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During the 25-year bull market for legal service, lawyers had little reason even to become aware of the concept of cost-of-sales. After all, the cost was pretty close to zero, at least compared to what their clients are used to.

As a result, they're far behind the curve when it comes to calculating cost-of-sales; for many, it's still a non-existent concept, or one that lacks useful supporting data.

Worth it?

In a recent discussion on LinkedIn, a lawyer made an interesting point about the lost goodwill derived from requesting a conflict waiver. It poses the question, "Given a waiver request's risk of triggering negative reactions from current clients, is this potential client worth it?"

When trying to gauge the risk/reward, lawyers are acutely aware of the risks, such as the one raised above and others such as collectibility, onerous service demands ,etc. What they're not in the habit of doing is assessing the likely reward:

  • strategic value: brand enhancement, market legitimacy
  • practical value: gain experience in an emerging area of demand; teach younger lawyers
  • annualized economic value
  • emotional value: respectful, enjoyable, appreciative client

Evaluating the different forms of reward would automatically increase the discipline level in the sales process. For example, you couldn't simply pitch someone on hiring you because you wouldn't yet have enough info to satisfy the risk/reward assessment. That would require you to investigate instead of pitching. Only when you had a basis for believing the potential reward justified accepting the projected risks and costs would you even have to consider the question of current clients' potential reactions to a waiver request.

Do You Want This Client?

What about lawyers in "hot" markets, such as certain aspects of IP or Employment-Workplace practices? Should they pay any attention to marketing? Many are in the enviable position of literally not being able to take on any more work.  

While getting more business may not be a concern in a hot market, what KIND of business you have should be. When business comes in fast and furious, little attention is paid to, "Do we want this client?" But that is precisely the question.

80/20/30 corollary

Hot markets will introduce you to the 80/20/30 Corollary to the 80/20 Rule: 80% of your revenue and profits come from 20% of your clients, but 80% of your aggravation and stress comes from the bottom 30% of your clients, whose demands for time and attention are disproportionate to their value.  

When you're so busy that you couldn't accept another client and still do a good job, it's even more important to define your idea of a desirable client and pursue that profile in an organized fashion, even if it means turning down clients outside the profile.  Think of it as a capacity problem. You can deliver only so much work. If you don't want - or can't accept -more work, make sure you get better work.

The Cost of the Wrong Sale

All business is not good business. Just as there are certain types of companies and individuals whose circumstances, attitudes and aptitudes make them a perfect match for us, there are also people with whom we will have a very low likelihood of a mutually satisfying business relationship.

It's important to profile and understand each so you can target the former and avoid the latter. Usually, these negative profiles reflect serious gaps between the buyer's inherent expectations and our service delivery style.

According to a study by Case Western Reserve University, there are four groups of dissatisfied clients, arranged from best to most dangerous:

  • Voicers (37%): Will tell you when there's a problem and ask for satisfaction; generally don't tell others about the bad experience.
  • Passives (14%): May return after a bad experience; won't complain to you or others.
  • Irates (14%): Will stop buying and won't complain to you, but they do tell others.
  • Activists (28%): Seek revenge and will broadcast your firm's shortfall to anyone who will listen - including the government and the media.

Just as you counsel your clients that they should discuss emerging problems with you early, because it's easier to avoid or control one before it becomes really complicated, so it is with clients. It's easier and less stressful to avoid bad business than to extricate yourself from it.


Do you spend too much time "following up" on supposed prospects that have languished in your pipeline far too long? They don't buy, they don't progress, they just eat up your limited sales time. It's probably because your fear of hearing "no" prevents you from pursuing a decision. Learn why you're better off with a "no" than a languisher. Download our free e-book, The Blind Spot that Keeps Lawyers from Doubling Their Income.

If you've ever purchased or participated in any kind of business development training, you know that much of the training you're asked to devote time to feels like "just in case." You can't see any immediate application for it, so you put it in the "get around to it when I have extra time" column. (We both know when you'll have extra time.)

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