Does your lawyer’s office affect your bill?

AS a corporate lawyer, I have always been fascinated by the relationship between the quality of professional services and what clients are prepared to pay for them.

Perhaps it is because I have had the opportunity to visit some of the world’s leading law firms.

I have visited the offices of the Magic Circle firms in London and some of the top law firms in Tokyo, Seoul and Singapore. They are impressive. Very impressive.

The offices occupy prime real estate in some of the most expensive parts of the city.

The interiors are beautifully designed, the furniture is immaculate and the meeting rooms are so impressive that each seems capable of doubling up as a boardroom of a multinational company.

And then there are the lawyers themselves. Impeccably dressed in expensive suits, with degrees from some of the world’s most prestigious universities.

Even the receptionists look as though they have been groomed to be flight attendants.

Looking around, one cannot help wondering: how much does all this cost?

The obvious answer is: a lot.

The rent alone must be enormous. And there must have been a substantial investment in interior design, furniture, artwork and technology.

But here is the more interesting question.

Does any of this have a bearing on how much a law firm can charge?

Of course, the quality of legal advice matters. Experience matters. Reputation matters. Expertise matters.

But could the environment in which that advice is delivered also influence a client’s perception of its value?

Psychologists have long recognised that we do not always evaluate value objectively.

Our perceptions are influenced by our surroundings. For example, a beautifully designed restaurant may make the food seem more sophisticated.

Could the same phenomenon apply to professional services?

If a lawyer sits across the table from you in an imposing office overlooking one of the world’s most expensive streets, wearing an immaculate suit and holding degrees from elite universities, does that subtly influence what you think his or her advice is worth?

And if the same lawyer were sitting across the table in a much more modest office, would you perceive the advice differently?

I find this particularly interesting in Malaysia.

For those of us providing legal services to business owners – and small and medium enterprises (SME) make up a huge portion of the legal services market – we too are conscious that perception matters.

If our office is too extravagant, a business owner may wonder whether he is paying for the designer furniture and the expensive rent.

If we arrive at the business owner’s factory or office in an obviously luxurious car, we may inadvertently create another problem. “These lawyers must be making a lot of money from us.”

And the next conversation may not be about the legal work, but about a request for a further discount.

So there is a need for a lawyer to walk a fine line – balancing yin and yang, so to speak – when serving the huge Malaysian SME segment.

On the one hand, if your law office looks too cheapskate, you lose credibility. The client may wonder whether your business is doing so badly that you are struggling to pay the rent.

On the other hand, if your office looks too extravagant, the client may think that you are “slaughtering” him with your high fees.

It is a delicate balance.

While owner-managed businesses, including companies undertaking initial public offerings, are often much more conscious of professional fees because, ultimately, it is the owner’s money, the picture can be different when dealing with multinational corporations (MNC) or government-linked companies (GLC).

Here, professional fees are often evaluated within larger budgets and procurement frameworks.

The individual approving the fee may be less personally invested in every ringgit spent because the money is not coming out of his own pocket.

A small number of elite law firms, with impressive offices – although still nothing compared with those of international law firms – tend to service this MNC and GLC segment.

So, does culture influence what lawyers can charge?

I think it does.

Different countries have different attitudes towards professional fees and the value of expertise.

In some cultures, paying a premium for a premium professional service is the norm. In others, negotiation is almost expected.

This raises a broader question for lawyers:

Are clients paying for the quality of our advice – or also for the signals we send about our quality?And perhaps an even more uncomfortable one: If two lawyers provide equally good advice, but one works from a spectacular office, wears an expensive suit and has an impressive list of academic credentials, while the other works from a modest office, is the first lawyer entitled to charge more?

Perhaps professional fees are not determined by trust and experience alone, but also by culture, psychology and, inevitably, perception.

Sometimes, what a client is prepared to pay may have as much to do with how valuable the service feels as with what the service actually costs to provide.

And perhaps that explains why, when it comes to lawyers, the most expensive thing in the room may not be the legal advice.

It may be the perception of value.