How and when can my law firm raise its rates?

Misbah Jalal Siddiqui

How and when can my law firm raise its rates?

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Law Firm Rates

Because of rising costs, inflation, and desire to attract and retain talented employees, most law firms raise their rates regularly. Deciding how and when to do this requires a strategy for determining what to charge and for communicating changes to clients.

Determining rates with market research. Conducting research in local markets can help firms determine what to charge. Price point should communicate value within market rates. If prices are too high, clients may not be able to afford to engage with a firm. Research also suggests that customers perceive greater value of higher-priced products, which means that law firms who price themselves too low can be perceived as providing low-quality services.[1]

Valuing expertise. Attorneys bring specific expertise to a problem, which was acquired through a significant expenditure of time and money. A few minutes of strategic advice can offer a considerable amount of value. Rates should reflect this fact.

Rate increase models. Some firms increase prices annually, while others opt for occasional billable rate adjustments. The industry standard for annual increases is three to six percent per year.[2] For firms that don’t raise rates regularly, each increase may be more substantial. Making smaller increases more frequently can lessen the burden on clients.

Communicating with clients. Increases are often communicated by mail at the start of a new calendar year. Some firms offer an incentive to retain work before the increase by honoring previous rates for work contracted before a certain date. A good rule of thumb is to give existing clients 60 days’ notice. The announcement can be brief, as rate increases are industry standard, and can discuss value-adds if relevant.

Contingencies. Some clients will balk at a rate increase. To avoid this, firms often communicate strategically with premier clients. After all, an increase of $25 per billable hour is much more significant for major clients than for those who rarely engage legal services.

Firms should develop a contingency plan in the event that major clients object. This can include proposing an incremental increase in which the rate increase is spread over several months. Contingency plans should also include when to walk away. Firms may agree to part with a client in order to achieve a higher billable rate across the board.


1. How Customers Perceive a Price Is as Important as the Price Itself
2. How to Increase Your Billable Rate

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