Almost every lawyer I meet sets their fees wrong. In doing so, they do both themselves and their clients a disservice.
Lawyers are hurting themselves because they’re making far less money than they could if their fees were set correctly. And they’re hurting their clients because they’re attracting the wrong kinds of clients with the wrong fees.
Let’s start by dismissing a myth that lawyers insist on believing.
Low fees are a good marketing strategy.
This myth is based on the fear that you won’t get new clients if your fees are too high. And doing anything based on fear is a bad idea.
Low fees are indeed a marketing strategy. But not a good one. Unless you want to attract clients who are more interested in the fee than the result.
These are the clients who are reluctant to pay, reluctant to communicate, and perpetually unhappy, regardless of how well you do your job.
The first thing you need to do is banish from your thinking the notion that keeping your fees low will produce a positive result.
Your goals should be to have higher fees, better clients and happier clients.
How Lawyers Typically Set Their Fees
Many lawyers set their fees based on experience level.
Apparently, someone at some point felt it was appropriate to correlate pay with how long you’ve been sitting in a chair.
The world may work that way for certain salaried employees in a union. But lawyers aren’t in a union.
And as to the 'experience' thing ... last I checked, time doesn't cure incompetence.
We operate in a free market. We can charge as much or as little as we choose within the bounds of ethics and reason.
Show me the rule that says a sixth-year attorney is worth more than a fourth-year attorney. Show me the rule that says one more year under your belt gives you the green light to inch up your rate by $10 an hour.
You can’t. Because those rules don’t exist.
There is no reason why you can’t double your prices in one year. That may not be the best strategy depending on your location, but it’s absolutely the right strategy from some lawyers.
Another way that lawyers set their fees is by looking to the left, looking to the right, and picking a number in the middle.
In other words, you base your fees on what other lawyers in the market are charging.
Guess what you’ve done? You’ve let your competitors set your price.
Does that sound like a winning strategy?
Your competitors are doing exactly what I mentioned previously. Setting fees based on fear or experience level.
If you’re looking at the market to set your fees, it doesn’t mean you’ve escaped the other two traps. It just means you’ve let people who did fall into those traps drag you down with them.
The Right Way to Think About Pricing
It has nothing to do with fear, your competition, or your perception of what your services should cost.
It has everything to do with how much your ideal client will pay for an outstanding experience and your full attention and representation.
Every lawyer I’ve worked with realizes that they have a lot of headroom for raising fees when they start thinking about how to upgrade their client base, and how much extra revenue they’ll produce.
You just have to stop looking to your left and your right.
Where do you start?
First, you need to believe you can do it.
Second, you need to actually try it.
Third, you need to try it more than once.
This will help you build confidence by getting a few experiment wins under your belt.
And you’ll quickly find that your price becomes elastic when you pay more attention to your ideal clients, position your practice properly, and walk clients through your unique process of delivering legal services.
You may think your services are similar to your competitors. But when a client is coming from a nightmare experience with an attorney who never called them back and never explained anything, they’ll perceive your services much differently.
And they’ll pay a premium for them.