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Dissecting The Dangling Carrot Concept For a Firm’s Business Practice Regarding Initial Attorney Consultation Fees

May 31, 2018 7:00:00 AM / by Melissa Lewis

Initial-Consulting-Fees

There are numerous business practice decisions that a law firm must consider and implement when opening a legal practice.  One of these decisions has to deal with initial consultations. A big question to ask is whether to charge a fee for initial consultations.  There are several factors a law firm may look at to lead to a sound business practice decision in regards to initial consultations.

One factor to consider whether to charge a fee for initial consultations is the location of the law firm.  The location plays a big role in the attraction of a clientele. If the firm is in a rural location, charging a fee may be beneficial since the clientele may be limited. Alternatively, a free one-half hour initial consultation may be implemented with a fee charged for the remaining half hour if the consultation runs over the one-half hour.  Charging an initial consultation fee may generate income for the firm especially for new start-up firms. However, the downfall is that rural locations may have potential clients that cannot afford to pay the fee so the firm needs to determine what amount the fee should be to still bring them to the door.

On the other hand, if the firm is in a metropolitan location, the one hour free initial consultation may be utilized to draw in clientele from a larger population with more law firms available and in competition.  The free initial consultation is the “dangling a carrot” for a potential client to grab and enter the firm’s door as opposed to a competitor’s door. However, the downfall is that the metropolitan locations may have potential clients that take advantage of the recommendations the attorney provides during the free initial consultation and run with them as opposed to retaining the firm.  They decide to be pro se or seek out another attorney.

Another factor to consider whether to charge a fee for initial consultations is the pool of potential clients.  What are the characteristics of the clientele pool in the firm’s location? The characteristics to look at are the following but not limited to:  income, education level, accessibility to the legal process, common legal issues, and demographics such as dominant conservative or liberal beliefs.  For example regarding income, if people cannot afford to pay the rent or for groceries, they are unlikely to seek out legal assistance to address their issues knowing there is a charge for the initial consultation.  Therefore, the free initial consultation is the dangling of the carrot to get these people in the firm’s door. On the other hand, if people can afford their living standard and luxury items, they are likely to seek out legal assistance if there is a charge for the initial consultation.  

The last factor to consider whether to charge a fee for initial consultations is the revenue generated at the law firm.  If the firm is a start-up business and/or employs recent graduate attorneys, a free initial consultation is the dangling carrot to attract and draw potential clients in the firm’s door.  Then, the hope is to have these people retain the firm leading to a build up in revenue for the firm. On the other hand if the firm has been in business over time, experienced attorneys, and has profits saved, a free initial consultation dangling carrot concept may not be necessary.  This is especially true if the firm and attorneys are reputable and well known in the area. Overall, the firm will need to review the books looking at the accounts receivables and payables to check the revenue generated to cover the expenses, but yet have some reserves. Depending on the financial condition of the firm, the dangling carrot initial consultation fee concept can be considered and weighed by the firm to improve or continue the financial health of the firm.

One important business practice decision a firm has to decide is what to charge for an initial consultation or to use the free initial consultation, the dangling carrot concept, to attract a clientele and generate revenue.  These aforementioned factors are the main ones that a law firm must consider and weigh when determining whether to charge a fee for initial consultations. There is no one easy answer since this business practice is tailored to the firm’s location, clientele pool, and financial condition.  

Topics: Law Firm

Melissa Lewis

Written by Melissa Lewis

Melissa Lewis is a solo practitioner and owner at M C Lewis Law Office, PC. After branching out as a corporate counsel and attorney at M C Lewis Law Office, PC, she has been able to apply her exceptional counseling skills and legal knowledge as an attorney and mediator from her three year experience as an associate attorney with a rural law firm practicing in the following areas of law but not limited: general practice, corporate, criminal, disability, estate planning and probate, family and divorce, guardianship, juvenile, municipal, property, and small claims. During this experience, Melissa represented clients who were hearing and deaf. Melissa is able to communicate in English and sign language, which allows her to reach both communities. This is because she was born with a 95% hearing loss in both ears. In addition, Melissa is able to understand the issues that commonly occur between the hearing and deaf communities in legal circumstances such as the interactions between the police and individuals who are deaf. Therefore, due to the ongoing demand during her work as a corporate counsel, Melissa opened up her own law practice, M C Lewis Law Office, P.C. to continue to work with the deaf and hearing communities as needed to address their legal issues. Melissa holds a B.S. in dietetics with honors from Iowa State University, a M.S. in sports nutrition and wellness with honors from Illinois State University. She is a registered dietitian (R.D.) with experience as a clinical dietitian and adjunct professor. Melissa also holds a J.D. from City University of New York (CUNY) School of Law. After relocating to her hometown in Iowa, she passed the bar exam in 2008 and is licensed to practice in the State of Iowa.