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Don’t Negotiate, Do Accommodate

by Carolyn Elefant on October 18, 2008 · 4 comments

in Client Relations, Setting and Collecting Fees

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Last season, my daughters and I became fans of Donald Trump’s Celebrity Apprentice.  While my girls enjoyed  the show for the recognizable products that were often the subject of the challenge, I watched for marketing lessons.  And one of the lessons that’s remained with me now, even several months later, was gleaned from a competition between two teams to earn the most money from selling a product on the QVC Home Shopping Network.

The contest worked as follows:  QVC identified five potential products and each team would choose one that it would market during a one hour segment.  The team making the most sales, based on amount of dollars, would win.  Both teams coveted one product, a combination chair/stepladder (in my view, the best of the bunch as well), and Team A, which drew first pick, claimed it.  Team B settled for its second choice, a lightweight vacuum that could pick up ordinary debri as well as larger items like pebbles or paperclips.   As I recall, both items were comparably priced.

Despite having less enthusiasm for the vacuum, not to mention a less riveting TV demonstration, Team B won the contest.  The reason?  Team B had thought to ask QVC about its easy pay option, which allows buyers to purchase a product and spread payments out over a two or three month period.  So, rather than pay the $70 price of the vacuum up front, or put it on a credit card to accumulate interest, easy pay buyers are auto-matically charged $35 over a two month period.  The easy pay option accounted for a large percentage of Team B’s sales, thus giving it an enormous edge over Team A, which hadn’t thought to make it available.  Let’s be clear – Team B didn’t reduce or modify the price of its product and try to make it up on volume.  But it did make the product more affordable by allowing buyers to spread out payments.

And that’s the lesson that lawyers should consider in this economic client:   don’t negotiate, accommodate. For example, let’s say that you ordinarily require a $2000 retainer to begin work on a matter.  Rather than requiring the client to pay the entire retainer before starting work, could you allow the client to pay $1000 the first month and $1000 the second month?  Or could you have the client to agree to pay you $500 on a continuing monthly basis (you would send bills each month noting the balance owed, or amount accrued in the trust account) until the matter is paid off.   Some of my colleagues have had good luck with a phased approach, where they outline tasks upfront and take payment only for the most immediate one.  Each time a new task arises, the client is asked for a payment; if the client can’t pay, the lawyer withdraws.

If you decide to adopt any of these approaches, you’ll need to shield yourself as best you can from risk.  For example, you need to set up payments so that each month, you automatically bill the client’s credit card or the client’s account makes a direct deposit payment to your trust fund.  And you need to make absolutely sure that your retainer agreement specifies that non-payment of any of the required installments will result in your withdrawal – period.

Even with these safeguards, these types of arrangements won’t work for all cases.  If the nature of the case requires a substantial time investment up front, you take the risk of non-payment by accepting a smaller retainer.  Likewise, if a client can’t make the second payment and you’ve had to enter an appearance in the case, you may be stuck if the court won’t let you withdraw.

The other benefit of accomodation is that it allows you to look like a hero without appearing weak.  Consider the following two conversations:

Conversation 1 (DON’T)

Attorney:  I will need $2500 to get started on this matter and that should most likely cover the entire cost.

Client:    Look, I’m really short on funds right now.  I just don’t have that kind of money and $2500 seems really expensive for this matter.  Why don’t I just give you $2000?

Attorney: Well, all right, I know times are tight, so I’ll give you a bit of deal.

Client:  OK – let’s say I pay $1000 now and $1000 in two weeks after I get my next pay check?

Attorney:  That will be fine.

This is clearly a don’t.  The client is in control here, he’s said what he  is going to pay, and having gotten his way on that point, has also informed the attorney how he plans to make the payments.  And because the attorney rolled over so quickly, the client doesn’t even appreciate the accommodation – in fact, he probably assumes that the attorney jacked up his rate originally, which accounts for his willingness to bargain.   It’s unlikely that this attorney will ever see that second $1000 installment.

Conversation 2 (DO)

Attorney:  I will need $2500 to get started on this matter and that should most likely cover the entire cost.

Client:    Look, I’m really short on funds right now.  I just don’t have that kind of money and $2500 seems really expensive for this matter.  Why don’t I just give you $2000?

Attorney:  I understand that times are tough right now.  But I believe that this is an important case and that if I have the resources to pursue it correctly, it will ultimately improve your bottom line in the long run.  However, I’ve handled a few of these matters, and I know that it  is going to take $2500 in order to enable me to do what I need to do.

Client:  I hear you, but I am concerned.  I really don’t have $2500 right now.

Attorney:  I understand.  As you know, I can’t negotiate my rates, but I am willing to make a proposal that might accomodate you.  In your case, I can get started for $1000 and I’ll then bill you for the remaining $1500 in two $750 installments.  Now, in order for this to work, you will need to provide me with authorization to bill the payments to a credit card.  You also must realize that if you miss a payment, I will withdraw from the case immediately and I may take action to recover the payment owed and you’ll also be responsible for the costs associated with collection.  But I think this arrangement will ease the burden of the payments for you and give me the assurance to move forward and do what I need to do to assist you in this matter.   How will this work?

Client:  That would really make things much easier for me.  You don’t have to worry – you will get those payments from me.  I really appreciate your willingness to work with me.

Here, the attorney stands firm on what he needs to pursue the case – and also explains why receiving full payment is important, and how it will benefit the client.  Significantly, the attorney does not reduce the rate, but offers a proposal to facilitate payment. Most importantly, the attorney stays in control of the conversation, not the client.

In a perfect world, we’d quote our rate to clients and they’d whip out a check and pay us in full.   These days, the world is far from perfect but we don’t need to settle.  As Team B proved on Celebrity Apprentice, accommodation can be a winning strategy both for our clients, and for us.

  • http://negotiationlawblog.com Vickie Pynchon

    You are, of course, counseling your readers to negotiate, which the American Heritage Dictionary defines as “confer[ring] with another or others in order to come to terms or reach an agreement.” You’re also right to suggest that accomodation is often an excellent way to make a concession without sacrificing dollar value. Many cases settle with up-front payments coupled with notes and stipulations for the entry of judgment for the full amount immediately due and payable in the event of default, a good way to skin the impasse cat. Thanks for reminding all of us that flexibility and creativity are at the heart of running a successful business.

  • http://negotiationlawblog.com Vickie Pynchon

    You are, of course, counseling your readers to negotiate, which the American Heritage Dictionary defines as “confer[ring] with another or others in order to come to terms or reach an agreement.” You’re also right to suggest that accomodation is often an excellent way to make a concession without sacrificing dollar value. Many cases settle with up-front payments coupled with notes and stipulations for the entry of judgment for the full amount immediately due and payable in the event of default, a good way to skin the impasse cat. Thanks for reminding all of us that flexibility and creativity are at the heart of running a successful business.

  • http://www.twitter.com/adrianos Adrianos Facchetti

    Great advice, Carolyn. A lot of clients think they can push us around (especially in my situation since I’m a young solo). I’ve had very intense negotiations over my rate with a few clients–especially my anchor clients. I like your suggestion. I’m going to try it next time. Thanks.

  • http://www.twitter.com/adrianos Adrianos Facchetti

    Great advice, Carolyn. A lot of clients think they can push us around (especially in my situation since I’m a young solo). I’ve had very intense negotiations over my rate with a few clients–especially my anchor clients. I like your suggestion. I’m going to try it next time. Thanks.

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