Lawyers bill too little for two reasons. First, they believe that a lower fee will yield more clients. Alternatively, especially when they represent individuals and small business owners, lawyers feel sorry for their clients and end up billing what they think the client can pay — not what the lawyer is worth.

Do not fall victim to either of these faulty arguments.

Never, ever compete on cost

Other lawyers may bill less for their services than you do, and you may fear losing business to these low-cost competitors. Don’t. Chances are good that these lawyers are not making a profit and will soon go out of business. You don’t want to join them.

If I had excess capacity in my practice, I wouldn’t waste it by taking on legal work that loses money. This kind of “loss leader” work will only lead to more work of the same kind – unprofitable. It’s a dangerous spiral. I’d spend that time on face-to-face marketing activities before I wasted it on unprofitable legal work.

Clients who shop for lawyers based on rates alone will always find someone who charges less. All things seeming equal, these clients will abandon you for a lower-cost alternative. You want to make sure that all things are NOT equal. Use your social and legal skills to earn the trust and loyalty of your clients. Once you’ve done that, cost is less important and you can bill rates that reflect your true value.

Consider raising your billing rates

I regularly advise my lawyer coaching clients to raise their fees — and none has ever complained that he or she lost business as a result. The profits on less work performed at a higher rate will always exceed the profits on more work performed at a lower rate.

In fact, lawyers can even LOSE business if their rates are too low. There is a strong perception that higher rates equal higher quality — and vice versa. When I was an in-house counsel reviewing the rates of outside lawyers, my response to a low rate was never “I should hire him, he’s cheap,” but rather “I should avoid him, there must be something wrong.”

Clients expect legal services to be costly

Whether a client is the general counsel of a Fortune 500 company or a blue-collar worker in a small town, he or she expects that retaining a lawyer to solve a serious legal problem will cost a lot of money. They do not expect a “great deal” and a Best Buy or Wal-Mart experience. The key is to manage those client expectations by billing a rate based on fair — not discounted — market value for your services.

If you feel sorry for people, do more pro bono work — where you charge nothing to those who cannot afford legal services. You might have a good heart, but do not use it as a reason to discount your regular rates.

The only lawyer who might want to bill below market value for a short while is an absolute newbie. Otherwise, I recommend that my attorney coaching clients charge at least market rates for the service they provide.

How to bill a higher rate

Even better is the ability to bill above-market rates. To do this, you must identify some quality of your practice that strongly differentiates you from your competitors who are “just as good” at the law — something like personal skills, fast response time, a business/industry segment focus or a convenient location. As long as it’s not cost.

The more you can differentiate your practice, the more you can bill.

Originally published on

Categories: Practice Management