LexisNexis research reveals fixed fees to be a sign of entrepreneurial lawyers

By Sascia Elliott In Legal News

Small legal firms offering fixed fees are investing more in processes, technology and marketing in order to “cement a better client relationship from the start”, new research by LexisNexis has found.

The views of 112 lawyers in firms consisting of up to 20 fee earners and 108 clients were collected in The Bellwether Report: A Question of Value, which followed on from the main Bellwether Report, which was published in May of 2016.

The research found that 43% of providers saw fixed fees as an opportunity – more so than through mediation, commoditisation, offering online legal services or ABS.

Smaller legal businesses are “more likely to have a client service policy and be using CRM software,” the report asserted. Findings also suggested that non-fee-earning business experts from outside the legal profession were more commonplace in smaller, less conventional businesses.

However, the report also found that less than a quarter of firms confirmed that they had made a deliberate shift towards fixed fees in the last 12 months. Those who were doing so considered themselves to be “the most forward-looking” and entrepreneurial, with a progressive, open-minded and customer-centric approach.

On average, firms embracing fixed fees were younger, growing businesses with high client conversion and retention rates. Almost 70% of clients on fixed fees said they would recommend their lawyer, in contrast to just 45% of those on charging out hourly rates.

According to LexisNexis, 92% of clients paying a fixed fee for their services ended up paying either what they expected or less. This is in stark contrast to the 63% of those on hourly fees paid more than expected.

According to the report:

“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.”

An important caveat contained within the report was that lawyers should not think that fixed fees could be interpreted as an excuse for lower service levels. In response to this, LexisNexis asserts:

“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.”

 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 layers 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.”

Lawyers’ service not as good as they think
Another startling statistic from the Bellwether report suggests that despite three-quarters of lawyers believing that they deliver “excellent” or “very good” service levels, less than a third of their clients agree.

LexisNexis warns that lowering quality and lowering fees simultaneously is counterproductive in the effort to improve value and customer service levels. Often because clients “felt those fees were too high to begin with”.

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