Spring clean your client and prospect list

In a down economy is it a good practice to fire bad clients?

For the attorney or business person that is looking to use this current environment as an opportunity rather than a curse I say, absolutely!

In any environment you have to make choices. You have time, resources, and money allocated. I have been working with a lot of clients who are being asked for significant discounts on their bill rate. Of course, those clients will be more than happy to pay their current rate when the economy turns positive again…right?

Are there prospective clients that simply are not going to come to fruition? A lawyer or firm may have pumped out lots of proposals, answered RFP’s and you haven’t heard back.

I am firm believer in holding on to good clients. Your definition of good will vary. Mine is one that we have mutual respect, they look at what I do as an investment and not a cost, and one that pays when they say they will pay. Simple definition and one that you can consider a 3 legged stool. If they don’t have one, the other two will fall.

If your service has value that doesn’t mean that you won’t be asked for a discount. These are tough times and that is a decision that you will have to make. It is also a decision that you will own for a VERY long time. It is a decision that will not only affect your rate with that client, but since there are few secrets, be prepared to have to stand by that rate for others. A study was done by Gartner a few years back that for every 10% of discounting, that an organization loses 33%. Those dollars being discounted are pure profit dollars.

Now may be a good time to have these conversations with clients. Asking business questions, developing success metrics tied to value. If 85% of business comes from existing clients that seems a pretty good place to start. Setting up mutually agreed upon metrics by which you and they measure the investment is like stacking the deck in your favor when they come calling wanting to trim rates. Make yourself invaluable or give yourself a measure by which you decide if this client is in fact worth it to you. Mutual respect.

Existing clients ask yourself:

Is this a rate that I can live with?

Am I buying the business?

What are the clients expectations?

How much time is spent managing the clients emotions?

Do I respect them and do they respect me?

Am I/ or is my firm having to wait for payment past our agreed upon schedule continuously? How much time and resources am I committing to this?

Am I the best counsel for my clients needs? (Am I taking this client on effectively when my real niche of practice is something else?)

Are there other issues that I can be assisting them with across other verticals and practice area?

Prospective clients are a different reality. A lot of lawyers and firms commit a lot of time, effort, and resources to the sunshine pump. Keep pumping because hope springs eternal. When in fact after all of this commitment you realize that you have a septic pump. No one wants to clean out that pipeline and fill it back up with new prospects. So you follow up, call, email, text message, sit outside their building and bang it out on jungle drums. Still nothing. Meanwhile, who has the power, and when will they start to use it?

Take some time and put together a list of all prospective clients that you have sent some form of proposal to that is more than 30 days old.

Send a letter effectively pulling that proposal off the table. A lot may have happened to them and to you over a period of time. Circumstances change. In the letter, explain that you would like to pull the proposal off the table and have the opportunity to meet with them and discuss their needs in more detail. Maybe there were areas of value that we not covered before or you simply did not ask the business questions to determine value. If they were shopping for price do you want to play?

One of two things will happen. They will not respond in which case how good of a prospect were they? They will respond and provide you an opportunity to reengage the process, maybe leverage you and your firms offerings more effectively.

This shouldn’t be rude. You are simply establishing mutual respect in the beginning of a working relationship, or identifying if you are simply a commodity that has little to no value to them but a high cost. Better to know that up front.

Questions for prospective clients:

Do I fully understand their environment and can I provide the best service to them?

Do they see the value in my services?

How will success be measured in this business relationship?

Is this measurement mutually agreed upon?

Is this business worth winning?

Is this an opportunity that I can/ should refer to another?

Why are they looking for (new) representation?

Do they fit my target market?

Is my bill rate in their range? If they are used to paying workers comp rates and you are billing $500 + an hour don’t waste your time.

If my main contact leaves, do I have other contacts that are strong within the organization?

You may end up with few customers, but they more than likely will be better ones. You will end up with fewer prospects, but they will be more qualified opportunities. Just like spring cleaning your house gives you more space, spring cleaning your clients or prospects will give you more time. More time to develop or manage your customer base, take in your kids ballgame, dinner with your spouse…

According to my watch the time is now…

Written by Andrew Wilcox, Andrew@Wilcox-legal.com, 850-893-8984