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Look Who’s Discounting Their Fees

by Carolyn Elefant on May 30, 2008 · 2 comments

in Big Law/Small Law, Biglaw Practice and Issues, Setting and Collecting Fees

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If you’ve ever discounted your fees, either voluntarily to lure a client to your firm or involuntarily because  your client ran out of cash, you’re in strong company.  As I posted over at Legal Blogwatch, 76 percent of law firms discount their fees.  But what’s even more interesting is that 89 percent of the discounters practice in firms of ten lawyers or more, while only 59 percent of the smaller firms cut their fees.  However, the study that I cited as summarized by Greatest American Lawyer (the study is not free) does not explain when or why firms offered these discounts.

So what does this mean for solo and small firm lawyers?  First, if you compete with the big boys, don’t assume that your $400 an hour rate is necessarily a bargain compared to biglaw – since the partners may be chopping their billing rates.  You may still be cheaper, but not as much as you think.  So when you make your pitch, don’t rely on cost alone (which still matters, at least based on my own review) but also the added value that you can bring with better client service.  Second, if you find yourself involuntarily cutting fees after the fact, ask yourself why.  Did you under budget and leave your client unprepared to pay a higher fee?  You might want to consider flat fees, where the client knows the firm cost up front and can budget for it.

  • Ben Glass

    It’s simply amazing that so many lawyers have yet to figure out that billing by the hour (and them competing by price!!) is not an efficient way to make a living. It’s horribly scary for the client to not really know how large the bill will be and it reduces the lawyer and her expertise to a commodity. The last thing you want to be in any business is a commodity.

  • alexisneely

    Yep, this is why we always recommend flat fees agreed to up front so there are never any surprises for the client or the lawyer. And you are so right on the focus on client service. that's really what it's all about. My clients happily paid my higher fees because they received a much different and better experience than they would have elsewhere.

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