The Wal-Mart Model: Trendy for Fashion, Why Not for Law?
Mike Sherman of the relatively new blog Law for Profit posts on the easiest way to a million dollars. Drawing on the "ubiquitous" Seth Godin, Sherman writes that "it’s easier to make a million dollars selling a $10,000 service to 100 people than it is to make a one dollar profit selling to a million people." And Sherman argues that this principle should inform lawyers' pricing strategy. He writes:
I know a divorce lawyer who has been practicing 30 years (twice as long as I have) and whose technical skills are very well respected in his community. However, he takes the Wal Mart approach - low fees, high volume. I have often been opposite him in cases where, despite my having half his experience, I made literally two to three times the fee he did in the case. When he and I talk about this he essentially admits he is afraid to raise his fees. He thinks he will lose business. He doesn’t realize that would be a good thing (despite my repeatedly telling him so). He could double his fees and even if he lost half the volume (which he wouldn’t because of his reputation) he’d make more money, work less and be able to deliver a higher level of service to his clients. That’s a win all around.
I've seen this model recommended by consultants, and of course, it makes eminent sense. And yet, as lawyers are encouraged to move away from Wal-Mart volume practices, other industries are embracing them. For example, one major trend in the fashion industry, as described in this article,
'Sex and the City' star sells cheap chic, is "cheap chic," where famous celebrities like Sarah Jessica Parker, Madonna or even basketball superstar Stephon Marbury lend their names to bargain basement-priced attire and athletic shoes. Many of these products are carried by stores like Steve & Barry's or H&M, which sell bargain-priced fashion.
Wal-Mart has achieved its success because some people love bargains, but even more have no choice but to seek out bargains. In law, that's equally true: Some clients will always need the Wal-Mart version of legal services. I'm not saying that you have to be the lawyer who provides them, but if the legal profession doesn't offer some version of affordable legal service, the integrity of our entire system suffers. At the same time, because there's a demand for cheap legal service, it seems that there ought to be a way to fill that niche and still profit. Wal-Mart is doing it, as is the fashion industry. Will lawyers find a way to do the same?
Posted by Carolyn Elefant on June 27, 2007 at 07:23 PM | Permalink
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