting to me that they are, frankly, a bit bored! They probably don’t use those words. They might not even recognise the fact themselves. But after some probing questions from me, the reality is all too frequently revealed.

And this state of affairs doesn’t surprise me. After all most of the partners are doing the same as what they were doing as a senior associate some 10 or so years ago. Same old points to negotiate. Same old clauses to draft. Same old challenges dealing with the team. It’s all a bit repetitive. Nothing new.

What they typically need is something more stimulating – a new challenge perhaps and something the partner would enjoy and have a talent for. For example there are:

  • sectors to focus on and develop, such as retail, banking etc
  • geographical areas to stimulate referrals – perhaps the partner has a language skill that could be used
  • specific clients to develop a relationship with – perhaps a subsidiary of an existing client
  • new roles within the practice group, such as recruitment or marketing
  • CSR programmes to run

There’s an important role for practice group heads in assessing whether your partners are fully motivated and in helping them find stimulating new challenges. Use those partner review conversations well.

The other aspect to recognise is that most partners don’t have any kind of career plan. As an associate there was partnership in the dim distance. But now you’re a partner, you’ve arrived and now there’s nothing on the horizon!

I really urge law firms to think about this. What career plans can you offer your partners? If you don’t have an offering, you risk mojo loss and the downsides of that might be greater than you first think. A partner wondering around with a demeanour that’s, say, less than the joys of Spring, affects the morale of the whole team. Might that be why you’re losing some talented associates to rival firms?

Let’s get their mojos back!

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Research Findings on What Motivates (and Demotivates) Lawyers

Source: businessnewsdaily

I’ve asked more than a thousand lawyers over the last ten years what motivates them at work.

I’ve asked lawyers across Europe, Asia and the Americas.

I’ve asked lawyers in big firms and small firms.

The results are somewhat consistent and are perhaps not surprising. What is surprising is the extent to which their supervisors are behaving in ways that demotivate them!

What Motivates Lawyers

A minority claim that what motivates them is a high salary or bonus. US lawyers have money as a higher priority – maybe because of the high cost of their legal education.

But the vast majority confirm that the main motivators relate to the work itself. It’s receiving challenging work that provides a sense of responsibility, autonomy and ultimately achievement. And it’s being appreciated and recognised for their contribution.

What Demotivates Lawyers

A surprising number of lawyers say they are not given stretching work. Their workload seems trivial and mundane. They also say that they don’t feel valued or appreciated.

I receive comments that there seems to be an unequal allocation of work and they sense others are not pulling their weight.

Other aspects that demotivate lawyers are:

  • Not receiving any constructive feedback
  • Others taking the credit for your work
  • Inefficient matter management
  • Poor work-life balance
  • Supervisors who are overly nit-picky

Advice to Supervisors

  1. Try finding out what motivates and demotivates junior lawyers in your team. Ask what matters they’ve enjoyed most and least.
  2. Consider more carefully what stretching work you can delegate. Try to avoid the view that ‘it’s easier to do it myself!’
  3. Delegate thoroughly so juniors know how best to carry out the work. This minimises the risks of work needing to be redone.
  4. Give constructive feedback so junior lawyers can learn. This is particularly important for Millennials.
  5. Give a few more ‘well done’s’. And make these real by being specific about what was good.

Remember, all your new hires almost certainly started off very motivated to be great lawyers. Let’s try to keep it that way!

For more see https://tonyreiss.com/2015/04/27/what-can-managers-do-to-motivate-their-team/

 

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Giving Feedback Using Radical Candor (or Candour for the Brits!)

Avoid the feedback sandwich – too much bun!

Kim Scott tells a great story about getting feedback from Sheryl Sandberg whilst working at Facebook. It goes roughly like this…

After a presentation, Sheryl said: ‘You know you say ‘um’ a lot.’ Kim, who thought she was a pretty good presenter brushed this off politely. Sheryl than added, ‘I know a good presentation coach’. Kim brushed this off saying she’d think about it. Sheryl went on to say, ‘You know, when you say ‘um’ every three words it makes you sound stupid!’.

Kim finally got the message (after the third attempt) and started wondering why nobody had told her this before.

She also wondered why she’d taken the feedback from Sheryl and concluded that it was because:

  • She had the skill to challenge me
  • She cared about my personal development

Obnoxious aggression, as demonstrated by the Meryl Streep character in The Devil Wears Prada, doesn’t work – lots of challenge but no care. Nor does what Kim calls Ruinous Empathy, where there is lots of care and consideration but not enough challenge.

Too many managers want to liked too much and are frightened to be more challenging. As Colin Powell said, rather bluntly: ‘You got to be willing to piss people off to be a good leader!’

And we need to be careful using the feedback sandwich. You know the sort of thing. Lots of bun (praise), a bit of meat (criticism) and lots more bun (praise). The criticism gets lost and we don’t enjoy the sandwich!

For more on motivating your team members see:

https://tonyreiss.com/2018/10/25/5394/

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All Advisers Should Have a Personal Marketing Plan

And it’s easy to write one…here’s how!

Firstly, why is a personal plan important? There are several reasons, but a key one is that it makes your career less open to random chance and makes you more focused on doing the kind of work that makes you fulfilled.

Strategy first, plan second

You need to be aware that a plan should follow some strategic thinking. Otherwise your plan will probably be unsustainable. It will just be a wish list.

A quick tip on strategy. It’s a matching process. Start by assessing your marketable assets:

  • What knowledge and experience do you have?
  • What are your skills?
  • Who is in your network and thinks well of you (inside your firm and outside)?

Now consider the market you are in. What areas of work are big? What areas are likely to grow? What types of work are more profitable than others? You don’t need to quantify anything. Just rank the areas as High, Medium or Low in attractiveness.

Then match your marketable assets to the more attractive sectors or areas of specialism. As you do this, ask yourself whether you feel passionate about doing this kind of work? This passion bit is important! It will have you through the tougher times.

Choose two or three areas to focus on and then write your plan.

Headings for a personal marketing plan

Many firms have long complicated documents that make planning a tedious and potentially bureaucratic process. I recommend having just four headings and you can get your plan on a single page. The headings are:

  • Objectives – ‘Smart’ objectives are important (ie specific, measurable, achievable, relevant, time-bound) so you can measure your progress
  • Profile-raising activities – to make yourself the ‘go-to’ person internally and a bit famous externally
  • Key clients and target clients – make sure you don’t put too many on your list, so you’ll have enough time to invest in building these key relationships
  • Product innovations – to ensure you have something with more added value than your rivals to offer your clients and can legitimately charge a premium (eg risk-sharing pricing options, project management processes, checklists etc)

Final comments

Many professionals (consultants, lawyers, accountants etc) work in what seem like hierarchical organisations. Too many staff members believe that their role to do the work handed down by a more senior professional. I urge all professionals to be tactfully assertive on matters to do with your careers. Too many talented juniors are leaving because they are not fulfilled. The problem is that the grass is rarely greener somewhere else.

So it’s actually in the interests of professional firms to encourage staff to produce personal plans. It’ll be a win-win!

If you’d like to receive the proformas that relate to this process of producing a strategy and personal plan, just ping me an email (tonyreiss1@gmail.com) and I send them to you.

 

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How to Deal with Objections when Selling

When selling your services, you are bound to receive objections and need to deal with what feel like tricky conversations. Here are some tips for dealing with push back from clients.

Firstly, what type of conversations am I talking about? Here are a few comments you might receive:

‘But what about x?’

‘I’m not sure that will work…’

‘That’s too expensive’

It feels like bad news to hear such comments. But the truth is that they are buying signals! They wouldn’t be bothered to have listened to you or be bothered to start negotiating if they didn’t have a serious interest in buying.

So, objections are good news and there is no need to get flustered. Stay calm, don’t get defensive and go through this simple process!

  1. Express gratitude for this feedback.
  2. Demonstrate some empathy for the client – avoid telling them that they are wrong at all costs! There may be a misunderstanding.
  3. Probe to find out more about their concern. Sometimes there is an underlying concern that the client hasn’t expressed yet. Think about objections as icebergs with 90% below the waterline. Gently probing lowers the waterline.
  4. Listen and show you understand their perception. More empathy will deepen the relationship with the client.
  5. Explore alternatives and ideally do this with the client to build a collaborative relationship.
  6. Demonstrate the value of your proposal and check understanding by the client
  7. Ask if there are any further concerns.

Sometimes a rival firm has a genuinely better proposition and it doesn’t matter how you negotiate, you won’t get the sale. Arguably, you might have recognised this earlier and avoided wasting time on a lost cause. Assess the likelihood of success before preparing your proposal.

Another tip…at the outset, consider what objections you might get and prepare your answers. You’ll get fewer objections.

Final tip…learn from each pitch so you can make a note of what works and what doesn’t. You’ll get better each time!

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Pricing for Profit for Professional Firms

Margins for professional firms are under pressure. It’s a tougher, more commercial world and clients are becoming more demanding when negotiating on fees.

Here’s the 3-step process we used in my consulting firm to improve margins:

  1. Establishing and building the value of the work in the mind of the client
  2. Working out a minimum price based on actual costs and a minimum margin
  3. Negotiating to achieve ‘win-win’, both at the outset and during the work, as well as at the point of billing

Some initial thoughts on particular factors that are relevant to these approaches are included below.

  1. Establishing and building the value of the work in the mind of the client 

Clues as to whether work should be given premium pricing include:

      • Urgency of work to the client
      • Importance of work to the client (what Americans call ‘you-bet-your-ranch’ work)
      • Expected savings to the client (tax work in particular can provide such savings)
      • The dominance of the firm in the category of work
      • Successful previous experience with the firm
      • Low level of competition for the work
      • Low level of experience working with lawyers

Factors which might lead to discounting include:

      • High level of competition (eg beauty parade)
      • Fixed client budget
      • General market expectation from experience of similar work
      • Lack of realisation in the client’s mind as to the value of the work
      • High level of experience working with lawyers
      • On-going relationship (eg Key Account)

Then there is the skill of authentically articulating the value of the work in the client’s mind. I say ‘authentically’ because you should be aiming to be seen as a trusted advisor, so the client should not perceive that you are trying to exploit them!

2.Working out a minimum price based on actual costs and a minimum acceptable margin

This probably represents your ‘walk away’ price. The prime skill here is that of a project manager who should itemise the tasks and estimate the level of resource required to carry out the task and the length of time required. The other approach to use is to review how much similar projects cost. So you have a ‘top down’ and ‘bottom up’ approach. This is a good example of using a belt as well as braces!

Other factors to consider are as follows:

  • Utilisation and mix of staff – if some staff are currently under-utilised, there may be a case for reducing the price of that resource
  • Volume of work – volume discounts may be worth considering when higher than budgeted utilisations can be achieved
  • Duration/continuity – staff can work more efficiently when working on fewer projects for longer periods of time
  • Strategic considerations – it may be desirable to work on a ‘loss leader’ in order to get some valuable experience which may then in turn provide you with profitable work (eg Securitisation work in 90’s)
  • Unusual extra costs – particularly in the areas of support staff

3.     Negotiating to achieve ‘win-win’

The ideal is to establish a basis for charging that both client and firm feel offer them good value. Factors to consider are:

  • Having the right ‘mindset’ (this is particularly important early on in the relationship when the client might not fully trust the law firm in terms of billing)
  • Having the skills to build credibility, rapport and trust with the client
  • The basis of billing – what are the advantages and disadvantages to you and the client of offering straight £/hour, estimated fees, fixed fees, contingency fees etc
  • How to respond to client counter-demands and the skills of establishing their underlying need
  • Strategies for offering concessions – always ask for something in return and the ideal is to offer those things that are really valued by the client but which cost you very little
  • How to resolve deadlock – a more senior person or a panel can play an important role if the issue needs to ‘escalate’
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