Bundling services encouraged for property lawyers

"Pacific" and "Business" Class Property Lawyers
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Bundling services is being encouraged for property lawyers

The reduction in fee income from property-based work has cut into the revenues of property lawyers, particularly conveyancers. An inflation-adjusted fee for an average house purchase in 1983 would today be around $3500 plus GST, hugely more than the average fee for such a transaction today.

In a column in the NZ Law Society “Property Lawyer”, lawyer Richard Burcher of legal consultancy Validatum talks about operating airline-style ‘Pacific’ and ‘Business class’ bundling services so that conveyancers who have been hammered by higher costs and lower fees in order to dramatically boost their income levels.

Mr Burcher says lawyers should take a “dual level” bundling approach with a “bare bones offering” and a full service offering. He comments that lawyers need to face the hurdles that different segments in the market place different values on services while even within the same market segment different values can attach to the legal services being delivered.

Lawyers need to offer fixed price, variable-value packages for their clients to not only get clients to buy more for the bundled price, but also to create opportunities to earn through new opportunities created for the clients.

To do this, he suggests categorizing home buyers, for instance, into their component segments such as first home buyers, investors, retirees etc. Services would then be bundled and targeted to each group depending on their attitudes and interests.

He refers to bundling that can come into play with family trust work and wills preparation. In conveyancing terms, the price differential he provides shows lawyers charging $975 for ‘Pacific class’ (basic) and $1290 for ‘Business class’ (full service) offerings.

“For bundling to work, it is essential that we price individual components higher than combined bundles. Without individual component prices that are higher than the budnled, there is no incentive to buy the bundle. The discount doesn’t need to be large –something in the offer of 10-15% can be quite effective.”
Different bundles would receive different service levels, response times, legal expert involvement and so on.

“As a pricing and business growth strategy, bundling works. Research shows that clients will buy more when given a clear, unequivocal and transparent choice,” he says. “It is also critically importantly to avoid undermining your bundles by allowing clients to break the bundle during price negotiations. Some clients will try to ‘cherry pick’ the individual items that appear to be the best value from their point of view.”

Accordingly some ‘brinksmanship’ is required on the part of the law firm, he said.

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