Raise Up: Law Firms Should Increase Rates Annually

The chief method for law firm business management is inertia, largely.  That means you can pretty much default to lawyers doing nothing, rather than something, anything. 

 

That, of course, extends to financial management.  Lawyers tend to run up accounts receivable, because they don’t bill regularly.  They never run revenue projections, either; so, they can’t build to specific financial goals.  They don’t run financial reports regularly; so, they don’t have a consistent understanding of the financial health of their law firms. 



Neither do attorneys raise rates regularly.  Across the country, law firm rates struggle to keep up with inflation. That’s not enough. 

 

And, while most attorneys think that raising rates is a dangerous step, there are ways to manage it, without alienating new or existing clients.  In the first instance -- don’t go crazy: it’s okay to raise your rates by $25/hour, let’s say.  You don’t necessarily have to make up for lost time by doubling your rates, or adding a tripe digit rate increase.  Just start small, and then setup a process.  To that end, you’ll want to raise your rates at least annually, by letter, to your existing clients; and, update your rate sheet to reflect those changes.  Let your clients know that this is something you will do on a recurring basis, each year.  It’s easier for new clients: just apply the new rates.  Make sure your original fee agreement includes language reflecting rate increases, too.  Like many things related to more effective business management for law firms, this is mostly about creating a system, and sticking to it. 

 

If you can send out holiday cards every year, you can raise your rates every year. 

 

. . .

Looking to revise your financial management tactics?  We can help. 

Through a unique partnership between the Maine Board of Overseers of the Bar and Jared Correia’s Red Cave Law Firm Consulting, Maine attorneys have access to experienced law practice management consultants at a special discounted rate. 

To get started, visit Red Cave’s landing page for Maine attorneys, and start running your law practice like a business.

Comments

Post a Comment

Popular posts from this blog

The Nice and Naughty List: How to Pick New Software

Image
Selecting new law firm software can be a daunting prospect .  There are so many options, that attorneys are often waylaid by a paralysis of analysis, and then don’t end up making any positive changes at all .  This is why a lot of law firms end up relying on old and obsolete technologies, rather than updating to modern tools .  Once again, inertia becomes the single worst enemy of law firms.   But, when lawyers do end up selecting specific softwares , they often do so in a hasty manner, just to ensure the painful process end s quickly .  In that case, the selected software is often not a good fit for the law firm, so that attorneys and staff end up wasting time building inefficient workarounds, that dress up the problem, and make the software just a little more palatable for the law firm ’ s use case.     Neither option is particularly compelling.     And, the truth of the matter is that the process of selecti ng the right software for a law firm is not an easy one , and it takes
Read more

Buried Treasure: What Software Features Are You Missing?

Image
What’s been great lately, is that lawyers are increasing their reliance on technology .  That means that law firms are adding efficiency, and revenue.     This is fantastic , absolutely .  But, there’s still more work to do.     That’s because lawyers may be overpaying for technolog y; and, it’s largely because they’re buying new stuff without looking harder at what they already have.   In fact , there are lots of instances where attorneys will purchase a new product without assessing whether they have that tool already included as a feature in another technology platform .  This often happens with productivity software and law practice management software .  The former can include tools like video conferencing and internal chat as product features (meaning you don’t have to pay any more money to use them); and, the latter can include tools like e signature and epayment as product features .  In some cases, and depending on a user’s subscription level, there may limitatio
Read more

Arrested Development: What Do Modern Law Firm Associates Want, Anyway?

Image
There’s a lot in flux around the legal industry of late .  Work roles, places and preferences seem to be changing constantly .  Yet, law firms continue to require associates to move business forward.     Managing partners often think, in these instances, about what the law firm needs .  But, even if in an employer’s market, it pays to consider what your associates ( and potential associates ) actually do want – especially if you want those associates to stick around for a while, along with all the capital you’ve invested in them.   One of the major challenges of hiring is that those doing the hiring are often a generation (or more) removed from those they are hiring .  There’s lots of barriers there to begin with; and , most of those hiring partners are not going to take the time to learn more about candidate preferences.     So, let’s do a quick crash course on what millennial ( and younger ) employees want out of an associate position:     Flexibility. Especially with the m
Read more