Why are lawyers not using their ranking in directories or industry awards to charge more? Surely they are worth it, asks pricing guru Richard Burcher?
This blog has its genesis in an angry and heartfelt comment on LinkedIn from a practitioner who was responding to my post that read, “Law Society accredits first law firms to Wills and Inheritance Quality Scheme. Excellent, but will the accredited firms use the accreditation to justify charging a premium over those that don't? They are entitled to and should but I have my doubts...”
The practitioner’s on-line response was; “It's not excellent at all, just a further stupid, box-ticking exercise by the Law Society, who are finding it increasingly difficult to justify their existence and looking round for schemes to raise a bit of cash.
There are many solicitors who are perfectly competent practitioners in Wills and Inheritance but wouldn't dream of paying some petty bureaucrat to certify them as such. It's also often the case that, as with the equally absurd Conveyancing Quality Scheme, a firm will pay the Law Society for their little badge and then delegate the actual work to some half-witted paralegal.
They're just a form of window-dressing, and actually cause damage to the profession by implying that those firms who don't sign up to the relevant scheme are somehow less competent, whereas the true position is often the exact opposite. It's also interesting to note that many of the firms of solicitors that have spectacularly imploded recently are those whose websites were festooned with such alleged `quality marks'.
Fortunately, there are many people who choose solicitors by their reputation rather than whether they have a silly sticker on their office window.”
Now, I want to be very clear that I have no view on the merits of this or any other accreditation scheme, whether run by the Law Society or anyone else. But the practitioners’ comments got me thinking. Why do law firms bother with accreditations, industry awards and even directories?
And more specifically, because my work is confined to helping firms with pricing strategy and execution, what relevance if any, do accreditations, awards and directories have on their pricing?
Let’s look at each of these.
The Law Society runs a number of accreditation schemes. In fact, I hadn't appreciated how many such schemes there were until I had a look at the Law Society website. They include Lexcel, Children, Civil & Commercial Mediation, Clinical Negligence, Conveyancing, Criminal Litigation, Family Law, Family Law Advanced, Family Mediation, Immigration and Asylum, Immigration Law Advanced, Mental Health, Personal Injury, Planning, and now the latest addition, Wills and Inheritance.
These accreditations are clearly targeted at the public is evidenced by the Law Society's website explanation, “If you have not had to seek legal advice before, it can be difficult to choose the right lawyer to help with your legal issue. The Law Society’s accreditation schemes can help you find legal advice quickly and confidently. Our accreditation schemes award a quality mark to law firms, practices and individual solicitors who meet the highest standards of expertise and client service in specific areas of law.
When you see one of our accreditation scheme logos, you'll know that the practitioner's skills and knowledge have been rigorously and independently tested”. So, rather than being something to assist firms, they are intended as a quality mark to assist unsophisticated buyers of legal services differentiate between the quality of various law firm offerings. I suppose that it is implicit that law firms can and should use these accreditations for marketing and business development purposes.
Firms certainly put these accreditations on their website and in reception but apart from that, I see little evidence of them being used to differentiate themselves from competitors and absolutely no evidence at all of them being used to justify a difference in pricing when compared with those firms who don't hold the accreditations.
There is no shortage of industry awards that law firms and other members of the profession can compete for. These include The British Legal Awards, the Halsbury Legal Awards, the Legal Business Awards, The Lawyer Awards, the Law Society Excellence Awards and the Modern Law Awards, to name a few.
To be sure, they are all glittering affairs and a great night out. Some are perceived to be more prestigious and worthy than others but based on their websites, it is difficult to discern any articulated rationale for the awards.
Celebrating success is reason enough of course but what I am intrigued by is, apart from bragging rights within the profession, what use do winners put the awards to. Certainly, details of the win or the firm's position as a finalist will be uploaded to the website and will no doubt feature in pitch, tender and RFP response material put together by the firms marketing team.
But what impact if any, does it have on pricing? Absolutely none as far as I have been able to determine.
Firms that take seriously their entries in the two principal directories, Chambers and Legal 500, invest an enormous amount in terms of time, effort, direct cost and opportunity cost in the exercise. Before making an investment of that magnitude, firms should be asking themselves, what is the ROI?
The response of most is that they don't really have any choice. If their competitors do it and they don't, they will be at a significant disadvantage. That makes sense and certainly, being designated a leading individual or leading team must give you something of an advantage over competitors who do not share those designations.
However, as with the awards system, I have seen no attempt to leverage these hard-won and expensively acquired rankings from a pricing perspective.
Law firms may want to reflect what other enterprises in the marketplace do when it comes to accreditations, awards and directories. A few examples:
(a) Accreditations: I would concede that of the three strategies discussed, accreditations are likely to have the least potential impact in terms of price. Indeed, some would regard those accreditations is merely table stakes.
Nonetheless, accreditation is seen as vitally important by a plethora of industries from security to construction to furniture retailing to accredited repairers of BMWs and Harley Davidsons.
As consumers we use these accreditations as a proxy for quality and peace of mind. And here’s the rub. We know that for the most part it will cost more than the alternatives. I am just in the process of moving apartment and I have chosen not to use one of the many ‘man-and-a-van’ deals on offer but rather, a more expensive option that amongst other things comes with the peace of mind of knowing that the company is an accredited member of The National Guild of Removers and Storers (NGRS) & the Removals Industry Ombudsman Scheme.
(b) Awards: Winemakers regard relevant industry awards as central to their marketing, business development and pricing strategies. Why? The answer lies in the last time you justified to yourself the purchase of a premium priced wine on the basis that it had a little gold sticker on the bottle saying that it had won gold at some industry award that probably meant nothing to you.
For the restaurant and hotel industry, winning one or more Michelin stars is tantamount to winning the lottery, literally. They are suddenly elevated to a position where customers know that they will be paying a premium and that they will have to book weeks if not months in advance.
(c) Directories: The use of Trip Advisor as a pseudo directory in both the planning and execution of our holidays and travel has become ubiquitous. Whether you are a hotel, bed and breakfast, restaurant, tourist attraction or amenity, appearing at the top of the list is highly coveted. And if you are fortunate enough to achieve a five-star ‘highly recommended’ ranking, recipients go to considerable trouble to ensure that their certificates are prominently displayed in the windows and reception areas.
Now it might be argued that like these businesses, law firms also make good use of the three strategies for marketing and business development purposes and indeed many do so.
However, unlike these other businesses, law firms do not usually use their accolades to justify a price differential. In my view, this is simply a wasted revenue opportunity.
Even when I have pointed this out to partners who have been designated by one of the directories as Leading Individuals, their response is often, “oh, but I can't charge any more than anyone else. I have to meet the market.” What absolute nonsense!
Regrettably, it is this mindset that has contributed to the homogeneity and perceived commoditisation of the market. Here you have a partner who is at the very top of their game (according to their clients, not their peers) and they still don't believe that they can justify a premium over their competitors. The reasons have more to do with a lack of pricing self-confidence than any rational economic explanation.
So, if you hold one or more of these accolades, the next time a client or potential client queries the fact that you are more expensive than a competitor, try responding with (apologies to L’Oréal), “you’re right, because I’m worth it”.