Leave Your Attorney Fee to Your Clients

A month of name-your-own-price attorney fees? Some people called me insane. Others called me stupid. My clients called me awesome. Those were the reactions I got when I posted this video on the front page of my website on May 1st, 2011:


That video kicked off Name Your Own Price Month. The process of setting my attorney fee was relatively simple. I would meet with my client and then perform any work that we agreed to. Once I had performed all of their services, we would meet again to wrap everything up. At this meeting, the client would sign a payment agreement, where they filled out how much my attorney fee would be, and how many monthly payments they would take to pay it. I simply asked that their chosen attorney fee take into account these three factors:

  1. The value of the services my client received;
  2. My client’s satisfaction the customer service and representation of my firm; and
  3. The attorney fee that my client could afford to pay.

When the month began, the most common question I got, especially from other lawyers, was why on earth I would give anyone the chance to take such advantage of me. Call me naïve, but I think people are better than that. The good news is, I was right.

When I began the month, I made a promise to myself. I would stick to my guns. If someone wrote a big fat zero on the attorney fee agreement, I had to accept it. I could ask them why, but no more. I’ll admit, every time I sat down with a client to wrap up everything, I was terrified of the number they would write down. To my surprise, not once should I have been. On more than one occasion I was pleasantly surprised. The best part was, almost every one of my clients was happy to break down for me why they paid me what they did. In my three years of practice, I have never received so much constructive feedback as I did over the month of May. Clients gave me incredible insight into how they perceived my firm and me, what I did well, and what I could improve on.

NYOP Month paid off for me in few ways. Like most lawyers, I had run across a few prospective clients that desperately needed my services but either could not legitimately afford me or simply wouldn’t get off the fence. NYOP Month got rid of the largest obstacle for these clients: money. Over the past two months, I have already seen an increase in referrals from these clients. Former fence sitters, now that they have seen the need for and the quality of my services, are telling all of their friends to get off their butts and hire me. That’s marketing you can’t buy.

Beyond the joy of helping people who are usually shut out of decent legal representation because of financial concerns, NYOP Month also provided an invaluable service to my firm. I finally got some honest answers on what my services are worth to the people who are paying for them.

Figuring out the attorney fee structure for your firm is a complicated and arcane process. The thing most of us looked at when we started our firms was what other firms in the area charge. That is what I did. Then I made my prices a little bit lower. The problem being cheaper than other firms doesn’t mean you are affordable to your target client. It just means you get paid less when you find someone who will hire you.

Some of us talked to marketing experts or business coaches to figure out our attorney fees. Consulting these experts gave me a few, vague, schools of thought for pricing something as amorphous as my time and expertise. Some would tell you to charge higher, so that you can go after just a few clients and still be making a healthy profit. Others will tell you to make your prices low enough to increase volume, thus increasing your total revenue. There are plenty of other strategies, but that is a topic for a different day.

Traditional pricing methods do raise issues that you should consider when you are determining your attorney fees. The problem is, none of these methods actually takes into consideration how your target client views the value of your services. NYOP Month allowed me to go out and simply ask them.

For the most part, the clients that I had during NYOP Month were the same types of clients that I am aiming to work with during the rest of the year. That’s not surprising, since, aside from the NYOP program, none of my marketing and networking strategies changed during the month of May. For the most part, NYOP clients paid less than what I would have charged them any other time of year. What was interesting, however, was that most of my clients paid almost exactly the same prices for the same services as other NYOP clients did. This provided me a great baseline to look at when I am revising my attorney fee schedule. I have far better information now for creating a realistic and marketable attorney fee schedule than I did a few months ago.

The last thing I noticed when doing Name Your Own Price Month was the increase in publicity I received. When I did something different and unexpected, people noticed me. This is the greatest lesson from NYOP Month. Have the courage to do something unique with your firm. If you have a crazy idea, try it for a month. You never know what you might learn or who you might meet. In an industry as stagnant as the law, doing something different almost always gets you noticed. Contrary to what some people will tell you, that’s a good thing.

Alex Bajwa is a Minnesota estate planning attorney in St. Paul, Minnesota. You can follow him on Twitter, friend him on Facebook, or connect with him on LinkedIn.

  • Gus

    I don’t really see how this would work. When clients come to me, they have absolutely no idea what a lawyer charges, so how could they ever come up with a fee that is reasonable to both client and attorney?

    • http://lawyerist.com/author/samglover/ Sam Glover

      I though Alex just did a really good job explaining how it works. You let the client decide your fee, but they have to explain it.

      I spoke with a lawyer yesterday who did some work for a client who paid him more than he asked for. Don’t assume your clients undervalue your work. Likewise, don’t assume you know what your work is worth. Attorney fees are pretty arbitrary in most practice areas, after all.

  • Robert Thony

    I’m inspired! Way to think outside of the box. I must say, the effectiveness/reasonableness of this strategy would likely depend on the sophistication and income level of your clients; nevertheless, it’s very helpful to consider the lawyer’s fee as more flexible and collaborative than traditional structures.

  • Rob

    I like it!! Getting paid in the small firm/solo practice arena can be very challenging. Traditional billing practices are unpopular with both attorneys and clients, and lead to job dissatisfaction. Congratulations to Alex for coming up with a very unique approach and having the stones to implement it.
    I would be interested in hearing additional follow-up to see if how his collection rates for NYOP month clients compare with non-NYOP month clients, and to also hear if he elects to implement NYOP on a more frequent basis.

  • http://gyitsakalakis.com Gyi Tsakalakis

    Interesting. I wonder whether the fact that the client set the fee can be used to defend an allegation that a fee was excessive. Seems reasonable that it should, but rule doesn’t speak to whether client believed fee was reasonable…

  • http://legalofficeguru.com Deborah Savadra

    Several recent experiences with client intake (or, in one case, non-intake) in our office convince me that the biggest barrier potential clients have is not necessarily the cost but the unpredictable nature of it. (I work in an area where “by the hour” billing is still the overwhelming norm.) If I had a nickel for every nervous “how much is this going to cost me?” joke I’ve heard, I could retire (or at least buy myself a very nice dinner). I can see how this strategy would remove that objection — it’s classic Robert Cialdini — employs at least two (if not three) of the six influence/compliance strategies, by my reckoning.

  • http://lawyerist.com/author/samglover/ Sam Glover

    So who is going to try this next and report in?

    I charge my business clients a monthly fee for basic services, but I’m considering a NYOP invoice for the additional services I provide. I also have a list of prospects who might be swayed to hire me if I did a NYOP promotion. I think it would work fine with business clients.

  • Oceander

    A very interesting experiment; thank you for carrying it out and letting us know how it went.

  • Rob van Rooij

    Great experiment! Very innovative approach that for sure gave Alex valuable insights. Give my background in fmcg before turning to legal services, I am used to first ask the potential clients what they are willing to pay for a product or service, before bringing it to the market. The legal service industry works the other way around and misses out on a lot of opportunities that are out there.
    Research has shown that 40% to 50% of all potential legal work is not handled by a legal professional. The basic reason for that is that the market is not transparant for clients or suppliers. High prices and inefficient organizations and working processes are the result of that lack of transparancy.
    At EasyLawyer.com we did extensive research on pricing by asking SME how they value legal services. When we knew how we needed to value different types of services, we designed our organisation and acquisition process in such a way that the client knows ahead that he never pays more than he wants to.
    If you organize legal work according the client wishes, legal work can be done for less than 50% of the price that the average client pays, while improving the quality at the same time. If an existing law firm would adopt this way of working, they would loose turnover and could no longer cover the costs of their existing organization. Real innovation (also in pricing) will therefor most likely come from newcomers.
    The good news is that the market for Justice is potentially incredibly big with 4 Billion people wordlwide without access to justice, according the UN report on Legal Empowerment of the Poor.

  • http://williampfeifer.com William Pfeifer

    A great idea for some areas of practice – but you obviously don’t do criminal defense or contested divorces!

  • http://lawyerist.com Sam Glover

    It never ceases to amaze me that, when confronted by a successfully innovative approach to law practice, many lawyers react with denial, instead of getting inspired.

  • http://williampfeifer.com William Pfeifer

    My comment is not denial of the idea’s potential, but merely an observation that it won’t work in some markets. For specific fixed fee items like basic wills and trusts, it could be a great approach. But try telling someone charged with burglary that he can pay you whatever he thought the case was worth after it is over, and see how much you get paid when the case is finally resolved two or three years later.

    • http://lawyerist.com/author/samglover/ Sam Glover

      How do you know it won’t work? Have you tried it?

      (If you do, consider sending a bill more often than once, at the end of the case.)

      • http://williampfeifer.com William Pfeifer

        I use a flat fee system with my clients. After a detailed consultation with them, I quote them a fixed fee for the case to be paid in advance, plus they are responsible for any expenses incurred during the course of the case. That way, the client knows the total cost of my services from the start, and they pay the fee in advance (with a few exceptions where I may let them split it into a couple of payments). That way, I don’t have to worry with hourly billing and they don’t have to worry that they are suddenly going to get hit with a legal bill they can’t pay and lose their attorney.

        I think the idea in the article is a great concept, especially as a promotion they way he did it. But he does estate planning, incorporations, and other matters that can generally be accomplished in a relatively short period of time (at least within a month). It could work in that setting. But committing yourself to long-term litigation without a definite agreement on fees would be a disaster. So my point was merely that this is not an idea that will work for every kind of law practice.

        • http://lawyerist.com/author/samglover/ Sam Glover

          And my point is that, while you may be right, you have no idea whether it will work with criminal cases, because you haven’t tried it.

          • Rob Thony

            Sam, while I agree that there’s nothing like trying the model out and seeing if it works, I can understand someone not wanting to take that kind of risk with something like a burglary case, particularly if we’re talking long term litigation. And in any event, you don’t have to experience something to make an educated prediction as to whether it will be in your own best interests. That being said, I applaud anyone who has the guts to try it in the crim law context, and blog/comment/speak about it.

            • http://lawyerist.com/author/samglover/ Sam Glover

              Right, but why not try with a couple of DUIs, first? What’s the worst that could happen? (How many times has a client failed to pay when you set the price?)

          • http://williampfeifer.com William Pfeifer

            During the early years of my practice when I used to let people pay me on payment plans, I amassed hundreds of thousands of dollars in unpaid legal fees owed by people who stopped paying as soon as their case was over (at least until their next arrest, when they wanted to roll their past due fee into a new fee agreement). That was enough of an experiment for me to have no need to try this approach in my practice once it reached the point where I didn’t have to try to work with people on the fee. I have no intention of experimenting with how much I can drop my income or postpone receiving it by no longer requiring prepayment or even setting a fee amount. Based on the amount of money I was never paid by the people I allowed to pay me on payment plans, I’d say I’ve gone as close to this experiment as necessary. I am able to collect my fee in full in advance of taking on cases now, and I’ve got plenty of people wanting to hire me. Why would I ever go back to something less secure when I don’t have to? I am able to devote more time and attention to my clients because their fees are already paid, and I don’t have to waste time worrying about whether I’m going to get paid. If I was only going to spend 3 or 4 hours on drafting an estate plan for somebody then I might be willing to try this approach, but when you are looking at committing large portions of your life to a person’s case you just can’t do that on spec.

          • http://ethicsmaven.com/ Eric Cooperstein

            A person doesn’t have to actually drop a brick on her foot to figure out that it would hurt. I don’t see why someone should be criticized for not wanting to spend $10 – $20K or more (in lost income) trying an idea that they can pretty well see won’t work in their practice area. Alex doesn’t actually tell us how much clients paid him, or exactly how that compared to what he would have charged (except that overall, they paid less), or how many clients were involved in the experiment. That makes it hard to evaluate as a business model.

            I agree with William. It would be crazy to do this in a criminal case, unless you can feed your kids promises for dinner.

            • http://lawyerist.com/author/samglover/ Sam Glover

              I think it’s crazy that you think the only way to test this is to put $10,000 at risk.