Would you hire yourself to solve a legal matter and would you happily agree to pay your fee?
This is the question you need to ask yourself and respond to with an honest answer.
Many lawyers don’t understand why they are perceived as better (or worse) than the next lawyer, what their true value is to the client and why they are (or are not) worth their fee. And if they don’t know, how are potential clients to know? And when clients don’t know why a lawyer is worth their fee, they will shop on price. Period.
If you don’t know your value as an attorney you may very well be attracted to this recent billable hour calculator presented by Lawyerist which purports to help (new) lawyers calculate their hourly rate based upon their general overhead and annual needs in order to survive. Certainly, understanding how much money you need to bring in in order to keep your doors open is an imperative. But I would argue that there is so much more to the calculation then just figuring out the cost of your rent, malpractice insurance, student loans, etc., and then passing this along to your clients in the form of an hourly rate. This is not a client-centric approach. It does not consider the value you are imparting to the client. It is saying, ‘This is what I need to earn. If you can pay me what I need to earn, then I will represent you.’ (Of course, Sam Glover is not truly saying this but if the only blog post you read this year on calculating fees is the one referenced, you could be misled into making unfortunate business choices.)
I’d like to give you a perfect non-legal example of how a client goes through this decision-making process.
This summer I decided I would get my son a math tutor to give him a leg up for his next year of schooling. I asked around, searched online and got a rough idea of what the hourly rate should be. It was fairly consistent – $60 per hour. I talked with different organizations, several individuals, and the fee appeared universal. However, no one really captured my attention. So, I contacted my son’s math teacher, told her what I wanted to do and she said, “I tutor students over the summer.” I said, “Great. You already know my son so it should be easier. How much do you charge?” She said, “$80 per hour.” This was thirty three percent more than I expected. Multiplied by several sessions and it was substantially higher than I was prepared to pay. I told her it was considerably more than the majority of tutors I spoke with. She very nicely and quickly said, “Quite possibly it is. However, I’m trained in Singapore Math. I know what the curriculum will be next year. I already know your son and his work style and I will drive to meet you half way. I also understand you want multiple sessions. Because I already know your son, I don’t believe he needs multiple sessions over the summer. He may just need two sessions closer to the start of school. Not having multiple sessions will save you a considerable sum. Your goal is to have him confident and ready for the fall. I’m confident we can do this in two sessions.”
In a handful of sentences she addressed my concerns, showcased her uniqueness and imparted value which took the discussion away from just the hourly rate and refocused it on the end result – a student confident in his math skills at the beginning of the school year. This was and remains my ultimate goal.
Every time you meet a client, if you don’t impart value unique to your representation and stay focused on the desired end result for the client, they will default to price. Yes, price is very much a consideration but it is up to you if it is the main consideration. According to Jay Foonberg and numerous studies, price is not the main consideration for the majority of clients. Your goal is to have price be further down the food chain in the decision-making process.
If you now use the billable hour calculator to determine roughly what you should be charging to make ends meet and then factor in why you are uniquely valuable to the client, you will have an hourly rate or flat fee that properly reflects both. You will also be more confident and more secure when presenting these fees and for most lawyers, this is half the battle.
How have you showcased your value to clients?