Over lunch near the courthouse earlier this month, I overheard two lawyers complaining that it’s gotten harder for them to gouge their clients. No, this is not a lawyer joke — it’s a story about marketing, and about handling competition.
It was hard to ignore their conversation — and not just because they were talking loudly a few feet away from my table at the Chick-fil-A in downtown Raleigh. Their predatory conversation was like a verbal car wreck — I couldn’t stop listening.
Back in the Old Days, Without So Much Competition
The older lawyer was advising the younger lawyer about the traffic ticket business, and explaining how the market became hyper-competitive in just a few years.
You see, he used to charge $100 to fix a traffic ticket. Every morning, he’d send letters to people who’d just gotten citations, and he’d get an 8% response rate. Not bad, considering he was one of 3-4 lawyers sending letters. He’d show up in court at 7:45am and knock out 7-8 cases in 45 minutes.
He boasted that this business model made him $12,000 to $16,000 a month — yes, he shared this out loud in Chick-fil-A, and no, I didn’t interrupt to fact-check whether that $192K/year was net or gross.
But it wouldn’t last.
When His Competitor Became the “Wal-Mart of Traffic Tickets”
One of his competitors announced they were going to be the “Wal-Mart of traffic tickets,” and they cut their price to $45 per ticket.
Suddenly, everyone else in town dropped their prices, too, from $100 to $45 to match.
Plus, a glut of hungry new law school graduates meant he was now one of 30 lawyers sending those “hire me!” letters to hapless drivers, instead of just 3-4 before.
His direct-mail response rate plummeted to 3%. In less than five years, he lamented, the easy revenue was gone.
An Informed Client — A Lawyer’s Worst Friend?
My involuntary lunchmate complained that he couldn’t keep up with the aggressive competition. He stopped sending letters, and he switched to another area of law. Bitterly, he said he had to start taking harder, more time-consuming cases.
The younger lawyer — who’d listened patiently as the older lawyer told his woeful tale — rubbed salt in his elder’s wounds. The younger guy said, “I never waste time sending letters. When people call me, it’s because they never heard of the $45 rate — when I tell them it’s $130, they agree ’cause they don’t know any better.”
What We Can Learn About Marketing from This Cautionary Tale
While the two lawyers’ rapacious attitude made it hard to concentrate on lunch, it made me think about marketing:
- First, I didn’t realize legal fees for traffic tickets were that low.
- Second, if I get a traffic ticket… I’m going to shop around!
- Third, why is Chick-fil-A so delicious?
- Fourth, if I were in a business where the market price dropped 55% in five years — what would I do?
If prices dropped, I think I’d find a way to compete on service or quality — I’ve been doing web design client service since I was 15 years old, and I’ve learned a few things along the way. And I’d look for a way to provide some sort of value that my competition couldn’t, whether it’s picking up the phone when people call or having deep experience in a niche industry.
What would you do if your competition dropped their prices 55%?