When meeting with clients, should you charge for consultations?
After implementing the law firm marketing plan contained in Big Fat Pipeline, the calls will start pouring in, and the issue of whether you should charge for client consultations will immediately arise. The answer to that question will turn on your individual circumstances and goals, but I can offer my experiences and observations on the subject.
1. Consultation fees can provide a nice base.
Because of my wrongful termination practice, I could make a nice living just doing consultations, as do some other attorneys I know. A terminated employee is in a panic about how they are going to pay the bills, and about the damage that has been done to their employment record, and will happily pay for an hour of my time to get some idea of what they can do. If I did just one consultation per day at $495, that would give me a base income of about $100,000 per year even if I never took a single case. I have heard many a seminar on law firm marketing, where they urge that attorneys should always bring the client in for a consultation, so that every client contact is a profit source. But I don’t charge for consultations, in most instances, as I will explain.
There is an attorney in my area who is very well known because she is masterful at obtaining media coverage for everything she does. As a result, her office receives many phone calls from clients wanting to consult with her on their employment cases. Her firm has turned this into a very lucrative profit center, charging an application fee just to submit a case for consideration. If the case passes that initial screening process, then another fee is charged for a consultation. I have no personal knowledge of her numbers, but just based on my own experience and every other employment attorney I have spoken to, I would estimate that less than 2% of the clients who pay these fees become actual clients of the firm.
I can’t operate in that manner. A full 75% of the terminated employees who call my office have no understanding of at-will employment. They may be aware of the term, but they still operate under the mistaken belief that even though the employer can fire the employee at any time, the reason for the termination must be legitimate. If I brought them in for a consultation, 75% of the time they’d be paying for an education on why the law of at-will employment prevents them from having a case. Instead, I send them to my website, “atwillinfo.com,” where they can learn that they don’t have a case at no charge.
The same is true of my defamation practice. Most clients know nothing about privileges, and want to sue because someone lied about them in a court document or to the police. I would be accepting $495 to educate them about privileges and tell them they have no case, so instead I created “whatisdefamation.com” where they can learn about privileges for free.
But I don’t avoid consultations in this way just because I am generally a nice guy. It is also true that . . .
2. Consultations make you a captive audience.
Don’t get me wrong here. I love talking with clients so long as we are having a productive conversation. But having paid the consultation fee, the client quite understandably wants to get their money’s worth. Although I was able to identify the issues and tell the client their best course of action in the first ten minutes, some will want to spend the next 50 minutes telling me the same facts over and over. I think the dynamic arises from the fact that the client feels they have been wronged like no other person, and feel that my reaction should have been to immediately call the Governor and reserve time with the Supreme Court. Since I simply told them that they have a strong case and how best to proceed (or worse, told them that they don’t have a viable case), they feel I haven’t fully comprehended the outrageous nature of what occurred.
When I first started my practice, I signed up with the the local bar association’s referral service. As a part of being on the referral panel, I agreed not to charge for the initial consultation. Unfortunately, the referral service would always tell callers, “the attorney can’t charge you for the first 30 minutes.” The clients heard this as, “they are required to talk to you for 30 minutes for free.” If I tried to cut off a client in less than 30 minutes, some would respond, “you have to talk to me for half an hour.” Potential clients will have the same sense of entitlement if you charge for a consultation.
3. Insisting on consultation fees will deprive you of cases.
Many attorneys (my self included) offer free telephone consultations. On an almost daily basis, clients call wanting to schedule an appointment, offering to pay for the meeting, and I have to twist their arm to avail themselves of the free telephone consultation. If a potential client calls wanting to discuss a matter with you, and you insist that they come in and pay to meet with you, even if they do schedule an appointment, you can bet they will keep calling other attorneys. I’ve told the story here before of the client who called my office and made an appointment to meet with me in about two hours. As soon as we hung up, he called and again launched into his story, thinking he was talking to a different law firm. When I asked him why he was still calling attorneys when we had an appointment in just two hours, he said he was hoping to find someone who could meet with him sooner. If you insist on meeting with a potential client, and another attorney (like me) agrees to talk to them for free, that attorney might discover a potentially valuable case, and sign up the client. You must decide if the money you can make from consultation fees is sufficient to offset all the money you will lose from the cases you did not get.
At one point in my practice I tried a compromise approach. Since so many consultations don’t result in cases, either because the case lacks merit or it is just not a case I would want to pursue, free face-to-face consultations were just too expensive in terms of lost time. The compromise I tried was to charge a reduced fee of $100 for a half-hour consultation. That at least offset the lost time, while hopefully not driving away potential clients with good cases. But this approach had the same problems as a full priced consultation, and a few of its own. A half hour is not a lot of time, so what do you do when the half hour is up and the client is still talking about the drive to the office? Even for $100, the client won’t be happy when you stand up and guide them to the door, if they feel that they have not had the opportunity to fully apprise you of the facts.
4. Keeping time open for an in-person consultation can be very costly.
Let’s say you schedule a one-hour consultation at 1:00 p.m. When do you stop taking calls to make sure you will be available for the 1:00 meeting? Let’s make it 30 minutes just to be safe. We’re not doctors, after all; we want to be punctual. But remember item 3. Any calls you don’t take during those 30 minutes are going to other attorneys. Thus you are sacrificing potential cases for a scheduled meeting with a client who might not even show up.
OK, forget the 30 minute window. Go ahead and take the call that comes in at 12:45, and just make an apology right up front that you might have to cut the call short because you have an appointment at 1:00. Clients are typically cool with that, but when you do have to cut the call short, that means that potentially great client you had on the phone is going to be calling other attorneys while you handle the consultation.
Another failed experiment I tried was charging a “no-show fee.” When my assistant would book the appointment, she would explain that the consultation fee would be $495, and that there would be a fee of $95 if the client failed to appear. They could avoid the fee if the called at least 24 hours in advance. They had to pay the $95 fee right then with a credit card, and it would be credited toward the $495 fee when they showed up for the consultation.
Very few clients balked at this arrangement. They wanted the consultation, and fully intended to show up, so why not pay a little of the fee in advance? It was actually a pretty good screening process. If they did balk, then that was a good indication that they were not likely to appear. But the process was so annoying and time-consuming for my assistant. She’d have to get all the credit card information and run the charge to make sure it went through. And then probably half of the appointments would cancel, for the very reason already set forth above. They were happy to have an appointment lined up, and didn’t have a problem paying for it, but that did not stop them from calling other attorneys and picking their brains. From that process, they would at some point feel like they had all the information they needed (or had signed up with another firm), and thus no longer need to meet with us. They’d would call and cancel their appointments, and my assistant would have to take the time to process a credit card refund. And since it can take a couple of days for the credit card company to issue the refund, she’d get calls asking why the refund hadn’t appeared. I also worried that someone would get angry that they had to pay $95 for nothing when they failed to appear, even though they had agreed to the arrangement, or would go crazy when the charge appeared on their bill from an entity they no longer recognized. I ultimately decided it just wasn’t worth it.
5. Charging only for necessary consultations is usually the best approach.
If the situation requires a consultation, as with a case where you need to review documents in order to reach a conclusion, then charging for a consultation is entirely appropriate.
The bottom line for me is not to charge for consultations, unless: (1) the consultation is the legal work, such as reviewing a severance agreement; (2) I have to meet with the client and review documents in order to tell them the best way to proceed with a case; or (3) the client rejects a telephone consultation and insists on a face-to-face meeting. In the latter case, here is the speech I give to avoid any confusion. I’ll use a defamation case as an example;
“Most of the time clients feel that they have a very strong case, but the speech in question ends up being privileged. There are a number of public policies that keep certain types of speech from being defamatory, even if the statements are false. If you talk to me on the phone, there is no charge, and most of the time I can tell you whether it is a viable case we can handle. If it is, then I will meet with you at no charge. If you want to meet with me in person before that determination has been made, then I’ll have to charge you a consultation fee of $495, which must be paid before we meet. Wouldn’t you rather spend a few moments with me on the phone, so I can at least determine if the statements in question were protected?”
As you can imagine, most of the time they relent and agree to first have the free telephone consultation. Sometimes, however, the reason the client insists on a face-to-face meeting instead of a telephone consultation is because she has already talked to a number of attorneys on the phone, and they have all refused to take her case. She is convinced that if she could just meet with an attorney in person and show them the documents, they would see the merits of the case. In those situations, when I join the line of attorneys telling her she has no case, the speech prevents any ill will because she was told up front that there are often problems with the case.
The Two-Attorney Consultation.
This is a brilliant idea I came up with, if I do say so myself, that I have never heard of or seen with anyone else. It provides a fantastic service to potential clients.
Most of the contract attorneys I use have their own practices, and specialize in one of my firm’s practice areas, such as defamation, wrongful termination or HOA law. All are eminently qualified to handle breach of contract cases as well. Just so you know, none of the contract attorneys I use are recent law school graduates. Most are big firm escapees with a tremendous amount of experience, who are still in the process of building their own practices and like the stability of the contract work I can provide.
So let’s say I get a call from a homeowner who wants to sue their HOA for failing to make repairs. That’s the sort of situation where I need to charge for a consultation, because I’ll need to take the time to review the CC&Rs and other governing documents, to determine if the facts will support a claim.
I explain to the client that I would like to have a very good attorney from another firm sit in on the consultation, both so that we can offer different perspectives, and so that in the event I decide not to take the case, the other attorney might be interested. The potential clients always approve this arrangement, thrilled by the idea that they will be meeting with two attorneys for the price of one and only having to tell their story once.
Because I have the luxury of being so selective in the cases I decide to take, this greatly increases the odds that the client will gain representation. What do I gain? Remember my aversion to being a captive audience? If upon the presentation of the facts, both of us tell the client they have no case, that seems to squelch most arguments.
On the other hand, if I take the case, then the contract attorney who will be assisting me with the case was there from moment one, and already knows the facts. If I turn down the case and the contract attorney takes it, then we proceed under our usual referral fee arrangement.
You do you. I imagine there some practice areas where there is no reason to turn down a case. For example, an attorney handling Chapter 7 bankruptcies probably tells some clients that their circumstances do not warrant bankruptcy, but likely takes most of the cases. I can see where that might require and justify consultations with all the clients, to review financial documents and such. But short of that sort of situation, I think you and the potential clients are better served if you can do an initial screening by phone.