Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the managing partner of a 14 attorney estate planning firm in Lexington, Kentucky. We took a hard hit in 2008 during the recession and have just been recovering over the last couple of years. Business is up, but profits are still flat. We have not raised our hourly billing rates for several years for fear that we will not be competitive and will lose out on business. However, we believe that we must increase our billing rates and are concerned. What are your thoughts?

A. I would bet you are leaving money on the table and you should in fact increase your billing rates. I often find law firms are more concerned about their rates than their clients are. You must remain competitive for the value package (including your experience, expertise, and reputation) that you are delivering. This does not mean being the cheapest estate planning firm in town. Some of my most successful estate planning firms are those charging the highest fees.

Here are a few thoughts:

1. Do some research on the going rates in your market area for estate planning law firms of your caliber.
2. See if there is data available from your professional organizations such as The Academy of Estate Planning Attorneys, The Academy of Elder Law Attorneys, etc.
3. Determine what your competitors are using other than time billing fee arrangements.
4. Explore alternative billing arrangements for estate planning matters. Many of my client law firms are using flat fee arrangements for estate planning.
5. Since your clients are individuals and typically single matter clients (at least initially) experiment (pilot test) with new prospective clients with increased rates and determine whether there is "pushback" and to what extent your prospect/client conversion ratio is being impacted.
6. Offer prospective new clients more than one option.
7. Initially leave your old rates in place for existing clients with open matters.
8. Measure and evaluate impact.

You may find that clients are not as concerned about your fees as you are. 

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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.