When it comes to fees George Beaton of Beaton Capital urges firms to recognise clients' shifting mindset away from pure price.
Video transcript below:
Reporter: Approaching the subject of fees is a challenge for many firms. According to George Beaton of Beaton Capital there has been a shift that firms need to recognise. Customers no longer think in terms of price but value.
Dr. George Beaton, Partner, Beaton Capital
Dr. George Beaton: When clients view your firm or you as a practitioner and what value you are going to provide to them, they don’t think price, they think value and value isn’t the same as price. Price is a component of value. Our research and we have been at this since 1994-95, so 20 years we have been at it, has incontrovertibly showed that when you deconstruct what value means to a corporate client of a law firm, there are three components.
First of all is what I am going to get, what business outcomes, what service levels, what care and attention or what piece of mind am I going to get from you. So there is both hard things like results and soft things like care and attention and feeling comfortable that you are looking after this, I have given the problem to you, so I can go home and sleep at night.
Secondly there is what are you going to charge me in the trade off, what I am going to get, what am I going to pay. But what we know in all professional services, not just law but we’ve researched it most in the law is there is a third mediating factor in all this and it’s what we call cost consciousness.
Reporter: And according to Beaton it’s cost consciousness that many firms are failing to acknowledge.
Dr. George Beaton: And when you look at the portion of these three things, what am I going to get, the quality, what am I going to pay, the price and what role does cost consciousness play, the proportions are roughly 40:20:40, that’s 40 as to the benefits and the quality, 20 as to the price level and 40% in a weight sense to cost consciousness. Now you know when clients of ours which are the law firms see this, they say that’s just not true. We say well hang on, can we just look at the evidence of this and can we look at the evidence in two ways, what does our research show, because our research comes from your clients, it’s not our theory, it’s what they are telling us that we have now reduced to this understanding, it’s been like this for a very long time, that’s a repeated repeated repeated.