Seth Godin recently wrote:
“Price is the last refuge for the businessperson without the imagination, heart and soul to dig a bit deeper.”
Seth’s quote rings true to me every time I hear a law firm partner suggest a cap fee arrangement to their client.
Capped fees lack imagination. They lack investigation. And because of it, they lack understanding.
Understanding of your client’s priorities, as well as your own.
More damagingly, they encourage apathy.
Because, if I – as the service provider – want to get my maximum value, then I need to work to my cap, and no more. I don’t want to be too good at my task though, because otherwise I won’t get paid for my labours. At the same time, I don’t want to be too bad, because I won’t get paid for my labours then too.
So, cap fees are a lose-lose scenario.
And that is why, capped fees are lazy pricing.