Close Menu

Should Lawyers Discount Fees During Coronavirus 2020?

Reduce Fees

The following article focuses on the reasoning for and against discounting fees to existing clients.  I will publish a post about the wisdom of offering lower fees to new clients in a couple days.

A partner at a long-time law firm client of my consulting business called me this week and asked if she should include a discount on her invoices during the Coronavirus pandemic.  It so happens that she does advisory and transactional work for a number of small and medium sized businesses.  Some of her clients pay a monthly flat-rate retainer while others have been happy to pay her $395 per hour rate for any work that needs completed for their organization.   This attorney is quite successful, has long-term relationships with most clients, and does very high-quality work.

My ultimate answer to her question is below.  But first, since I’m a spectrum guy, let’s look at the extreme ends of what she could do… and why.

On one hand, this lawyer is smart, deals with several niche and complex areas of the law, and has invested substantially in her own knowledge and ability to deliver positive results for more than 20 years.  Furthermore, her clients need her expertise now more than ever, and it’s likely her efforts will help them emerge from these troubling times in a much better overall position.  So… it could be argued that the last thing she should do is discount her fees.  Afterall, this is exactly what clients hire her to do, at the most critical time, with the most at stake.  In short, she’s earned her bill-rate and is worth every dollar of what she invoices.  No reduction in fees!

On the other hand, this lawyer is doing fine financially.  She can weather a 3-4-month downturn in the economy as well as a decrease in her firm’s revenues.  In fact, her business could withstand a much longer slow period if necessary.  Conversely, some of this attorney’s business clients will be lucky to emerge from the pandemic at all, and almost all will see drastic impacts to their bottom line over the coming months.  In addition, she typically deals with C-level executives at her clients’ offices who are under tremendous pressure to conserve cash, keep employees safe, maintain smooth operations, and make customers happy.  So… it could be argued that this attorney should absolutely provide some reduction in her fees as a gesture to her clients that she is “in this thing” with them.  Discount the fees!

Now that we’ve examined (perhaps painfully) the opposite ends of the spectrum on this issue, what’s my opinion?

I believe whether or not this lawyer should discount her invoices should be decided on a client-by-client basis and depends on the answers to the following questions:

How impacted is her client by the pandemic?  If the answer is not much, there is no need to discount her fees at this time.

How much work does she do for the client?  If she only does a few hours a month, no discount is necessary.  It’s too small of a savings to have real meaning to her client.

Is her client expecting a discount?  This is difficult for her to know without having the conversation directly with her client, and I’m not a big fan of speculation.  But I believe most lawyers know their clients as well as how those clients view finances and business relationships, and sometimes doing the expected is the right move.

How much would it hurt to lose the client’s business?  This is perhaps the most important consideration.  If the idea of her client taking their business somewhere else puts a pit in her stomach, she should be looking for ways to go the extra mile for them now.  And one good way is to reinforce the idea of her standing shoulder-to-shoulder with them during the tough times by giving a little back.  (BTW, this is the same analysis experts recommend that law firms use to determine if an associate should be made a partner.  i.e. “If Associate X walked out the door today, how would we (the partners) feel?”  Also, keep in mind that revenue isn’t the only consideration when evaluating the impact of a client taking their business elsewhere.  In some cases, how enjoyable the client’s work is, or how easy it is to work with the client, should be serious considerations when it comes to the desire to keep their business.

In the end, I say what I say about a lot of business decisions in the practice of law, which is this…

There is no wrong decision for a lawyer when it comes to putting a temporary discount on his or her legal fees in uncharted waters such as these. The only wrong decision is not considering the important factors and thinking the issue through.  Once a lawyer does that, he or she should make the decision and never look back.  This approach is what separates the amateurs from the pros.  And it’s also what makes doing high-level business fun.

Like this article?  Connect with me on LinkedIn as I’ll be posting similar pieces during the COVID-19 pandemic, https://www.linkedin.com/in/mattstarosciak/.

About the Author:  Matt Starosciak brings a powerful combination of experience and passion to the law firm marketing process. He has practiced law in both small and large firm environments, spent the better part of a decade as a top legal sales representative, and as the founder of Proven Law Marketing, has been responsible for the client development and revenue growth at some of the nation’s top law firms.  He can be reached at matt@provenlawmarketing.com.

Facebook Twitter LinkedIn

Copyright © 2019 - 2020 Proven Law Marketing. All rights reserved.