How to Beat Cheap: Five Ways to Successfully Compete Against Low-Cost Legal Providers

This article was originally written by Daniel Decker for our client exclusive Spotlight Quarterly publication in the April 2017 Edition. Daniel is the co-founder of Spotlight Branding.

The legal industry is highly competitive and becoming more so every day- you don’t need me to tell you that. There are more lawyers practicing than ever before, and meanwhile the popularity of free or dirt-cheap online services like LegalZoom, along with the emergence of platforms like Avvo Advisor which connect consumers with lawyers willing to work for low flat rates, there’s tremendous pressure to lower prices and conform to the demands of the market.

If you’re hoping to build a profitable, sustainable practice that provides a great living for yourself and your family, this is obviously a cause for concern. But here’s the good news: there’s an opportunity created by these market forces that you can exploit. You just have to do things differently than most of the other solo/small firms out there who are responding to these market forces by cutting rates, offering poor client-service, cutting costs, and generally racing for the bottom.

Prospering in these conditions requires a mindset shift. It requires you to accept the fact that there are many consumers and businesses out there – perhaps even a majority – who will choose the low-cost provider every time. They’ll get it done online if they can. If they have to hire a lawyer, they’ll hire the cheapest lawyer they can possibly find. Don’t chase those clients. You don’t have to. Instead, focus your marketing efforts on a market segment who can and will pay premium rates because they recognize the superior value you are providing.

In every industry, there are hugely profitable businesses that charge premium rates and still win business despite the availability of free alternatives. Here’s my favorite example: think about the most readily-available commodity we all enjoy – breathable air. It keeps us alive, and it’s free! Now Google “oxygen bars.” You’ll likely find several near you – establishments where you can easily pay $60 an hour to breathe pure oxygen, which offers no actual health benefits compared to “normal” air according to medical professionals. But yet, customers are lining up to pay for it, despite being literally surrounded by a free alternative. It’s an extreme example but I hope you can see the point: If an entire industry can thrive by selling air – readily available for free, you know, everywhere around us – at high prices, there’s no reason for you to panic when you hear about low-cost competitors. You just need a strategy to attract the right clientele – people who have the means to pay your rates and who see the value in doing so.

Here are five steps to make this happen:

Target the right market. The first step is shifting your mindset, as discussed above. Accept that many/most people out there are not good clients for you. Don’t target clients who can’t afford to pay you premium rates. If that means shifting your focus and maybe getting into some new practice areas, so be it. It’s much harder to build a profitable business when you have a low-profit margin. Target clients who can afford premium rates and provide sufficient value to justify those rates.

Narrow your focus and become the expert. The key to differentiating yourself from the low-cost options – at the same time making yourself more attractive to the premium clients you’re targeting – is to narrow your focus and build a brand as a leading expert in that area. I strongly recommend focusing on a single practice area or a group of related practice areas. Then, work to build your reputation as the “go-to” guy or gal in your market for that specific area of practice. Publish articles and blog entries. Launch a podcast. Speak at conferences, seminars, industry functions. Look for opportunities to get on the radio, on TV, in the newspaper. Write a book.

Build – and cultivate – your referral network. Referrals are one of the very best ways to fill your pipeline with prospective clients who are willing and able to pay premium rates. When you build a network of referral sources who trust your expertise, believe in your work, and understand the value you provide, they act as the best kind of gatekeeper. They’ll send you good clients who are happy to pay your rates, and they won’t waste your time with clients who aren’t a good fit. A major focus of your marketing should be maintaining relationships with your referral network and continually reminding them of what you do, why they can trust you, and what makes a good referral.

Demonstrate the “hidden cost” of low-cost alternatives. It’s important to show prospective clients that there are significant hidden costs that come along with low-cost alternatives. Less desirable outcomes, poor service, etc. For example, LegalZoom will create a Will for $69, so it’s your job to communicate the hidden cost of that decision. “Is it really worth saving $1200 now when you’re literally putting your family’s entire future at risk in the process?” Choosing the cheap provider is generally not the best decision and will often be far more costly in the long run. Make that clear to prospective clients.

Eliminate the competition. Not by taking action against them, but by transforming yourself. If there’s too much competition in your market segment, create a new segment for yourself. If you can accomplish this, you’re selling in a vacuum – there’s nobody your potential clients can price-shop you against. This requires innovation and an open mind. How can you enhance, combine, or structure your services to create something that nobody else offers? If you haven’t thought about this before, it’s worth blocking off a few hours to consider. What resources do you have… what relationships can you leverage… what unique value can you create… how can you mix, match, and restructure your current offerings? What can you do to place yourself in a “category of one” and make the competition irrelevant because nobody else can offer what you offer?

If you’d like to learn more about how we help solo & small law firms grow their practice, schedule your FREE consultation with us HERE.

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