The Veblen Effect

As an elder law attorney, I am mindful that there are two, primary impediments to people planning for estate and long-term care issues—procrastination and perceived expense.  With respect to procrastination, people may see a need to plan (for instance, by having a Will, power of attorney, and advanced health care directive drafted for them; or by removing assets from their name in the event that they require long-term care someday), but they really don’t believe the issues will affect them in the near future or ever.

It’s not until something happens to a family member or friend (such as the death of a family member or a friend needing care in a nursing home) that people see the need to plan and that need becomes urgent enough to overcome the inherent procrastination that affects estate and long-term care planning.

The other major impediment that affects a person’s planning is cost.  People tend to think of attorneys as being very expensive, and they fear the expense associated with planning.  But expense is a double-edge sword.  On the one hand, people don’t want to pay a lot of money for an attorney.  On the other hand, if an attorney were too cheap, the client would fear that the attorney is incompetent—Why is this guy charging me so little?

This latter concept is attributable to the Veblen Effect.  People want to have higher priced goods or services believing that the higher priced good is better.  For instance, assume that you were charged with a crime.  If you consulted with an attorney and the attorney told you that he charged $50 an hour, you might not retain the attorney believing that an attorney who only charges $50 an hour isn’t a good attorney.  On the other hand, if you consult with an attorney and his offices are paneled in mahogany wood and his floors are carpeted with carpets so plush that your feet are lost in the fabric and the attorney tells you that he is going to charge you $800 an hour, then you would probably leave thinking that this is the best attorney for you.  You might not retain the attorney—you might not have sufficient assets to retain such attorney—but you probably would want to retain the attorney and would struggle to retain the attorney if it were feasible.

The fact that the attorney is so expensive leads people to believe that his services are better than other attorneys.  The attorney must be an excellent attorney if he can charge that much for his services.

I am aware of all of this, and because I am aware of all of this, I write these articles to explain to the public my opinion on this and other issues.  And I cannot tell you how many people have said to me, “You won’t believe this, but I have just about every article you’ve ever written.  I have them stacked up in a folder.  The paper is turning yellow.”  My answer is, I would believe it because many people have told me that exact same thing.  My point being, my articles are read, and I’d like to think that to some extent, the points I try to make are getting through to the people who read my articles.

Despite the Veblen Effect, I typically charge my clients a flat fee.  For instance, if a client comes to see me to have a Will, power of attorney, or advanced healthcare directive drafted, I charge the client a flat fee and once I quote that flat-fee, the fee never increases.  If a client comes to me to obtain Medicaid eligibility for themselves or their family member, I also quote a flat fee, and once quoted, the fee never increases.

I also like to think that my fees are extremely reasonable, and I base this thought on the fact that I know what many other similarly-qualified elder law attorneys charge, and I am always considerably less (often half the price or even less than that).  I also know what non-attorneys who illicitly engage in Medicaid planning charge, and I have always found that I charge less than them.

I charge what I believe to be fair, and because I do that, I never worry about someone thinking I charge too much.  If someone thought that, oh well, they should go elsewhere.  They’ll learn then what I charge is fair.  I also don’t worry about trying to make my services look good because they are expensive (the Veblen Effect).  My services are good because I concentrate my practice in a specific area of the law, and I am familiar with that are of the law.

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