A value-based pricing action plan for conveyancers

A value-based pricing action plan for conveyancers

Shaun Jardine is a solicitor and director of Big Yellow Penguin Ltd, a law firm consultancy business specialising in pricing legal services. In May 2022, Jardine presented a webinar for the Law Society which explored how law firms win, deliver and price work.

During the webinar, the following poll questions were posed:

Which of these statements is closest to the truth?

  • We have a pricing strategy and policy that is consistently applied
    Answer: 39.4%
  • Individual matters are priced by individuals on a best-efforts basis
    Answer: 60.6%

What currently stops you from setting fees based on value to the client?

  • We don’t know the value of our work to clients
    Answer: 74.2%
  • Partners are uncomfortable with it
    Answer: 7.6%
  • We don’t have the skill sets
    Answer: 13.6%
  • Our IT systems don’t allow us to do it
    Answer: 4.5%

“The answers were illuminating”, said Jardine. On the first poll, he said:

“What this tells me is that 40% of firms probably have a menu price of some kind. Not unexpected in the conveyancing sector. But in many cases (not specifically conveyancing), 60% of firms let their staff make prices up as they go along.”

The second poll question highlighted a widespread problem. Lawyers don’t know the value of the work they provide to their clients. This is across the board.

Jardine began by listing a few “home truths about conveyancing”:

  • Conveyancing is a risky legal activity.
  • The work is complicated.
  • The work is pressurised.
  • High attention to detail is required.
  • If a case is handled negligently and a claim arises it can result in a professional indemnity insurance claim of tens/hundreds of thousands of pounds.
  • There are loads of litigation firms who will pursue negligent conveyancers on a no win no fee basis.
  • All conveyancing transactions and clients are different. No two are the same.
  • Some clients will be a joy to work with – others are awful… we know this.

So, if we accept these truths, what can conveyancers do differently?

Jardine has prepared an action plan for conveyancers helping to address some of the issues raised in the polls and help conveyancers adopt value-based pricing, earn more fees, and achieve a better work-life balance by charging more for their services.


1. Management should review the charges that the conveyancing department are currently using

And I mean seriously review them.

a) Have a full and frank discussion about why these figures exist, how they came to be, when they were last seriously reviewed, how they were calculated in the first place and whether they are high enough. When someone says (and they will) that “these are the market rates for conveyancing”, ask them where this so-called market is? What are the figures based on? In many cases it will boil down to “this is what we think the competitors charge”.

b) Accept that the price people are prepared to pay for conveyancing is not the same.

c) Our/the client’s perception of what is value is not the same. When presented with a wine list does every diner choose the house wine? No, of course they don’t.

d) Value is not rational. Why do people queue up outside shops at midnight to get the latest iPhone?

e) Value is contextual. You will pay more depending on your circumstances. It could be that this is an urgent case. It could be complicated. It could be the client wants a specific lawyer to deal with a matter.

f) Stop chasing the lower end of the market. If your competitors want to have a race to the bottom, let them.

g) How about your firm adopting a mentality of being a price setter in your area rather than a price follower? Be prepared to turn work away.

h) Look hard at any referral fees that are paid to agents. It’s not a great model. Could that outlay be spent training staff to do things differently? See below.

i) Recalculate the price table you have. Regard these figures as bottom-line walkaway charges. The bare minimum that can charged.

2. Change internal processes

Pricing should be taken away from those who aren’t terribly good at it. Let’s face it, many people hate talking about money. That is okay – don’t let them price their work. Why do barristers have clerks and actors and footballers have agents? The answer is to represent their client and get a better price for their services.

One of the golden rules of value-based pricing is no one should price their own work. Adopt a process where prices have to be agreed with a colleague. The colleague’s job is to challenge how the price has been achieved.

3. Seek to abolish low self-esteem

Law firms need to become more confident about what they do and how they charge for their services. How often does a lawyer think to themselves “they won’t pay that” and then discount a figure in their heads before they have even asked the client?

Accept there are enough quality customers and opportunities. Do not get in the mentality of selling a commodity. Don’t capitulate when customers say they won’t pay a price given. Be prepared to lose clients. Bad clients drive out good clients.

How often do you negotiate lower prices or challenge the costs charged by your dentist? I bet you don’t. If you started asking for a discount the next time you need a filling, I bet they won’t offer you one.

We all know you can buy a will kit at the local supermarket. So, why do people instruct lawyers? They don’t want to do it themselves. They want peace of mind that a job has been done correctly. Sure, a client can shop around and get conveyancing cheaper than you – let them. Aim to act for those that value what you do and the service you will provide.

4. Speak with people

Have conversations with prospects and help them understand the value that you provide, what you will be doing, how experienced you and your team are.

Learn to ask value-based pricing questions which aim to find out what the value is to the client. Help your lawyers understand their worth.

Take down the impersonal conveyancing quotation calculators on your website. All clients are not the same and don’t deserve to be treated the same.

5. Take your time – speed is bad for pricing.

Train your people to have engaging conversations with prospects. Ask questions: what are the reasons for moving? How does the location work for schools, pubs and local restaurants? Show empathy. If someone is moving because they are getting divorced or because a partner has died, acknowledge it may be a tough time for them at the moment – but you know you can help. This is where rapport is built. Your competitors are probably asking “is it freehold or leasehold, what is the price, and how many people are purchasing/selling” – not terribly inspiring or rapport building.

Once you have had the conversation – ask for the business. If you find yourself saying “if you want to go ahead, give us a call back…”, you should not be having the pricing conversation. How about saying “I hope I have covered everything you need to know and satisfied you that we know what we are doing, and we can get you into the property you want within the timescales you want…shall we now open a file and get on with it?” It’s an assumptive close.

6. Do not assume that every prospect is ringing around half a dozen firms

They are not – and if they are, they will want very low prices. You don’t have to operate in that market. If the prospect has been recommended by a friend or are an existing client, then they have affectively been pre-sold. They want you. They value you. You are worth it!

To quote John Chisholm, a Melbourne-based friend of mine who works with many Australian law firms… ‘Before you can charge a premium price, you first have to believe, internally, that you are worth it. There is great nobility in being paid what you are worth.’ Amen to that!

 

Shaun Jardine is a solicitor and director of Big Yellow Penguin Ltd.

Jamie Lennox

Content Editor. Contact: [email protected] Twitter: @JamieLennoxTM

1 Comment

  • That’s a great article and very true.
    When working for numerous law firms providing new business solutions I would always bring out my “Duck Shop” analogy. Firms are not great at asking for the business and many staff use the “call me back when you are ready” line rather than assuming that the prospective client, who has called a duck shop, actually intends to buy a duck, which of course they have. Many would start apologising for the prices they were giving and offered discounts before the prospect had even responded.
    We must remember though that conveyancers are not sales people; I’ve heard that a few times. However, in my experience, conveyancing rarely needs to be ‘sold’ as people need it. Without it, they are not moving, so the industry is absolutely in the driving seat and should remember it.
    Only 5% of the market buy on price, and they are the 5% that are welcome to go to your cheapest competitor and give them a hard time, you are worth more.

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