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3 Ways an Attorney Can Raise Rates Without Losing Clients

By Andrew Chow, Esq. | Last updated on

New Year, new rates? It's something your law firm may be considering for 2012 as the economy slowly improves. But what's the best way to implement a law firm rate increase without losing clients?

Experts say it comes down to communication, calculation, and timing. Here are some tips on how to handle each prong of the law firm rate increase test.

1. Communication

If you have specific reasons to justify your law firm rate increase, communicate those reasons to your clients. For example, perhaps your firm froze its rates when the recession took hold, out of respect for your clients' finances. Or perhaps your firm chose not to bill clients for de minimis expenses such as printing and scanning.

No matter how small, financial concessions should be shared with your clients because they build goodwill, suggests John Gilbert, senior vice president of nQueue Billback, a legal financial software firm. If clients realize you've been keeping costs down, they may be more amenable to a rate hike.

Even if your firm continues to write-off small expenses, your client's bill should reflect that, Gilbert writes for FindLaw's Law Firm Management Center. "That way, even costs not recovered provide some value to the firm in the form of goodwill."

2. Calculation

By how much should you raise your rates? Smaller increases are generally better -- around 3% to 5%, says Edward Poll, an attorney and certified management consultant. Remember your client probably chose to retain your services because of your skills, experience, and reputation -- not because of your rates, Poll says.

3. Timing

Timing is everything, especially with a law firm rate increase. The worst is not telling your clients at all -- and having them find out about your new rates on their invoice.

If you can, try rolling out your rate hike in phases to different groups of clients, Poll suggests. You can test the waters by first introducing your new rates to new clients, then moving on to newer existing clients and finally your major existing clients.

Once you come up with a schedule for your law firm rate increase, let your clients know in writing. You can also confirm that your fee hike still fits your clients' budgets.

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