The phone rings. You answer it and find that a possible new client wants to come in “as soon as possible” to see you for an initial chat about a business issue.  The caller explains that he has been recommended to your firm by one of your best clients. He has in mind a free initial consultation.  You arrange to meet later that week.

You start to think about the issue the caller mentioned. It’s a complicated matter but you have the necessary experience to help him. It could be quite a large amount of business for your firm.

Your thoughts focus on the amount you might be able to charge if your firm were to be appointed by this new client. He’ll probably get two or three quotes from other firms, but there are only a few people around who are able to do the work involved, so that puts you at an advantage, doesn’t it?

A “free initial consultation” is what he said.  He’ll explain his problem and you’ll listen. But, he can’t expect “free advice” can he?

The Legal Ombudsman, in its guide for lawyers: says (here): ‘Some firms offer free initial consultation meetings. It is reasonable for a lawyer to charge an initial consultation fee if they wish to, but they must make any charges and conditions clear to a consumer before the appointment is made. The charge made must be reasonable. The consumer should know where they stand when they walk through the door and not hear of any charge, if there is one, at the consultation.’

Ellen Freedman writing in the US in PA Law Practice Management, here, raised some very sensible points about the initial consultation with a prospective client. I think that everything she says applies to lawyers, accountants and other professional firms.  It’s worth reading what she has to say. Briefly:

  • If you already have more work than you can handle, it’s time for other actions, such as raising your fee rates, getting rid of unprofitable or undesirable clients and improving your intake screening techniques of prospects.
  • There are many seemingly genuine prospects out there who just want to pick your brain for free. Don’t allow it, not even under the guise of wanting to show how helpful and valuable you will be. Ellen recommends that you always charge an initial consultation fee, and to set a time limit on the initial meeting. Insist that payment be made before or at the beginning of the initial consultation.
  • If you want, you can provide the prospect with a credit on their first bill for the amount paid during the initial consultation once they become a client. In this way you can still provide a free initial consultation, with the caveat that it is free only for those who ultimately become clients.
  • If you charge an initial consultation fee, it will eliminate all those “fishing” for free information. And if you have a referral source who sends lots of “bad” referrals with the occasional “good”, it will gracefully do the weeding for you without embarrassing or discouraging your referral source.

In most cases, the prospective client is trying to decide whether to engage your firm and to see whether you have the knowledge and experience to help him. They also want to find out what it’s like to deal with you and your firm.

Try having a free initial consultation with a brain surgeon. You won’t get one.

My advice is the same as Ellen’s. Charge for the initial meeting, tell the prospective client (in writing) that you’re going to charge and (most importantly) bill it either before or immediately after the initial meeting.

And when the prospect says yes, you have achieved what you set out to do. What do you do next? Celebrate – No!  What you should do get the terms of the engagement agreed as soon as possible.

Setting out your terms of business with your clients, with specific agreement on the work you do for them and the fees you charge, is the only sensible way to deliver professional services. To do anything else is professional suicide. Our professional bodies have been telling us for years that we must issue engagement letters.  When something goes wrong, not having an engagement letter is going to bring you plenty of problems and cost you a lot of money.

Some years ago, I created an engagement letter system (called Contract Engine) to simplify the whole process, eliminate uncertainty with the client, and make it very easy to agree terms. Find out what it does, here.  Statistics gathered by the AICPA Professional Liability Insurance Program in the USA emphatically stress the importance of engagement letters. More than two-thirds of professional liability claims in that Program arise from client allegations of professional lapses in tax practice and in approximately 25% of all claims made, the client alleged that the scope of the engagement went beyond the services which the accountant believed he or she had agreed to perform. The resulting claim then alleged that when performed, these disputed services were performed negligently.

So, have your meeting with the prospective new client but bear in mind all that’s been said above. And, by the way, good luck!

Martin Pollins
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