For all the popular legends out there about how attorneys are bloodsucking leeches, the truth of the matter is that most lawyers don’t charge enough. And, the fact that middle class consumers can’t keep up with legal fees is more about the stagnation of wages, than it is about the cost of legal services, which definitely don’t even keep up with inflation. In fact, most solo and small firm lawyers are petrified to raise their rates, because they know how far middle class Americans are strapped for cash. That’s because the vast majority of solo and small firm attorneys are middle class Americans themselves.
All that being said, lawyer rates are mostly below market. And, one of the main contributors to that fact is that law firm rates generally remain static for years. If you want to make some more money in your law firm, a really simple solution is to raise your rates up, just a tick. Many attorneys think that, in order to revamp their pricing that they need to make a big upward change, tacking on at least $100 per hour to all rates — but again, much of that is driven by attorneys’ lack of a consistent process for raising rates: in other words, if they did it more often, the changes wouldn’t have to feel so dramatic. What if you raised your rates $10 per hour? Or, $25 per hour? Doesn’t that make more sense? And, what if you did that regularly, so it can all add up? Do you think anyone would complain?
So, why don’t you give it a shot? At least once a year, review your rates, and adjust them upward, just a little bit. Even if you only adjust by the annual inflation rates (2.2% in 2018), you’ll make some more money next year, while simultaneously avoiding the pitch fork-toting crowds outside of your front door. Let’s say that you charge $200 per hour. Adjusting that rate for inflation ramps you up to a whopping $205 per hour. Now, multiply that number by the amount of hours you work. If you bill 1500 hours each year, you just made $7500 appear out of thin air. That’s real money. Not that you have to steamroll that back into your business. You can use that to pay for the vacation you never go on. Not only that, but you probably have more wiggle room than that slight upcharge, especially if you haven’t updated your rates in a long time. Change that figure to $25 per hour and you’ve made an additional $37,500 over the course of that year. That’s enough to pay for an assistant. In cases like this, simple math leads to big results.
Of course, you know your law practice better than I do, so you should endeavor to adjust your rates based on more than just national inflation rates. Which areas in your practice are hot/trending? Where is there a need for ‘emergency’ services? How much experience do you have? What are your direct competitors charging? How much do you invest in technology and how efficient and secure are your practices? What do your local ethics rules say about how rates may be set? When you sit down on an at-least-annual basis to reset your rates, do so as a team (if you have one), and come to a consensus on what you can — and what you should — charge. Then, aggregate it all into a fee schedule, and don’t deviate from that.