International Law

?I Don?t Care What You Charge; Whatever It Is, It?s 15% Too Much?

Today we got an inquiry (through a referral from their New York lawyers, actually) from one of the peculiar breed of corporate clients who has demanded a 15% across-the-board discount.

Problem is, this new client hasn’t asked for our normal fee structure. Without knowing our rates, fee structure alternatives (such as fixed pricing), general staffing habits (i.e., do we “gang-bang” the client with a bunch of lawyers, or are we generally pretty lean?), the client already knows our prices are too high and that a 15% discount is what ought to be granted by our firm.

Over more than a decade in Korea I’ve run across this kind of client from time to time. Usually, they are bad clients who bully with the promise (undelivered, in almost all cases) of future volumes of work. Or they think their brand name is so awesome that I get some kind of value out of association with their awesome company. In respect of this latter point, they’re onto something—hey, how about a trademark license agreement, so I can use your logo on my “representative clients” list?

The last time was a large computer systems-integration firm with a strong global brand, the kind of client with whom I’d like to work, actually. I like computers, know their industry pretty well, and thought I’d deliver good value. But I refused the discount in the end, suggesting instead that we work on a fixed-price basis for specific projects—if the fixed price was acceptable to them, they could hire us knowing exactly what the cost (and value) would be. Isn’t that better than a 15% discount on an untold number of hours?

Unfortunately, the client’s contact attorney was a relatively junior corporate counsel in a branch office, and that meant she had no discretion to do anything other than robotically repeat her department’s “But you must give us a 15% discount” demand. Plus she had no authority to pass me along to a more senior counsel who could make a value-based decision.

The idiotic “across-the-board 15%” demand merely promotes gamesmanship, posturing, and an unhealthy confrontational attitude—right from the outset of the relationship between the law firm and the client. If you think I’m a crook, why are you hiring me? And the solution, for some law firms (especially many Korean firms, for whom the request for “lean staffing” is laugh-out-loud funny), is easy: You want me to cut the rate? Fine, choke on these hours, cheapskate!

Or, Sure, you can have a 15% discount. Let me mark up the rate 25% first.

Life is too short for that kind of nonsense. It presumes, and encourages dishonesty on the part of the lawyer. And I’m fundamentally an honest guy. Meanwhile, I’ve got other client relationships which have gone as long as my time here in Korea—over 10 years. For one of those dear, cherished clients (a top global brand name which knocks everyone’s socks off), I haven’t raised my rate for six years—not because they demand blood from the turnip, but because we are in a deep and (hopefully mutually) satisfying partnership together.

By the way, Discount Demanders, the client I’ve just described now pays exactly 50% less for my time than new clients (yes, our partnership has noticed this discrepancy and complained to me about it). But I love the client: They don’t treat me like an anonymous, disposable vendor, and I treat them like family.

So, what to do about this new potential client? Well, although I am ashamed to say this—I am going to accept the demand for discount, do this initial bit of work, and then evaluate whether it’s worthwhile. The referring party says that “time is of the essence” and advice is necessary tomorrow. This makes me reckon if I were to refuse, my referral source—a friend from the IBA whom I wouldn’t want to put in a jam—would be disadvantaged for having made the referral. And I value his friendship and professional reputation enough not to want that.

But I’m not all that optimistic about the new client.

Dear Reader: As this is a topic of interest to lawyers here in Korea, to clients here and abroad, and especially to the new crop of young lawyers-to-be, I’d love it if you’d leave a comment below. The discussion would do us all some good.

Full post as published by Korea Law Blog on April 08, 2008 (boomark / email).