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Archived updates for Thursday, December 20, 2007

TGIF for Price Insensitivity in Law and Love

"One study found that clients will not switch firms until the prices in the old firm are 34% higher than its competitors," writes Rees Morrison in Law Department Management, citing the J. Prof. Serv. Marketing, Vol. 3, 27-28 (1987) and Susan Samuelson, Law Firm Management: A Business Approach, Sec. 6.4.2.1 (Little, Brown 1992). "For a law firm trying to horn in on a competitor’s turf, that is a staggering economic gap." At least until there's a change in client management, when some of the factors affecting price insensitivity might get "reevaluated." "Specialized knowledge is willingly paid for; prices are difficult to compare; high cost is often viewed as a sign of superior quality; legal fees represent a small proportion of income; and switching costs are substantial," notes Morrison.

And if you thought legal services were expensive, you might be interested in knowing that another study puts the average "fixed fee billing rate" for marriage at $1.5 million. According to Robert Frank writing for the Wall Street Journal on December 14, 2007, this matrimonial "preferred service provider negotiated arrangement" also varies by gender and age:

Asked how much a potential spouse would need to have to be money-marriage
material, women in their 20s said $2.5 million. The going rate fell to $1.1 million for women in their 30s, and rose again to $2.2 million for women in their 40s. Ms. Smock and Russ Alan Prince, Prince & Associate's founder, both attribute the fluctuation to the assumption that thirty-something women feel more pressure to get married than women in their 20s, so they are willing to lower the price. By their 40s, women are more comfortable being independent, so they're willing to hold out for more cash. Men have cheaper requirements. In the Prince survey, their asking price overall was $1.2 million, with men in their 20s asking $1 million and men in their 40s asking $1.4 million.
"My wife is fond of saying that when you marry for money, you have to earn every penny of it," notes one client who probably paid dearly for that bit of specialized knowledge. "Fortunately, I am still in debt. "

Thank Goodness It's Friday (and still time for more shopping),

--Bill Heinze
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