Fee Shifting: Is It Time To Revise Your Rate Structure?

A lot of law firms have been sitting on hourly rates for a long, long time. But trends are emerging that are causing attorneys to reconsider that hard stance; among them the fact that legal consumers are seeking flat fees — they want to know the total cost of the representation.  Couple that with the fact that law firm rates barely keep up with inflation, and the massive changes that the rise of the convenience economy has wrought, and there’s probably no better time to reconsider your rates than right now.

If you do decide to shift off of your standard billing practices, there are a number of options, including:

• Raising your hourly rates, even incrementally, on a schedule, can deliver significant revenue gains over time.
• Launching flat fees on a rolling basis works as starting point.  It’s not like you need to decide tomorrow whether you are going to move to flat fees, or not.  Try them out, for certain new cases, and see if you can find the right value proposition.
• If you’re taking credit card payments anyway, why not automate those?  You’ll need to reset your fee agreement (to get permission to do so from your clients) and tweak your payment management process; but, that’s a pathway to eliminating accounts receivable.
• If you can’t get to a flat fee (or don’t want to right away), instead adding a success fee = bonus, if your law firm comes in under a quoted number of hours, aligned with a reduction in hourly rates for any hours billed that are over a quoted number.
• An evergreen retainer = a threshold retainer level that a client would ‘top off’ on a recurring basis, e.g. – for a $1500 evergreen retainer that dips to $1200, it’s the client’s responsibility to pay in $300 during the next payment cycle.

The world of law firm fees is your oyster, even if most law firms stick to the scrod.

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If you want to revise your fee structure, we can help!

The Wyoming State Bar offers free law practice management consulting services through Red Cave Law Firm Consulting.

To request a consult, visit the Wyoming State Bar’s law practice management page, and start running your law firm like a business.

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