Want access to all Practice Builder materials and blog posts? Learn more about becoming a Practice Builder subscriber here!
By Jared Correia, Red Cave Legal, Official Consulting Partner of the IndyBar
The majority of business owners have a very difficult time price setting. However, much of that effort (meant to define the value for what a professional does) is most often undone by those same professionals. This is especially true of lawyers, who don’t like to talk with clients about money and are more than willing to discount their services at the slightest provocation.
This becomes a significant problem as attorneys reduce their effective rates via the method of death by a thousand cuts. Law firms usually bleed revenue in fits and starts, until they begin to hemorrhage it. Constantly discounting in an inconsistent manner is where it starts. Plus, clients and referral sources talk about how a particular lawyer can be a soft touch, so not only does this issue exist in a vacuum, it most often mushrooms over time. Law firms that staunch the bleeding tend to make more money both overall and per hour.
The best way to preserve the value of your fees is to utilize and maintain a rate sheet. Simply put, a rate sheet is a list of your prices, which may include discount rates. The use of a rate sheet solves for the most common attorney foible in sabotaging settled billing rates—that is the ad hoc application of discounts. Treat the rate sheet as inviolable, including only discounting at the percentages included on that sheet, and you’ll be guaranteed to make more money. This tactic is especially useful for solo and small firm lawyers, with whom clients know the buck stops.
I’ve written in further detail on this concept here.
If you can’t seem to help but discount, we can help you to make what you’re worth.
The IndyBar offers FREE law practice management consulting services through Red Cave Law Firm Consulting. To request a consult, visit the IndyBar law practice management consulting landing page, and start running your law firm like a business.