Back to News & Advice

Service Guarantees for Law Firms – David Wells from Voom Pricing

Article by Caroline Ding

In this month’s Legally Yours Lunch and Learn on 16 November 2021, David Wells enlightens us with the advantage of explicit service guarantees for law firms. He also introduces many concepts to inspire your own implementation of them.

David Wells is the founder and principal of Voom Pricing. For 13 years, he was the managing principal of Melbourne legal practice, Moores and was instrumental in the transformation of Moores from a firm recording and charging time to universally pricing for value.

He knows a thing or two about positioning, value creation and client experience. Before moving into a management role, he was accredited by the LIV as a specialist in commercial litigation.

What is a Service Guarantee?

David Wells begins the session by taking us back in time to the origin of words. He discovered that the word ‘guarantee’ originated from the old Frankish language and cognates with ‘warranty’.

He realises it is about protection for the customer in relation to the quality of your service. One of David’s favourite quotes regarding service guarantee is by Aldo Gucci, “Quality is remembered long after price is forgotten.” 

He emphasises that a guarantee forces a practice to live to its own quality claims.

Advantages of a Service Guarantee

  • It shows that the firm is serious about customer service.
  • It gives the firm impetus to exceed the customer’s expectations which delivers internal advantages.
  • It establishes competitive differentiation. You can include it in a response to a tender request.
  • It requires a higher level of trust and forces you to understand the expectations of your clients, therefore you do a better job in pre-qualifying your clients.
  • It provides the customer with an incentive to complain.
  • You can charge more (a service with guarantee is approximately 15-25% more valuable than one without).
  • It generates word of mouth advertising.

Explicit and Implicit Guarantee

David mentions a guarantee is offered whether it is explicit or implicit. He gives an example of this through customer complaints. If a customer were to complain loudly enough, you would make reasonable adjustments according to their wishes or only ask them to pay for what they thought was reasonable for the services provided. Making your service guarantee overt (e.g., publicising it) allows for a marketing and competitive advantage over business competitors.

The Peak – End Rule

David explains that the peak-end rule is a cognitive bias that impacts how people remember past events. The peaks (intense positive and negative moments) and the final moments (the end) of an experience are heavily weighted in our mental calculus.

Offering a service guarantee encourages the business to potentially turn a negative experience into a positive one by actively addressing client complaints despite the outcome.

David notes that it is important to understand that service guarantees are not about guaranteeing outcomes but about guaranteeing the quality of the service.

Alchemy by Rory Sutherland

David’s three major takeaways from Rory Sutherland’s book ‘Alchemy’ regarding service guarantees are as follows:

  1. Humans prefer to do business with brands with whom they have longer-term relationships.
  2. If it has long surprised observers that if a customer has a problem and a brand resolves it in a satisfactory manner. The customer becomes a more loyal customer than if the fault had not occurred in the first place.
  3. Solving a problem for a customer at your own expense is a good way of signalling your commitment to a future relationship.

Tail on the Guarantee

Finally, David concludes that it is important for a firm to obtain some sort of tail on the guarantee. A customer should not be able to demand a refund of a fee paid 12 months ago because of a recent dissatisfaction.

David quotes Moores regarding providing service guarantees in a timely manner, “Let us know within 14 days of receiving our account”. An exercise of care should be established when determining the service guarantee for the benefit of protecting your firm.

Do you need legal advice?

If you have a specific question or you’d like to let us know what you need help with, head to our Talk to a Lawyer search resource and find the right lawyer for your needs.

This Lunch & Learn blog post does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area.

If you require any advice or information, please speak to a practising lawyer in your jurisdiction.

No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.