Small Law Firms

Clients Might Not Always Understand The Benefit Of Fee Discounts

Part of the problem is that clients often do not understand what the fair market value of the work being performed is.

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bonus money tug of war partner vs associateThis past week, I had to go to the dentist, which would have been a miserable experience, but my dentist is a good friend who I have known for almost my entire life. He made the process super easy, and when it came time to pay, he gave me a discount, which I really appreciated. I had paid for similar dental work before, so I knew that the amount that my friend charged me was below the market rate, and this made me really appreciate the discount. This experience made me think about times when I gave discounts on legal services to friends and family, and from my own personal experience, clients do not always understand the benefit they are getting from discounted legal services.

One of the main reasons why clients might not understand the benefit of a fee discount is because they do not understand what the fair market value of legal services is. Clients might not have hired a lawyer before in their lives, and even if they hired counsel in the past, they might have hired a lawyer to handle a legal issue that is different from the legal issue that they now face. As a result, they might not be able to appreciate the value they are receiving with discounted legal fees.

For instance, a very long time ago, I handled a closing for a friend. Since I had known this person my whole life, I decided to charge less than what is typical for a closing. I figured that my friend would likely not need his hand held like other clients when it came to closings, so I could justify the somewhat discounted rate by the lesser amount of work I expected to complete on the deal. I thought it would be rude if I explained to my friend that the amount I was charging was below fair market value, and I guess I just expected my friend to intuit that the rate was below fair market value and that he as getting a deal from me.

It turns out that my friend did not really appreciate the lower rate he was receiving for the legal work. On multiple occasions, my friend talked about “all of the money” he was paying me and how I should appreciate his business. In addition, the deal did not really involve less work than a typical closing, so I was not really getting anything in return for offering a lower rate to my client than he might have been able to secure elsewhere.

I spoke to other lawyers about this phenomenon, and it appears as if numerous attorneys deal with the issue of providing discounted rates to friends and family. One of my mentors within the legal profession told me that when he performs legal work, he either does the work for free or he charges his full rate. This lawyer does not discount his rate for friends and family, but he might perform the work for free. He reasoned that friends and family rarely recognize the benefit they are getting from securing a discounted rate from a lawyer. However, everyone is appreciative of having legal services performed by someone for free, so if he has a close friend or family member that needs legal work, he will perform the work for free.

I have performed free work for very close friends and family members, and everyone is definitely appreciative of receiving free legal work. Clients are a lot less likely to be needy with their lawyers when they are getting legal services provided to them for free. Of course, lawyers cannot provide free legal services to friends and family members at the same frequency as they can provide discounted legal services, since lawyers need to pay their bills. However, this is another option for lawyers who want to provide a benefit to friends and family.

In some situations, it is possible to be open about the discount that a friend or relative is receiving when a lawyer provides discounted legal services. A lawyer can give a range of how much money another lawyer might charge for a given legal task and then explain how much that lawyer will charge. In this way, a client might be able to understand the value of the discount they are receiving from a lawyer.

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Of course, this approach may be awkward, and should definitely not be employed in every situation. However, in certain circumstances, lawyers can be more transparent about the discount they are offering to friends and family who seek legal services.

Rothman Larger HeadshotJordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

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