Why are lawyers so expensive?

Some of us may think that a $500,000 sports car is very expensive, but we are not going to settle relying on our feet to walk from point A to B and avoid shopping for a vehicle just because of the pricey sports car.  Most of us don’t need to buy a high priced sports car to get to point B because there are many other affordable and practical options out there.  When we are shopping for vehicles, it is quite clear as to what we are getting with different brands and models with various price tags.  Generally speaking, we can get to point B by driving either an economy car or a sports car, but some of us may be willing to pay more for the image and the “vibe” which comes with driving a sports car.  

In fact, we constantly exercise our ability to assess values versus prices on most everything that we buy on a daily basis.  So, why is it when it comes to legal services, we would settle for the position that because lawyers are too expensive, we would give up entirely on having access to legal services?  Many business owners would take the attitude that unless they are in legal trouble and have no choice but to hire lawyers, they would just do any legal tasks themselves.  If they have to hire a lawyer, they will usually try to hire the cheapest lawyer that they can find. What is troublesome in this approach is that these businesses are putting themselves in tremendous disadvantage in the marketplace.  

By observing and studying consumers’ ability and behavior in assessing values and prices in their decisions in choosing how they purchase products and services, such as cars, handbags, vacation experiences, restaurants, and items for their businesses, it is clear to us that it is not because lawyers are expensive that cause business owners to avoid “buying” legal services.  The major contributors are:  

  1. consumers do not see the value that they are getting from the price tags that come with the legal services; and
  1. there are very limited options for legal services on the market for consumers to choose from.

Why has this happened?  Quite simply, lawyers are not good marketers, and they don’t work with good marketers.  In fact, most lawyers feel insulted by even associating the word “marketing” with their services.  Lawyers don’t really see why they have to make any efforts to articulate their values to their clients as their clients should have known how important they are to their clients and their clients’ businesses. The reality is that legal services have been operated and delivered pretty much the same in the last hundred years.  While other businesses have been self-studying their own processes and tried to improve efficiency and innovate, lawyers have retained their traditional approach and focused on charging by the number of hours worked.  Their excuses have always been that the services lawyers provide to their clients are unique and customized, so there is no process to be analyzed.  

The point of this discussion is not to shame or even blame lawyers.  However, until we look at law firms as real businesses and approach the legal industry like any other industries, we will not be able to design legal processes and services in a way that consumers can make knowledgeable decisions as to how to buy legal services.  If they cannot make that informed decision, they would rather live without it.    

Changing the fundamental views of legal services and processes will not occur overnight.  How fast it will change will all depend on the demand of consumers.  Consumers are not powerless in this process. They can take charge as to how legal services are being delivered and priced by following the steps below:

  1. Being educated on what legal services are all about and what type and level of legal services they need at each stage of their businesses

If lawyers are not good at articulating their services, then consumers would have to work harder to understand legal services and the value that different types of lawyers can bring to them and their businesses.  Think about how consumers understand the difference of values between an economy car versus a high priced sports car.  In legal services, consumers would have to dig deeper to understand the values and level of services provided by different types of lawyers and law firms.  Please see other articles that we have written which provide more detailed analysis and insight on this. (visit www.sowplatform.com)    

  1. Ask lawyers questions regarding legal pricing and deliverables and processes during the selection process of the right lawyers

Based on our years of observations as lawyers in various sizes of firms, we are surprised that business owners for some reason do not ask many questions in their initial meetings with their potential lawyers.  They ask more questions to their car dealers when shopping for cars than lawyers during selection of the legal services.  It is almost like they are afraid to ask any questions regarding the pricing, legal services processes and deliverables.  Most of the conversations during the meetings would be about the actual legal tasks and issues.  

The problem with not asking those important questions is that clients may walk away with the wrong expectations and assumptions, laying the foundation towards bad experiences working with their lawyers during the legal services process.    

Our platform has created a set of questions that a business owner should ask during the interview process of potential lawyers and law firms.  Please visit our website www.sowplatform.com to see the questions.    

  1. Be fair  

Many people think that so long as they can negotiate the hourly rate to the lowest price and are able to get the highest discount that they can get from their lawyers, they are getting the best deal for their legal services.  One important factor that they forget is that the negotiation of pricing occurs BEFORE the services are rendered or even performed.  It is not like a car that has already been manufactured and as soon as you negotiate the lowest price that you can get, you can just drive it away and pat yourself on your back.  In the case of legal services, once you push the price to the lowest cost, you are expecting lawyers to perform based on that price.  At the end, the one suffering from potential quality of services is the client.  

It is not about paying for the lowest price on legal services, but it is about paying a fair price and getting the right lawyer at the right price for the level of complexity of your matter.  It is not an easy task.  It takes actions and experiences in (a) and (b) described above to know that you are getting the right lawyer on the right matter with the fair price.  

While we are working on changing how legal services are being designed, delivered and priced, you, as a consumer of legal services, can play an important role in this process by understanding the importance of legal services to you and your business and following the steps described above in this article.  After all, being able to drive a vehicle going from point A to B is not just reserved for the ones who can pay for a high priced sports car. Likewise, being able to have access to legal services to give you advantage and fairness in the marketplace should not be reserved for only the ones who can afford $1,000+ per hour legal services.  

“I will build a motor car for the great multitude...constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise...so low in price that no man making a good salary will be unable to own one-and enjoy with his family the blessing of hours of pleasure in God's great open spaces.”

-- Henry Ford 6/6/1913

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