Building a rate sheet is an essential process for law firms. Experts recommend meticulous research over mere instincts. This involves benchmarking against market standards, drawn from other law firms and even businesses like Walmart and LL Bean, as Joyce Brafford, director of partner relations at ProfitSolv, recommends. This is especially crucial for small firms and budding lawyers. Legal tech firms can offer valuable resources with year-end reviews and white papers, published primarily for marketing, yet useful for these pursuits. Moreover, local lawyers can serve as a handy source of substantive information, more so when local bar associations do not list average hourly rates.
Two primary steps in rate setting include establishing a baseline price and the regular re-evaluation of rates. The baseline price considers overhead costs, basic salary, and other essential elements like contributions to 401(k) and health insurance premiums. From this point, lawyers can add their specialist knowledge and skills to charge a premium. It’s essential to understand that this baseline may require adjustment, as lawyers often negotiate prices, providing room for flexibility. Yearly re-evaluation of rates is recommended, with adjustments for inflation, to avoid unsettling clients with drastic percentage changes. This point emphasizes the importance of consistency over complacency. Services like Rocket Matter are beneficial in this task, assisting with time tracking, bill sending, e-signature collection, and automatic payment set-up.
Besides the common practice of hourly billing, alternate billing options should be explored. These include Evergreen retainers and subscription models, transforming legal practice to mirror technology software models. Furthermore, lawyers can even consider selling products, akin to Legal Zoom and Rocket Lawyer.
Podcast episodes like those hosted by legal technology expert and consultant, Jared Correia, provide further insights on the topic. As warned by Correia, hourly billing might hinder the consideration of other beneficial models. To read more about this, follow the original article on Above the Law.