Depending on global, economic or personal factors, it’s natural to wonder if your firm should offer discounts—out of compassion, a desire for continuing firm cash flow, or some mixture of the two.
Know the why
First, ask yourself why you’re considering giving the client a discount. Are they hard up for money? If so, why do you think they’ll pay you when they presumably have other bills to cover too?
This isn’t intended as a reason to not have some wiggle room for long-standing clients—see “Solutions” below—but it is intended to give pause. Many lay people believe lawyers have enough money that skipping out on a legal bill won’t matter to them. And many lawyers don’t like having to follow up with clients on overdue bills.
Consider the impact
It’s also worth considering how a discount might change a client’s perception of the value of your services. Will they perceive the legal work as costing less?
And will they expect the discount to continue, even once they are financially on their feet again?
A recent Thomas Reuters article proposes offering fee relief instead of a discount. As noted in the article, the difference may be a matter of semantics, but it’s still an important difference.
With fee relief, the client still sees what the whole bill would have cost—and importantly, they see the rates for billable hours as staying the same. Instead, the fee relief is applied as its own separate item at the end of the bill. This approach allows you to combat perceptual de-valuing of your services.
And fee relief comes across as more of a one-time exception. Clients won’t be in the position to ask, “Can I get the usual discount?”
Even with a creative approach to offering discounts that don’t feel like as much of a discount, you’ll still want to be selective about who you offer fee relief to.
And if you’re one of the many lawyers who doesn’t like following up with overdue accounts, consider using a billing system that generates automated overdue reminders for you.
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