Melnichenko R.G. Legal and marketing bases of an establishment of the size of the lawyer fee // the Lawyer. № 7. 2005. Translator Najda N. V.
There is an old joke: on enthusiastic exclamation of the client: " Simply I do not know as well as to thank you, mister the lawyer?! ", - the lawyer, shrugged shoulders, has chilly answered: " Since finikiicy have invented money, it not a problem ". Actually the problem is, and at the lawyer. Having known independence in an estimation of the work, the lawyer (or other expert rendering legal services), should define cost of the services in view of many, frequently inconsistent circumstances. How to take into account the interests and interests of the client, what criterion of an estimation of work to select? On this delicate theme the lawyer from of Volgograd of R.G.Mel'nichenko expresses.
The price of service of the lawyer is the size of his fee. In conditions of the market she is formed under market laws and basically the contractual character based on a supply and demand has. Definition of cost of lawyer service depends on two factors. First, financial attitudes of the client and the lawyer should correspond to lawyer ethics, and, second, provide to the lawyer a basis of his financial well-being.
Let's consider the ethical rules produced and fixed during lawyer practice by which the lawyer is obliged to be guided at financial attitudes with the client.
Rule of the spent work. In a basis of the lawyer fee the spent work, instead of result lays. A subject of the contract between the lawyer and the principal is not the result (for example, the positive decision of court on business), and activity on granting a legal aid. The lawyer can be considered properly исполнившим the obligations if it has made all specified in the agreement with the client of action. Thus refusal of the principal of payment of services actually rendered to it is not supposed. For example, the client refuses to pay to the lawyer the fee, referring on that circumstance, that the court has completely given up in the claim for business in which the lawyer participated.
Pactum de quota litis. The lawyer is limited in the conclusion pactum de quota litis. The concept " pactum de quota litis " is meant as the agreement concluded between the lawyer and the client before removal of the final decision concerning an affair taking place in trial in which the client is one of the interested parties. Concluding agreements with similar conditions, the client undertakes in case of removal of the decision in his advantage to pay to the lawyer compensation as a sum of money or any other form. In the attorney the right of Russia inclusion of a similar condition in announcement with the client is limited. According to rules of lawyer ethics the lawyer should abstain from the conclusion of the agreement on the fee at which payment of compensation is put depending on the termination of an affair for the benefit of the principal. This rule is not distributed to receivership proceeding on which compensation can be defined proportionally to the price of the claim in case of successful end of an affair.
For example, with the client it is impossible to include the following condition in the agreement: " In case of purpose to the client of the punishment which have been not connected to imprisonment, the lawyer receives the premium at a rate of 50000 roubles. "
Freedom of definition of the size of the fee. In the attorney the right there are no top and bottom frameworks of the size of the lawyer fee. The fee of the lawyer is defined by the agreement of the parties and can take into account volume and complexity of work, duration of time necessary for its performance, experience and qualification of the lawyer, terms, a degree of promptness of performance of work and other circumstances. A unique important condition thus is the requirement about that the size of the fee of the lawyer was beforehand known to the client in full.
Interdiction of a concession of the monetary requirement to the client. The lawyer can not concede the right of the monetary requirement to the principal on the prisoner between them to the agreement to somebody. If by the general rule the creditor has the right to concede the requirement without the consent of the debtor under the financial obligation between the lawyer and the client it is forbidden.
For example, the client refuses to pay service already rendered by the lawyer. The lawyer can not "sell" this duty to the persons professionally engaged in return of duties. It should or forgive a duty to the client, or independently solve this problem.
Preliminary payment of the fee. The lawyer not only has the right, but also should aspire to reception of the fee by advance payment. It is connected to minimization of risk of refusal of the client from payment of the lawyer services rendered to it. In a case nomaking the client of preliminary payment the lawyer has the right to refuse the further participation in trial of an affair or from granting services to the client.
Restriction of assignment of a subject of dispute. To the lawyer it is forbidden any way to get property and the property rights being a subject of dispute in which the lawyer takes part as the person rendering a legal aid in personal interests.
For example, the lawyer participates in dispute concerning the real estate. Thus it can not, having taken advantage of becoming information known to it and the influence on the client to become the proprietor of this subject of dispute.
Exception will be here the case when the principal voluntary gives such right to the lawyer. This circumstance should be particularly specified in the agreement between the principal and the lawyer.
Interdiction of debt dependence on the client. The lawyer should not put itself in debt dependence on the principal. This position does not concern to the fee of the lawyer.
Interdiction of a pledge. The lawyer is forbidden to accept from the principal any property in maintenance of the agreement on the fee.
For example, the client at the moment of the reference has no a financial opportunity to pay service of the lawyer. It offers the lawyer in a pledge the apartment. The lawyer is obliged to refuse this way of maintenance of obligations.
The second aspect of definition of cost of lawyer service - marketing. A problem of pricing - one of most acute problems, facing to lawyers. Unfortunately, the prices for lawyer services are established today chaotically. For the same service different lawyers can request compensation which size will differ in some times. Lawyers intuitively define the financial strategy in relation to the client, and not always this choice is successful.
Let's define some basic purposes of financial strategy of the lawyer.
Recoupment of lawyer activity. The fee allows the lawyer to exist in the market of services. Overwhelming part of lawyers leaves corporation in connection with insufficiency of means for the maintenance in this community.
Support status. If the lawyer is not the known expert, the client should learn and understand his status. The price in this case acts as the tool of positioning of services, i.e. she gives to the lawyer the certain status in the market of legal services. Lawyer services are not always obvious and are usually consumed at the moment of their purchase. As they do not have physical qualities, clients tend to take services for granted or simply are at a loss in definition of their value. Actually the client frequently uses the price as the indicator of quality of service.
Elimination of undesirable clients or has put. The lawyer frequently uses the financial mechanism for refusal from improper to it has put. Appointing the client the price for the services, obviously not satisfying the client, the lawyer shifts on him burden of refusal of the further cooperation.
Deduction or capture of a share of the market of legal services. Using the price factor, the lawyer firm and the lawyer can advance the services in the market or keep the settled market from attempts of capture by his other legal firms.
During the activity the lawyer can establish the prices much below, than competitors, at a level of competitors, are higher than the price of competitors. The question is, it should use what strategy. This question rises not only in the beginning of activity of lawyer firm, but also at entry on a new segment of the market of legal services.
There is a set of approaches to formation moneys practice of lawyers. From the point of view of marketing the lawyer can use the following strategy of pricing on the services: strategy of the high prices, strategy of the average prices, strategy of the low prices, strategy ultralow , strategy of the target prices, strategy of constant prices, strategy of the varied prices, strategy of reduced prices, strategy of the prices concerning reflection in them qualities of services, strategy of the flexible prices, strategy of discounts from the prices, strategy of the discrimination prices, the mixed strategy.
This list is not exhaustive as various situations dictate various conditions of pricing.
Strategy of the high prices is applied concerning unsophisticated or solvent clients for whom at the reference to the lawyer are important not only quality of service, but also aspiration to confirm the image due to payment to the lawyer sometimes obviously overestimated fee. This strategy allows to maximize the income of the lawyer. However she has also the minuses. So, the unsophisticated client further can learn, that the same level of service of other lawyers cost less, or the lawyer can not achieve result expected from him and then break between the paid price of service and its quality will find a special acuteness for the client. Such client hardly once again will address to this lawyer, moreover, it can become a source of the negative information on the lawyer, that negatively will have an effect on image and will promote reduction of number of clients. Besides at the moment of the reference to the lawyer the client is in a special condition. Before it there is a problem demanding the immediate positive sanction (attraction to the criminal liability, receivership proceeding etc.). At this moment the client is ready to pay obviously overestimated fee. However after the sanction of a situation the client leaves this condition and starts to suspect, that the bargain with the lawyer was for him enslaving. From here a plenty of claims of clients to the former lawyers concerning the overestimated size of their services.
Strategy of the high prices yields good results, if:
The high price supports the high quality status of service;
High steady demand is observed on the part of the big number of clients, insensitive to the price (basically it is solvent clients);
The difference between the high and normal price is insignificant;
The competition is limited (for example, in small settlements, where only one or several lawyers);
Demand for services is higher than the offer.
Than more than set forth above attributes take place, this strategy especially will be effective.
Strategy of the average prices consists in orientation on среднерыночные the prices. Complexity of application of this strategy consists that any official quotations of rates do not exist also concept " the middle price " rather conditionally. For use of this strategy it is necessary to find out average cost of lawyer services in region. Advantages of this strategy is, that she is less subject to risks of losses of incomes in the future in comparison with strategy of the high prices. Besides if the client beforehand assumes the average price for the services given by the lawyer, it will not frighten off it because of fear of the compelled refusal for cooperation with the lawyer because of insufficiency of the finance.
To lacks of this strategy it is possible to attribute short-reception of the certain profit on a concrete interval of time. That is the client presumed to itself the big cost of lawyer services. To lacks of this strategy it is possible to attribute and its some unification which is not peculiar lawyer activity.
Strategy of the low prices is reduced to the offer of qualitative services on a little bit underestimated in comparison with the middle values to rates, however sufficient that not only to cover cost of the resources spent by the lawyer on conducting of an affair but also to provide to it the certain profit. Such policy in long-term prospect is effective as the choice of the average client is defined just by these in two parameters - quality and the price. At identical quality of offered services wins the one who sells more cheaply.
Strategy of the low prices can be used by lawyer firms with the purpose of penetration on the new market , increases of the share in the local, already mastered market of legal services, attraction of clients.
Strategy of the ultralow prices can be applied by the lawyer at a stage "раскрутки" the firm or at a gain of a new segment of the market (for example, the market of legal services of the next area) with the purpose of mass attraction of clients. In this case the lawyer works under the prices which can be lower than expenses for conducting an affair. Strategy is effective in the short-term period of time.
Strategy of the target prices (or the target profit, the target income) pursues the purpose the certain size of the profit: for example, high profit within any concrete year, satisfactory volume arrived for a number of years. At realization of the given strategy can vary quantity of rendered services and the prices, but the planned size of the profit should be provided.
Strategy of constant prices consists in aspiration of the lawyer to establish and keep during long time constant prices for the services. In case of growth of costs the lawyer instead of revision of the prices aside increases changes structure of services, reduces time for rendering of services etc. thus it is supposed, that the client prefers such changes to a rise in prices. The given strategy can be applied to separate groups of clients which are extremely sensitive to change of the prices. She will be most effective only in the advanced market of legal services.
Sensitivity of clients a price level is defined by such factors, as uniqueness of service, expenses for switching for services of other lawyer, затрудненность comparisons, an estimation of quality through the price, dearness of service, a measure of "validity" of the price, the importance of an end result.
Strategy of the varied prices consists in change by the lawyer of the price of service as soon as there was a change of costs and demand. She is applicable only on advanced, the territorial markets of legal services. To use this strategy, the lawyer should hold a hand on pulse of changes in the market, steadfastly watch competitors.
Strategy of reduced prices consists that on the most "running" services the lawyer establishes the prices of below normal market price. The purpose of such strategy - attraction of clients in hope, that after consumption of any service they will get other services. However it is necessary to mean, that this strategy can appear improper on long time as clients begin to perceive the underestimated prices as normal.
Strategy of the prices concerning reflection in them of quality of services consists that the lawyer at definition of the price of service always estimates its quality. High quality in most cases means the high price. The level of the price can form base of an estimation of quality of offered service. The price is quite often used as means of allocation of high quality service from services of usual quality. The high price for services can serve as the tool of creation of reputation of the lawyer and also to be a source of reception of the additional income.
Strategy of the flexible prices is reduced to that the lawyer changes the prices for the services depending on ability of the client to bargain (from his consumer force). Clients who can bargain, pay lower prices, than those who is not able to do it. Such clients, as a rule, are well informed on the prices for services at other lawyers. This strategy is applied on the territorial markets.
Strategy of discounts consists that at the certain market situations the lawyer for strengthening position in the market uses various discounts from the usual prices. It is possible to allocate some kinds of discounts:
Discounts from the price for purchase of a plenty of services are established with the purpose of preservation of the greatest possible volume of services given by the lawyer. For example, cost of drawing up of the statement of claim in a package deal on conducting a civil case in court will be much lower, than a single spelling of this legal document;
Bonus discounts are given constant clients. The lawyer is familiar with behaviour of the constant client on the previous affairs. It is very important from a position of an establishment of the price for lawyer service in connection with that the basic time and emotional expenses of the lawyer falls to dialogue with the client (usual duration and comfort of conversation with the client, sense of duty of the client etc.). If the lawyer is sure in absence of problems with the constant client, it can lower for the last cost of the services;
Special discounts are done for clients in whom the lawyer is especially interested. For example, to the lawyer "loud" business is offered to a message. In this case participation of the lawyer in process will be to it good advertising. For this reason it is expedient to discount to the client with the purpose to receive business; Preferential discounts are established with a view of stimulation of selling of the certain kinds of lawyer services.
So, the given strategy of discounts from the prices can be applied both to increase of a share of the market, and for its deduction.
Strategy of the discrimination prices consist that the lawyer takes into account not distinctions in costs, and distinctions in consumers, services, a place, in time etc. As a rule, the sizes of costs for execution of the assignment of the client for the lawyer are insignificant. The basic sum of the fee is net profit of the lawyer. Because of this part of the fee also it is necessary to apply strategy of the discrimination prices.
The establishment of the discrimination prices is carried out in the following forms:
Establishment of the prices for services in view of a financial condition of the client. For the lawyer it is important to establish such cost of the service which the concrete client can financle afford. That is the lawyer should estimate a financial condition of the client. If the lawyer will overestimate the price of the service, the client will refuse it because of impossibility of payment. In case of a undercharge the client also can refuse service, having counted the lawyer "cheap". There are some strategy of definition of "cost" of the client: appearance, a place of work, structure of family, essence of an affair of the client;
Establishment of the prices for recommended clients. There is enough frequently to the lawyer clients under the recommendation of other former clients of the lawyer address. In this case it is expedient to overestimate cost of services as a minimum for a quarter in comparison with cost of already rendered services to initial clients Establishment of the prices in view of variants of rendering of services. Exist enough elements during rendering the lawyer help. It concerns to lawyer investigation (the reference with lawyer inquiries, departure a place of incident etc.). As a rule, these actions do not concern directly to legal activity, but borrow(occupy) from the lawyer a lot of time for their fulfilment. If the client incurs a duty to carry inquiries of the lawyer, to carry out photographing, to talk to witnesses, cost of lawyer services will be one. If all this will be carried out by the lawyer, cost of services should be, as a minimum, twice above;
Establishment of the prices in view of a site. For example, rendering of services in-home, i.e. departure the nontransportable client. The lawyer pawns in the price of service the factor of remoteness of a place of rendering of service from the location of the office. Naturally, cost of litigation in area of a presence of lawyer office will be lower, than the process which is taking place in remote area or in general in the other city.
The mixed strategy include those or other of set forth above strategy. Their huge set as depending on the usual situation the lawyer can apply a combination of various price strategy. And it is necessary to note, that the mixed strategy as seldom there are perfect conditions for realization of any one are in most cases applied.
In the market of legal services of the advanced countries the price is not strongly dominant factor of competitive struggle. Much more important for potential clients at a choice of the legal partner appear a degree of trust to the lawyer and a guarantee of qualitative, confidential and duly service.
There are different ways of formation of cost of services of lawyers: work for interest from commercial benefit of the client, hourly payment and the fixed payment for the executed work.
Percent from an affair. At the given way of pricing lawyers receive the interest determined by the contract from commercial benefit of the client. Commercial benefit here is understood as volume of money resources which is received by the client in case of success in the legal conflict.
At first sight such system the most fair: lawyers receive the fee in case of success, i.e. for concrete result - extraction by the client of commercial benefit. However both clients, and lawyers face with the certain problems.
The problem of lawyers consists that all work should be focused on achievement of result. In case of failure on any of stages of realization of the project lawyers can remain without the fee even if this failure has taken place not on their fault. Problem of clients that, as a rule, at the given way of pricing there is a tendency to overestimate of cost of legal services. Besides frequently at the client the psychology " the outstanding service works is possible ".
In a result we have the following picture: clients are ready to give let the most part of the commercial benefit, but only on the fact of its reception, and lawyers are ready to risk for the sake of higher profit.
Such form of payment is applied, as a rule, in brave affairs. It first of all tax, debt and receivership proceeding. More often it not typical, but specific projects. The Russian market in price aspect неструктурирован and изменчив, the rate of interest changes from 5 up to 45 %. To the major factors determining a level of the rate, it is possible to attribute(relate):
Complexity of an affair (direct dependence);
The size of dispute (inverse relationship).
The rate on large tax disputes makes 10-15 % of economic benefit. On the disputes connected to penalties, interests and losses, the rate on the average above also reaches(achieves) 25 %. In the market of problem actives (disputes with bankrupts etc.) the rate changes about 45 %. Quite clearly, that the level of the rate of interest grows depending on a degree of riskiness of an affair.
Key making elements of structure of cost are the advance payment, or advance payment, the budget of the project and the fee of success. At a percentage kind pricing there are some forms of payment:
1) All payment of services is carried out on the fact of end of an affair, and a covering of the budget of the project come on the executor. In this case the fee of success the highest;
2) Under the contract advance payment is paid, and the budget of the project shares half-and-half between the client and the executor;
3) Under the contract advance payment is paid (on the average 25-30 % of the sum of the contract), the client pays also the budget of the project. At such variant the sum the fee of success the least.
As we already marked, questions of the fee of success are settled by lawyer ethics. Hourly payment. The essence of her is rather simple: the hour rate of work of the lawyer, total of hours is stipulated and upon termination of the project to the client the account in which all time spent by the adviser on the project is in detail painted is exposed. This form of payment has come to Russia from the west and gradually gets accustomed here though many clients still prefer to specify in the contract full cost of works or interest from the commercial benefit.
Hourly payment guarantees to the executor that all time spent for work, will be paid, but at the same time it loses an opportunity to receive superprofit in comparison with a way of pricing " interest from the profit ". The similar system is favourable to the client then when it precisely can supervise work of lawyers and is sure in their conscientiousness.
The hourly system of payment is applied, as a rule, in affairs. The hour rate rather strongly differs in the western and Russian companies: its size depends on qualification of the lawyer. As a rule, the client can not affect distribution of the operating time spent by different lawyers.
By results of researches, in conducting western companies the size of the hour rate varies from 90 dollars for the younger lawyer up to 450-600 dollars - for the partner; the business hour of the average expert costs 200 dollars.
In the western companies of the second echelon the size of the hour rate does not exceed 400 dollars. In the leading Russian companies lawyers take in one hour from 100 up to 250 dollars.
Offers from the companies under the hour rate of work of the expert are lower than 100 dollars are or a dumping aimed at deduction of the concrete client, or a signal about low quality of rendered services.
Payment for a legal product. It is the form of payment for the ready circuit, a legal product; differently is a price-work form of payment. The most simple and a bright example - drawing up by the lawyer of legal documents and legal consultation.
Cost of a ready product is usually defined as a result of a combination of several approaches. First, the approach - the volume of time spent for creation of a product - defines the cost price of a product. For example, cost of the statement of claim will be influenced with such circumstance, as presence at the lawyer of a pattern of the statement of claim for similar business. Second, the important role play a level of demand on the given product and presence of competitive offers; differently - market conditions. For example, drawing up of the complaint in the European court under human rights will cost more dearly, than drawing up of the cassation complaint because of absence of a competition in this market.
There are two cases when lawyers resort for payment for a ready legal product:
If there is a ready typical product which after some completion can be sold to the client (for example, base of typical contracts);
In a case if as a result of negotiations it is more favourable to parties(sides) to agree upon the fixed sum.
Legal products can be subdivided on "simple" and "complex. To "simple" typical services which appear by one technique concern and not strongly differ depending on the client (registration and licensing of legal persons, drawing up of sample contracts etc.). More "complex products it is what demand deeper study .
Independently among legal products legal circuits and decisions, for example, оптимизационные tax circuits cost. The more difficultly the legal product, the is less structured the market, the prices on which can differ in tens times.
User's service. In the market there are also various combinations of forms of payment. So, for example, user's service is a combination of hourly payment and payment for a legal product.
The client concludes with lawyer firm the contract on service, in the contract the monthly quantity of business hours of lawyers is underlined. Having signed the contract, the client receives a ready legal product. The average volume of "qualitative" user's service in the market makes 20-30 hours per month, and cost changes from 120 up to 200 dollars at one o'clock.
It is impossible to draw conclusions on the absolute superiority of one form of payment over another. Use of this or that variant is caused by customs of a business revolution and market conditions. The wide circulation in Russia payments under the circuit " interest from commercial benefit " speaks an abundance of brave has put and some more the not generated structure of the market. At the same time in the settled western markets of lawyer services the hourly payment reducing an opportunity of reception of superprofit, but providing stability of monetary streams is accepted.
Once again we shall emphasize the basic idea of strategy of pricing on services of the lawyer. Programs of pricing for services of the lawyer demand more creative and intuitive estimations, than the program of pricing for other products. In pricing lawyer services the differentiation of clients when different clients pay the different prices for the given service is frequently used. The approach from demand, than the approach from expenses is here too applied more intensively to achieve a maximum of the profit on the basis of uniqueness of character of lawyer service.
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