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Some Real Numbers for How Much Should A Solo Lawyer Charge

by Carolyn Elefant on July 25, 2011 · 10 comments

in Setting and Collecting Fees

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You’ve heard all of the advice on setting rates for your services before. Stuff like,

Pricing is an art, not a science.

Don’t charge less than every other lawyer in town.

Price your knowledge, not your time.

All great advice, if you only had benchmarks. But where to find them? You can ask what others charge on a listserve without risking violations of price-fixing or antitrust laws. Having a friend call around to other firms seems underhanded, and is most likely unethical since it’s a deceptive practice. Looking on other lawyer websites isn’t much help because lawyers don’t post their rates. Of course, you could hire someone to help you set fees, but unless they’ve got experience in your geographic and practice area, they may not provide much value.

So here are some resources that might offer better guidance:

1. Laffey Matrix The Laffey Matrix lists rates available for recovery of fees under attorney fee-shifting statutes. Although the rates scale high and many courts downgrade or reject Laffey rates, it provides a context for demonstrating the reasonableness of your rates to clients.

2. Rate Driver RateDriver is an app that churns out hourly fees based on practice area, city and size of firm. The app, which costs five bucks, is based on data collected from an analysis of $4.1 billion in legal invoices generated by over 3500 law firms between 2007 and 2009. Though skewed towards bigly practice areas, I’ve found that RateDrive will generate fairly accurate results for solos if you (a) choose the associate rather than partner category for consumer-oriented practices or less than 8 years out of school (I know, very demeaning!) and (b) approximate the appropriate category of practice (e.g., choose litigation for family law, corporate and general for bankruptcy, etc…).

The drawback to these resources is that they work only for hourly billings. Here are some ideas for flat fees:

Flat Fee Family Law Calculator Developed by Massachusetts small firm lawyer, Gabriel Cheong, this calculator is a masterpiece. Not only does it generate flat fees, but it shows the items that inform the rate, raising it up or down. Even if you don’t practice family law or if Gabriel’s fees don’t work for your practice or geographic area, check out this calculator to gain an understanding of the mindset for setting flat fees. Kudos to Gabriel for sharing his calculator publicly.

Rate schedules – Many firms that handle flat fee commodity work offer rate schedules – like
Simplicity Law or Upstart Legal. You could even use Legal Zoom’s pricing menus as a benchmark – because you may find that the service isn’t as cost-competitve as the LZ advertising suggests.

Any other resources for real numbers on what lawyers charge? Send them my way

  • Susan Gibbs

    Hi Carolyn,

    Great post! There’s a typo you might want to fix: You say “You can ask what others charge on a listserve” but I bet you mean “You can’t” ask.

    Best,
    Susan Gibbs

  • TamarCerafici

    Great post! Just a cautionary note to solos thinking of flat fees. Be careful about the temptation to set a low flat rate. These are a great tool (they save time, the temptation to overdo an assignment, and you don’t have to fight with your client about the month’s bill). Hard won experience has told me that you need to be vigilant about the kind of work and level of effort you use with a flat fee!

    Don’t forget that the SoloSez listserv is another amazing tool when you’re researching ways to bill and how much. SoloSez represents the biggest group of experienced practitioners in the country. These practitioners are most generous with their time and advice. All you have to do is ask.

  • Susan Gibbs

    Here’s another one, maybe: “bigly”? Should that be “big law”?

  • http://twitter.com/BruceGodfrey Bruce Godfrey

    The Laffey Matrix is generally more than twice the average rates set by the US District Court for the District of Maryland for fee-shifting attorney fee award cases.  For example, attorneys in the District of Maryland who have been practicing over 15 years get $275-400 an hour, not the $732 number for 20+ years out. http://www.mdd.uscourts.gov/localrules/LocalRules.pdf – page 126 of the local rules.  Paralegal rates similarly are about 1/2 of what Team Laffey thinks they are for Baltimore.

    It is conceivable to me that within DC itself for upper end corporate and patent work, the Laffey Matrix may approximate reality.  Maryland is an expensive place to live and do business but largely less so than the District of Columbia.  It’s a good concept and may be applicable within specific markets.

  • http://twitter.com/victormedina victormedina

    I think it’s great that we’re thinking about fees as a function of value and not hourly time spent. However, I also think it’s misguided to use other attorneys as a source for benchmarks. First, most attorneys underprice their services, so, while it’s nice to know what people down the street are charging, I would be inclined to add 30% just off the bat. Second, if you handcuff your pricing to the pricing of the “market”, you begin the cycle of commoditizing your practice. If what you do is nothing different than what your competitor does (plus or minus a few dollars/hour or by fee), then the only basis by which to compare you is on price. I’ve been on and off of Solosez for years and I’ve found that most of those attorneys don’t have practices I want to emulate, and moreover, their thoughts on fees are antiquated. 

    Instead, I propose you begin to price your services as a function of the value to the client. Here, it doesn’t matter what other lawyers do, since that’s only a measure of what they charge and what their clients pay. Rather, you want to think about the value you are bringing to a client and charge a fee that fits that value. While this works best in the context of fixed pricing, it can also be done with hourly billing. The place that it works least effectively is on contingency fees, but even there, there is opportunity for flexible pricing based on the client’s willingness to pay _something_ for the representation.

    Finally, as you think about fees, think also about your offering of services. You want to land somewhere where your services can’t be shopped on price. You want to arrange them in a way where the only thing the client is thinking about is the value proposition of your services to the fee you are charging. At that point, it’s a decision about you and the client (and not a comparison with services with the attorney down the street). If the client decides not to invest with you, no problem – he or she is not the right client for you. But you won’t be losing them to the lawyer down the street who undercut you by $50. 

    Kind regards, 

    Victor

  • http://twitter.com/mikewhelanjr Mike Whelan

    On a related note, how do I set benchmarks for my first 5 years? I have seen some numbers for firms that the Texas bar defined as 0-5 years, but that doesn’t help me set goals for each of those years. What’s a reasonable gross for a family law practice in suburban Austin for those years? This all feels like guessing, which is no way to set goals.

  • Anonymous

    Iii

  • Carolyn Elefant

    Victor,

    Thanks for your response.  I both agree – and disagree.  Yes, ideally, services should be priced on value.  But many new lawyers don’t know how to measure the value to a client.  Thus, the ability to start with a benchmark for a basic service and adjust it for other factors such as complexity, expected contentiousness of the matter, unique nature (like Gabe Cheong’s calculator) is important.  

    As to competing on price, I both agree and disagree.  You don’t want to be the cheapest lawyer in town, and you don’t want to undercharge and make it up on volume.  And you don’t want people who won’t value your services.  But.  Even within those parameters, there is a rich market for middle-of-the-line rates and great service.  I use photography as an example.  When I hired a photographer for my daughter’s bat mitzvah, I knew that I wanted better quality than DIY digital pics.  I loved the artistic style of many of the journalist-type photographers – but at $4000+, it just wasn’t worth it to me.  Instead, I went with a middle of the road photographer who was reliable and skilled – and charged half the price.  That was fine for me.  Did I value having photos?  Yes – but not enough to compromise paying my daughter’s private school and college tuition by over-spending on a bat mitzvah.  At $2000, I was still a good customer – not a tire kicker – but I just wasn’t willing to fork over that much money.  There is a market in that bandwidth that new solos can capitalize on if they are able to get a sense of what people are willing to pay, and often for people in the middle market, they will pay what the market dictates.  The beauty of today’s technology is also that we can do more for less – so we can deliver more value without charging as much.

    Having said that,  once a solo gets started and gets busy, he or she can figure out, if  desired, how to play around with what they charge.  My concern for new solos starting out is that they don’t have any guidance at all – and I wanted to offer some resources.

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  • Eric W.

    Great post. As a new solo I have faced the issue described here –coming up with an accurate benchmark to determine a value of my services that is fair to both the client and myself.

    Also, a nice update — RateDriver is now a free App!

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