April 6, 2012
Cynthia Hsu, Esq. at Thomson Reuters FindLaw wrote a great piece last year titled, “How Much Should a Solo Lawyer Charge?”
The article provides some general advice on price-setting.
In addition to referencing the Laffey Matrix, a table of hourly fees based on the current year and an attorney’s experience, the article points out some additional factors to be considered, including the specific rates in your practice area and geographic location.
Lastly, Hsu’s article appositely points out that the rate a fresh law school graduate can justifiably charge will be less than an experienced attorney working in the same field.
These are all excellent points to keep in mind when deciding on how much to charge, but there are some additional slight nuances to consider in your price-setting computation.
For instance, when newly starting out a solo law practice, you very well may have few costs – at least compared to an attorney with several employees on the payroll.
Thus, with less overhead to consider, it may be tempting to set your rates particularly low to attract more clients.
This course of action may actually have the opposite effect, however.
Many consumers, including potential clients, have the attitude of “you get what you pay for.”
Thus, having a standard rate much lower than other attorneys in the field may lead potential clients to believe that the work you perform is substandard and that they would be better off with a different, more expensive attorney.
In short, many potential clients may value your skills based on the rate that you charge.
So while your low overhead costs can be leveraged to your advantage, it’s probably best not to charge much more than 20-30% less than, say, an attorney in your same area who has been in practice for five years or so.
That’s not to say that you can’t charge lower rates to specific clients – in fact, doing so is the best practice in some circumstances.
However, make sure that your client is aware of the discount that he or she is receiving.
State your normal hourly rate in the initial interview, and, if you so choose, show the amount of the discount in your bills.
This isn’t to make the client aware of what he or she is saving (though, this added effect is a nice bonus).
Instead, this is so that he or she knows that you usually charge a higher rate, and, if that client is one that correlates skill level to an hourly rate, dispel any notion that you are some kind of “discount attorney.”
Of course, rate-setting is something that has to be done by the individual attorneys themselves, but following these guidelines can save some time and trouble.
Do you have other advice for solo attorneys trying to set their rates?