You should! Yes, even if clients are reluctant. The fee for legal services would be based on the value (mutually agreed upon parameters in advance) received by the client. Value-based fee arrangement can be a win-win situation and a smart legal marketing tool.
But before suggesting such an arrangement to your clients, you ought to take a look at “Four Realities of Value-Based Pricing” that appears in this month’s Law Practice Today by Mike McLaughlin (who I am guessing is the same Michael W. McLaughlin who authors the Guerrilla Consulting blog, although LPT article doesn’t give more than his name).
Mike’s “four realities” are directed toward consultants (but I suggest substituting “lawyers” instead), and are:
1.Clients care about the performance of their business not the consultants (they don’t care about your profit margin, but they may pay more in fees if they perceive you can “achieve faster, better or more permanent results” according to Mike.),
2.Clients are reluctant to leave their comfort zone (accordingly, it won’t be easy to get them to accept rewarding firms on the value produced, when they are more comfortable with fixed fees or the hourly rate [often erroneously comfortable]),
3.You need to answer “yes” to six questions (whether you should even propose a value-based fee, you need to answer in the affirmative to:
*Can client see the ROI to be worth a results-based fee arrangement?
*Is there a 75% chance (not guarantee) that the result will be reached?
*Are you willing to share in the risk (by accepting a lesser fee)?
*Can you wait for results to materialize before billing for full payment?
*Is client capable of making “tough choices” that value-based system requires?
*Has your firm considered pros and cons that such a fee arrangement will have on your firm?
4.Value is in the eye of the beholder (so consultant has the responsibility to show the client how such a compensation system will produce real value).
Clients may indeed be reluctant to leave their comfort zone, but you can be certain they care more about their business than yours, but if they can perceive real value not only from your services but also from such a fee arrangment, they may just agree to it.
For more on alternative fees, take a look at a couple of my earlier posts on the subject here and here.