Last week saw the first of our half-hour fireside chats, covering why clients ask for discounts and what firms can do to avoid this. We were joined by Bethany Knoblauch, the Associate Director of Matter Planning at K&L Gates, Mark Medice of LawVision and our own Co-Founder Pieter van der Hoeven. We’ve put together a quick wrap up of some of the practical advice shared by our panelists on this difficult topic. For those wanting to continue the discussion, we will be hosting more webinars in coming months looking at avoiding write-offs and how to manage budgets successfully. Keep an eye on our social media for more information. A recording of the webinar can be found on our Vimeo page.
Training your personnel to manage discount discussions
In her role at K&L Gates, Bethany has to manage the firm’s approach to pricing strategies and accordingly the dreaded discounts. She had some tips to share on prepping your partners for the discount discussion:
- Be proactive – K&L Gates have focused on reaching out to clients, though not necessarily to engage in pricing discussions. It is a difficult time with much uncertainty, so making sure your clients know that you are there for them, and that you understand their challenges is essential
- Consider your options – Train your partners to understand that they don’t have to offer a discount on the spot. If a client asks, it is perfectly fine to say that you will have a think about how to best meet their requirements and come back to them. It gives you more time to think and avoids knee-jerk discounts.
- Offer regular reporting – K&L Gates uses tools like Clocktimizer to offer regular reporting to clients. This transparency reduces discount requests by keeping them in the loop and easily explaining the work your firm is doing.
- Reconsider how you segment clients – Bethany encourages her partners to think about how they group their clients. This could be by industry or by client profitability. These segments can better inform the type of discounts you would consider.
Changing the way we think about discounts
Offering discounts can be done in more ways than one. Mark and Bethany also shared their top tips for rethinking the discount:
- Embrace technology – Bethany noted two key ways technology can help the discount conversation. First by automating and reducing the cost of some work, to enable you to offer a reduced rate for an activity. Secondly, instead of offering a reduction on a specific timekeepers rate (which tends to be difficult to change at a later date) you can offer a blended rate. By using technology you can ensure that the profitability of that blended rate remains acceptable through timekeeper oversight.
- Know what your client values are – As Mark noted, a discount is a step away from ‘value’. Have a discussion about value with your client so you can understand what may be driving them to the discount discussion. We no longer consider time to be value, so understand what motivates your clients.
- Avoid long term discounts – For every discount you offer, try to ensure you are also receiving consideration. If liquidity is a problem for a client during the economic downturn, consider offering a rate reduction for a fixed time period. Bethany noted that sometimes K&L Gates will offer a very good client a (well-scoped) fixed fee at a loss, as it is considerably easier to get out of than a long term discount.
Finally, both Mark, Bethany and Pieter shared a key takeaway for firms moving forward. That is to be proactive rather than reactive. If you understand value for clients, you can avoid conversations about discounts with clients before they happen. Proactively recognising and pricing for client value will prevent unexpected conversations later.