Leak 1 – Under-estimating

Law firms:  Making more money is easy when you stop the leaks. 

In the coming weeks, I shall be sharing 8 short blogs on the leaks I have seen in law firms where they are needlessly losing hundreds of thousands of pounds.

This is particularly prevalent when lawyers are estimating for a fixed fee and happens for several reasons:

🟣They are very busy and don’t spend enough time considering how long it will take.  So, it might be a lick of the finger and stick it in the air sort of approach.  This is haphazard and may prove to be inaccurate.

🟣 It’s based on a job they did for another client which is similar but that was 2 years ago, but they still quote the same.  It probably wasn’t accurate then, so it won’t be 2 years later.

🟣Human beings naturally under-estimate how long something will take, regardless of whether it relates to cost.

🟣They are not confident talking about costs with clients and so the tendency is to state a lower fee, as they feel more comfortable doing that.  This means that potentially there is double under-estimating going on.

🟣They are not clear with the client what the boundaries of that fixed fee are.  The client is then at liberty to contact them constantly because it won’t cost them anymore.

🟣I will address scope creep as a separate post.

So, what’s the answer then?

🟣Don’t rush estimating.

🟣Discuss with an impartial colleague.

🟣Become aware of their own tendency to under-estimate.

🟣As a firm, get external training to help eliminate these leaks.