You may loathe the so called “Ambulance Chasers” but you cannot easily fault their business model. Personal Injury lawyers may be hated for different reasons, but their business model for poor clients is among the best in the market. They work on a contingency fee model of no win, no pay.
These lawyers are so confident of their capabilities and risk management expertise that they are prepared to put their money where their mouths are. In this slow economic growth era we find ourselves in, such a business engagement model should be in use and common across many sectors. By Nimroth Gwetsa, 31 January 2019.
Perhaps owing to the need to focus more on core activities, reduce cost overheads and manage risks, big business is increasingly becoming reluctant to enroll or engage SMMEs directly, but prefer doing so through intermediaries. As a result, we now see many such intermediaries or gatekeepers emerging in all sorts of business activities ranging from helping SMMEs list with and win deals at big businesses to offers of promoting or marketing SMMEs to a wider client base.
Some gatekeepers I have seen are themselves struggling organisations desperately in need of working capital to keep afloat. You see them punting different subscription offers with their respective incentives to potential participants, asking them for upfront payment in exchange to offering them a “platform” to promote their businesses to big corporates underwriting their programmes.
More often than not, once subscribed, you fast realise these entities are nothing but “e-mail forwarding post-boxes”. They do not look at whether or not the content they are forwarding to you aligns with your business offerings as specified in your enrolment. They, like many Telesales marketers, just forward irrelevant information, hoping you will continue doing business with them afterwards.
What is even more concerning, you are more likely to complete the entire subscription term without finding any meaningful deal. Yet, at the end of the subscription term, these gatekeepers would still have the audacity to remind you to renew your subscription to continue “benefiting” from their programmes.
Scammers are bolder, persuasive and more professional these days.
Many SMMEs, desperate for a sale, keep falling for these gatekeepers’ sham. This then brings me back to the introduction of this article so we could briefly look at the business practice of Personal Injury lawyers we could emulate.
While many Personal Injury lawyers may be guilty of touting and fleecing clients of their legitimate compensation, their business model for poorer clients is commendable. They take on their matters without taking any deposit or any other money afterwards to prove and settle the matter. They only take their fee upon successful conclusion of the matter.
These layers know their craft and are so confident of their ability to screen good matters from bad in working out prospects of winning the matter, that they do not shy away from taking on a big and complicated matter requiring experts in different fields to prove and win their case. Very rarely would you hear of clients being turned away from pursuing their matters, except where it is apparent the merits of the matter are questionable.
But to proceed, all these lawyers need is for the client to sign the power of attorney and undertake to have part of their compensation docked as the lawyer’s contingency fee in line with prescribed laws.
Imagine if the same model were to be applied by SMME big-business gatekeepers what would become of the growth and success of SMMEs?
The risk and reward model of no win no payment has been in place for years with placement and estate agencies. You won’t hear of applicants or home sellers being requested to pay fees upfront to agencies to secure good deals for them. Yet agencies do more than forwarding correspondence, as many SMME gatekeepers are guilty of doing. These agencies invested large sums in their business operations to screen applicants, prepare their clients’ profiles and presenting their clients’ offers to prospective “buyers”. They then earn their fee once their client has secured a deal.
This type of engagement model can certainly work for SMMEs and their intermediaries with big businesses. Not only will it ensure parties do their best to secure the deal, but ensure mutual growth of the businesses involved particularly in this slow growth economy.
Detractors may wish to see the big business gatekeeping practice abolished, but there is a need for such a role.
Big business supplier engagement gatekeeping is a crucial role enabling big corporates, which usually maintain a relatively small contingent of resources, administer their supply chain practices equitably. Big corporates usually have little time seeking, screening and enrolling new prospective suppliers while also doing their normal daily duties.
Gatekeepers can fill this gap and do this job effectively for big corporates. The more diligent the gatekeeper, the more trust big corporates will place in them. It pays, therefore, for the gatekeeper to be credible, diligent and professional. Investing in the knowledge of their clients’ business operations, culture and methods will improve their effectiveness.
But some gatekeepers behave like those “placing” car guards at shopping complexes. They “extort” money from poor guards upfront oblivious of their welfare. They have a transactional relationship with those guards. Such relationships usually do not last or grow further.
Imagine if car-guards gatekeepers invested in those relationships beyond transactions, gathering and managing insights into security concerns at those complexes – how such “intelligence” would enable them transition to more rewarding security management operations? In that role, they would do far more than placing “bodies”, but managing security operations, installing and managing technical equipment and providing security related consultancy services.
Perhaps many gatekeepers deliberately avoid repositioning their operations as they are more interested in earning instant money. Perhaps they realise such repositioning would also require the acquisition of deep knowledge and skills, more hard work, professionalism and investing in the development of those guards’ skills to succeed. Perhaps those gatekeepers’ skills are limited and they foresee car guard gatekeeping business dying soon, thus obviating the need to invest more in it. Perhaps as gatekeepers, they are more comfortable lounging around and earning money while doing so than imposing more troubles on themselves establishing a more professional and somewhat regulated outfit.
If big business gatekeepers are unwilling to change their operating model, surely there is, then a gap in the market for the establishment of a more professional, value for money and contingency-fee structure business model outfit to compete against the “hit-and-run sharks”.
There probably is an entrepreneur out there with an appetite for such a business model. Take advantage of the economic downturn to turn risks to lucrative opportunities to benefit all concerned.