If you are running a law firm, potential clients are going to ask what it will cost to obtain the services of your law firm. Before those calls come, you want to have a standard rate schedule put together that you use for all clients. This is especially true if you are in a service area of the law where repeat business is important.
So, before that phone rings from a potential client, do an analysis of the budget of your law firm. What are your expenses? What is your overhead? How much business do you need to do in order to meet your expenses and overhead, plus have the standard of living you want for yourself and your employees?
In other words, if you bill hourly, and collect an initial deposit, have a standard rate schedule for those initial deposits that you use in every single case. Likewise, if you are in an area of law where flat-fees are possible and ethical, put together a standard rate schedule for those flat-fees. Of course, the standard rate schedule might vary based on the attorneys in your firm, but still have a standard rate schedule put together for each attorney nonetheless and have them stick with it.
Don’t make the mistake of having a garage sale mentality where you wheel and deal with every potential client about the prices. Don’t take less than what you have budgeted for your standard rates simply simply because times may be slow and you feel as if you need the case.
At the end of the day, if you want to be financially successful, you need a standard rate schedule. You need to stick with that standard rate schedule in easily 99% of the cases. If the client doesn’t have the funds to cover your standard rates, you are better to decline the representation versus taking an amount that is less than what you have budgeted for the kind of case at issue.
If you create standard rates and stick with it, before long, you will have a solid list of clients willing and able to pay the fees you need in order to make your law firm work. On other hand, if you make your law firm a garage sale or flea market, you will end up spending lots of time on cases in which you are not being fairly compensated for the work you are doing. This will ultimately put your firm in a poor financial position.
Further, this only results in a downward spiral to the bottom where you have lots of work, but yet you are running your law firm in the red. Then, when that good case comes into your office, you won’t have the time to spend on that client because you are burning lots of time on a case in which you knocked down your fees too low simply to get the case. Also, once the word gets out that you negotiate on your fees, you can expect that most potential clients are going to take a lot of your time trying to get you to knock down your price because you did it for some other person they know.
At the end of the day, if the client really wants you and your law firm to represent them, most will obtain the funds necessary to secure your representation at your standard rate schedule. If they do not, you’re better not to have the case.
If you have any thoughts, feel free to share them below.