Believe me, as a solo who competes frequently with large firms for clients, I’d love, love, love to buy the arguments made by my blogging colleagues, Chuck Newton and Tom Collins that small firms don’t need to, and shouldn’t have to compete on price (Chuck’s post is here, Tom’s post is here). And perhaps that’s true in some cases. For example, if you’re dealing with a multi million dollar company involved in a multi million dollar deal, whether you charge $300 an hour or $450 an hour doesn’t matter much in the greater scheme of things. But that’s nice work if you can get it, and many solos and small firms can’t. Instead, many of us target that niche of clients who can’t quite afford biglaw, but at the same time, aren’t destitute. For those companies, saving $50,000 or even $25,000 on legal fees can make a difference. And we solos and small firms can capture those clients without it making a dent in our bottom line, because of our lower overhead.
In addition, while it’s nice to hear from lawyers who say that price doesn’t matter, I’m more interested in what clients say about price and small firms. Consider this article at law.com about why clients hire solo and small employment lawyers. At least two of the lawyers quoted in the article cited “cost efficiency” and low price as one of the reasons why they preferred their small firm employment lawyers. Sure, other things mattered, like knowledge and quick turn around. But price was also cited as a factor. Similarly, consider this year old post by Larry Bodine about the trend towards “pinpointing,” where firms seek out smaller firms in other cities to handle litigation rather than relying on their biglaw attorneys in major urban centers. Obviously, cost is a factor in those cases as well.
Moreover, we do a disservice to small firms when we advise them to
ignore price – particularly when their large firm competitors don’t.
Recall the dotcom era, where emerging small businesses went to large
firms like the now felled-Brobeck, Phleger, or Wilson, Sonsini over
small firms. The reason? Large firms were able to deeply discount
fees, or even work for free in exchange for a stake in company equity.
And recently, I lost out on a client to a large firm that discounted
its rates by close to 50 percent to capture the client. If price
didn’t matter, why would large firms discount their rates?
I agree that solo and small firm lawyers may undervalue their service. But as I’ve shown above, price does matter some of the time; and it matters to clients and it matters to large firms when they need to compete for clients. And for that reason, it’s got to matter to us solos or small firms if we want to stay in the game.