Our “friends” Jack and Jackie Cliente have five kids, ages 3 through 13.
For the past few years, they have been quite pleased with their main
babysitter Reese Morrispoon, who is now a high school junior. Reese
is mature for her age and smart, and gets along well with all the Cliente
kids (with the exception of the eldest, Sadie, who has just discovered
boys and is often sulking). Reese has two younger siblings, who
occasionally assist Reese or perform babysitting chores that are less
taxing.
The Clientes pay Reese $6/hr., which is as much as any babysitter gets
in their community. The younger Morrispoons get $3 and $4 an hour,
because they have less experience and are given less reponsibility.
reese
Jackie Cliente faxed me over the following letter that she received today
from Reese, asking how she should respond:
March 20, 2006
Mr. and Mrs. Cliente,
I’ve been very happy being your babysitter, but hope we could talk
about my fees. I really think you will love my ideas. A few days
ago, my parents came back from a conference they attended
called LaxThink. They got lots of ideas about how dad could charge
for his lawyer services and mom for her accounting services, to get
out of the “nasty rut of hourly billing” (because clients really hate
paying by the hour, they told me).
They learned that many clients feel a lot better when they pay more
money for services, because they feel they are getting more value.
Dad is a really sensitive guy (for a lawyer), and he explained to me
how important price sensitivity is when setting your fees. (Some guy
named Ron is the expert, he must be a baker or chef, because he
talks about prices for sweets, and ice cream and pop corn.)
Mom told me that they were really excited about the idea of
“differential billing”– charging more for doing some things things that
are harder or more valuable and useful to the client (like stuff my little
sibs probably couldn’t do, but I can). I went online to do some research
and a very nice attorney named Carolyn, who is a mother, and writes
kind of a gossip column about lawyers, says differential billing is “a
great suggestion.”
She gives credit to a man with a great name — Rees! — who talls about
it in a post at his website. Rees describes the concept as “Different
billing rates for the same lawyer, according to the task’s usefulness to
the client.”
To be honest, Rees might be a worrywort. He says his idea
is “Logistically a nightmare and beset with subjectivity.” But,
you know and trust me, and you love your children so much, that
I’m certain we can agree on “a billing system that matches fees
charged to worth delivered.”
Here are some of the things that I do or might do while babysitting that
I believe are especially valuable and useful for you as parents and for
your children. Next to each is my proposed “value-added fee.”
- Get Chubby Cathy to bed with only 1 snack [$5]
- Show 4th-grader Mikey a Memory Trickfor vocabulary and multiplication tables (invaluable for standardized tests) [$20]
- Keep Mikey from staring at my chest [$12]
- Secretly decode IM messages between Sadie and her girlfriends [$10]
- Stop Sadie from sneaking out her window to meet boyfried Butch [$50]
- Stop Butch from climbing into Sadie’s bedroom window [$70]
- Mediate X-box sharing schedule [$10]
- Keep my younger brother from eating all your cookies and ice cream [$6]
- Stop Jack Jr. from beating Mikey to a pulp [$15]
- Rescue baby Anny from swimming pool [$500]
There are, of course, lots of other very useful things that I
do that are lots more valuable than just watching tv and
putting the kids to bed on time. I think we could work
them out as they happen, comparing their value to
similar items in the list. As you know, I really love
your children, but you have raised them to be very asser-
tive and distrustful of authority figures. That makes my
job especially hard.
Please let me know if this Differential Billing idea is accept-
able to you, before our next babysitting night. Of course,
I would reduce my normal per-hour fee from $6 to $4 per hour,
if we adopt the value-added schedule.
Reese
XOX
Jackie is pretty upset by this turn of events. She thinks paying top-
notch hourly fees already compensates Reese for her extra experi-
ence and talents. She also thinks Reese’s younger siblings could
easily perform some of the “value-added” services, at least with a
bit of good supervision.
Jack Cliente is intrigued. He’s a master bricklayer, and is thinking
he might be able to charge a lot more money for some of the move-
ments that are needed in placing and setting a brick than for others —
with the total ending up a lot higher. He also pointed out to Jackie
that she might try this approach herself as a medical expert witness.
Right now, she gets paid by the hour for her time at court. But Jack
thinks there are some crucial moments in her testimony that can
make or break a case and might be worth a share of the damages
won — or, at least an enormous bonus.
“tinyredcheck” “Make a Killing with Value Billing”
Jack, of course, figures that neither general contractors nor trial
lawyers are likely to agree to this kind of value billing. He wonders
if any legal clients would fall for it. As parents hiring a babysitter,
the Clientes say they are not about to agree to value-added premium
fees. Since other parents in town are not likely to fall for this ploy
either, they’re not worried about losing her to the competition. Still,
they wonder how to break this news to Reese without hurting her feel-
ings, and they want to let her know that they are a bit disappointed in
her for trying to profit greatly by playing on their love of their children.
They’re not (price) insensitive, but they aren’t fools, either.
Any suggestions. dear readers?
p.s. A couple days ago, after being called “too old to
come to terms with anything other than billable hours,”
I explained on this page that: I’m not against alternatives
to hourly billing, but I am against those who use the mantra
of Value Billing as a ruse to charge clients more than they
would be charged under hourly billing. See, e.g., here and
here.
afterthought (9 PM, March 23): I hate to get serious or preachy after
having fun above, but it’s in my genes. A link today from our Referer Page
led me back to our post Valuable Debate on the Ethics of Value Billing, from
Jan. 2004. These ending thoughts seem worth repeating tonight:
A good rule of thumb for a fiduciary (or any service-
provider): if you’re embarrassed to tell your client/customer
how little you have to do to accomplish the task, when
compared to the fee, your fee is too high. That’s why many
informed consumers have rebelled against the customary
real estate agent percentage when selling a home. It’s also
why a lot of probate courts have questioned or put a dollar
limit on probate fees based on the overall value of the estate.
Two final points: As discussed in this post, the special
privileges that come with our professional license presume:
1) That since clients cannot adequately evaluate the
quality of the service, they must trust those they consult;
and 2) That the client’s trust presupposes that the practitioner’s
self-interest is overbalanced by devotion to serving both the
client’s interest and the public good.
As agent of reality, and consumer advocate, I must often tell my
colleagues two things they don’t want to hear:
First, in general, attorney services are worth a whole lot less (add a lot
less value) now that consumers can read and write and technology makes
it possible to provide legal services far more quickly and efficiently (or through
self-help); and
Second, there are over one million attorneys in the USA and they are all looking
to make a buck.
These factors can’t be avoided by coming up with new ways to “sell” and “price”
the product or to push back market forces and the tide of history.
Put another way (in Value Billing and Lawyer Ethics): We’re getting a little annoyed by
the “ethics aside” approach of the gurus and evangelists of law firm branding, marketing
and alternative or value pricing. They offer the easily-tempted lawyer a paradise of premium
clients and fees, with increased profits, while never probing the ethical and fiduciary duties
of the lawyer to insure that the client is fully informed, treated fairly (and without manipula-
tion) and, in the end, charged a fee that is reasonable for competent and diligent services.
. . . I am all for modernizing the law firm and the lawyer-client relationship — so long as it is
a tool for better serving the client’sinterests, rather than one that merely uses modern selling
techniques and technology to articificially increase lawyer fees and profits and to stave off
the democratizing effects in the legal services marketplace of the digital revolution
march wind
mother and baby
share a shawl
our kids on the swing
old enough to push each other
april evening
children’s playground
a mother reads
the parenting manual
from A New Resonance 2: Emerging Voices (2001)
except: “march wind” Morden Haiku (March 17, 2006)
