Tuesday, October 21, 2008

Good Question: Do you realize what you're worth?

You decide what you are worth. You set the fees and determine what and how you bill. What do you want to make? Market levels are relevant; do you play at the high end of the fee schedule? In the middle? What do your clients expect to pay for your experience and services? Will your clients value you as you do yourself? In a purely logical world, you set fees, charge for services and monitor the results, reevaluating your strategy if indicated.

However, this conversation is not just about "value". It's about money. The topic of money is never purely logical. Setting and then asking for appropriate fees can be incredibly hard.  We tend to settle for less than we (secretly) think we are worth. As my corporate career advanced, my compensation structure was negotiated for me by a recruiter. Invariably, the offer would be far better than I would have asked. However, it was never more than I knew I was worth. As a solo or small firm lawyer, you need to stand for yourself as well as those recruiters did for me.

Do any of these four things and you'll never earn what you're worth:
  1. Set your fees too low or give frequent discounts - ask yourself if you're satisfied with your fees
  2. Offer free services or get caught giving more than you intended- for example, a free intro consult that turns into something you should be paid for
  3. Write services off - because you're not comfortable asking for the actual amount, even though you know the full fee is legitimate and the work should be valued at an amount greater than you're billing
  4. Allow clients to leave invoices unpaid
In order to build a successful practice that supports the life you want, you must serve yourself well. Where do you need to upgrade? What do you need to do less of, what will you do more of? Who can support you in these actions? How can you test your ideas?

The speaker at a recent coaching association meeting summed it up well. You've likely heard this before- but spend a moment on the notion that "if you don't value yourself, why should anyone else?" Be sure you're earning what you're worth and don't settle for less.

Last words- the metric "realization" is usually comprised of two parts:
  1. % of fees you do bill versus fees you could bill (shows you the impact of write-offs and overdelivery, generally doing more than you're willing to bill your client for)
  2. % of fees collected versus fees billed (in other words, if you aren't paid, it's the same result as not billing for the work)
Track your realization metrics, with a target of 100%. Anything less than 100% is value you delivered without compensation. How much are you leaving on the table? Is it worth making some changes?