Bill Less and Prosper!

Yeah, yeah, I know – it’s not about price, it’s about value; talk about price and you’ll forever be haggling over cost with your clients.  I buy all of that…and yet, sometimes, clients do measure value in terms of price.  Let’s be honest – aren’t there matters where clients would hire a 700 person law firm instead of you if they could afford it?  I’m not saying that’s true for all cases (for example, for most day to day business matters, a small firm is always preferable).  But let’s face it – look at how many dotcom companies went with large firms like Wilson, Sonsini and the former Brobeck, Phleger instead of small fry because they provided legal service for free or at cut rates in exchange for a stake in the company.

In any event, this is all a set up for the main point of this post, which is this nifty tool for selling your fees and your value, all in one shot.  The tool is AmLaw’s recent chart showing associate billing rates by class for a number of geographic markets.  According to the chart, associate rates in New York range from around $260/hr for a first year up to $425-$485 for an eighth year.  Rates don’t go nearly as high in Buffalo, where the $130/hr billing rate for a first year and the $210 rate for an eighth year are just half of those in the downstate, metro New York market.

So how does all of this help solos and small firms?  First, if you’re a Boston area solo or small firm competing for business with biglaw, the chart can help you set your rates.  For example, if you’ve got a decade of experience, you don’t want to charge much less than $275 an hour, the going rate for a first year at a large firm.  And if you set your rates at $350, you can argue that you’re worth it, because you’ve got double the experience of a 5th year who bills at $485.

The comparison works even better for flat fees and “value billing charges.”  Say you decide to charge a flat fee of $18,000 for an appeal that you predict will take you 40 hours to research, brief and argue at your most efficient.  That’s around $450 an hour, $360 even if you take 10 hours more than planned.  Moreover, a $18k appeal is a pretty good deal for a company.   Now, let’s take that same appeal to the big Boston law firm.  Figure 30 hours for the 5th year associate to reseach and draft the brief ($14,550 at $485/hr), with 15 hours research and proofing assistance from the first year ($4125 at $275/hr).  But then once the briefs have been filed, we can assume that an upper level partner will argue the case, so he or she will need at least a conservative 8 hours of review and prep at $600/hour.  Suddenly, that appeal is up to $23,475, $5k above what you’ve offered, not to mention better value, since when you argue the case, you’ll have the benefit of having done the research yourself.

So take this chart and laminate it, and stick in it your desk drawer for the next time you draw up a fee proposal.  And to paraphrase Mr. Spock, bill less and prosper!

2 Comments

  1. China Law Blog on December 31, 2006 at 9:04 am

    I completely agree. I am always saying I know we have the client when they ask, “why should we hire you over mega-firm X?” I then talk about how we are equal in quality but much better in cost and in service to small and medium sized firms. There are definitely some things the mega-firms do that we don’t, but 99 times out of 100, those are not the calls we get.



  2. China Law Blog on December 31, 2006 at 9:04 am

    I completely agree. I am always saying I know we have the client when they ask, “why should we hire you over mega-firm X?” I then talk about how we are equal in quality but much better in cost and in service to small and medium sized firms. There are definitely some things the mega-firms do that we don’t, but 99 times out of 100, those are not the calls we get.



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