Offering fixed fees is a sign of entrepreneurial lawyers, according to research among small firms which also found that it helps “cement a better client relationship from the start”.
The research, by LexisNexis, found that those offering fixed fees were investing more in processes, technology and marketing.
“They are more likely to have a client service policy and be using CRM software. And they are more likely to have non-fee-earning business experts from outside the legal industry on staff,” it said.
The research, The Bellwether Report: A Question of Value, followed up the findings from LexisNexis’s main Bellwether findings released in May and reflected the views of 112 lawyers in firms of up to 20 fee-earners, and 108 clients.
It found that 43% saw embracing fixed fees as an opportunity – more than other possibilities such as mediation, commoditisation, offering online legal services and ABSs – but only 23% of their firms have made a deliberate shift towards them in the past year.
This was in part because most lawyers did not consider themselves part of a service industry, but the research found that fixed fees offered lawyers an opportunity to regain the trust of clients – 92% of clients on fixed fees ended up paying either roughly what they expected or less. By contrast, 63% of those on hourly fees paid more than expected.
Those lawyers who are taking the leap towards fixed fees were “the most forward-looking”, LexisNexis found. Most of those lawyers who saw the benefits of fixed fees viewed themselves as entrepreneurial “and tend to be more progressive, open to change and customer-centric”.
These lawyers were also younger, from growing firms and their client conversion and retention rates were above or well above average.
“Importantly, we found fixed fees help to cement a better client relationship from the start by putting clients at ease – and translates into more word-of-mouth referrals. According to our findings, clients who are serviced on a fixed-fee basis are more likely to refer the firm to others.”
However, the research cautioned lawyers not to think that clients on fixed fees were prepared to accept a lower level of service. “To this end, some smart lawyers are using fixed fees more creatively such as offering a tiered (bronze, silver, gold) service, based on what clients want to pay for. In doing so, rather than offering a cut-rate service for a cut-price, they are giving clients transparency, choice and control,” it said.
Jon Whittle, market development director at LexisNexis, said: “Lawyers have come a long way in recognising the business potential of fixed fees, but a more resolute change in mindset is needed to optimise this model.
“To deliver ‘value’, they must evaluate their service through clients’ eyes. As the research shows, the smart, entrepreneurial lawyers are already doing this – they are also more amenable to change and adopting processes, technology and marketing to make it happen. The rest must follow too if they are to be successful.”