Should You Use a Sliding, Income-Based Billing Rate?
Many lawyers dream of landing a corporate client with deep pockets or a millionaire businesswoman with a litigious ex -- anyone willing to pay an exorbitant hourly rate and to pay it often. But while the wealthiest few have no problem finding representation, there are millions of potential clients who need lawyers but cannot afford them. These aren't just indigent clients either.
Adopting a sliding, income-based billing rate can help you reach clients who would otherwise go unrepresented, without giving away your services for free. Could it work for your firm?
Sliding Scale Doesn't Mean Free -- or Even Very Cheap
The idea behind a sliding scale is simple. Clients are billed a particular rate based on their income and ability to pay. Many lawyers can still make a fair amount of money offering discounted services, since the market is so large.
For example, most free legal help is offered to clients who make less than 125 percent of the federal poverty level -- or about $15,000 a year for a single individual. That means someone making $30,000 wouldn't have access to most pro bono services, even if he couldn't afford regular lawyer rates. The solution? Income-based billing.
A Sample Fee Schedule
Using a sliding scale doesn't mean that you have to provide bargain basement prices, either. Take, for example, the scale used by San Francisco's AIDS Legal Referral Panel, a nonprofit that connects people with HIV/AIDS to legal services. Lawyers are allowed to charge referred clients only on a set, income-based scale:
|
Client's Gross Income |
Hourly Rate |
|---|---|
|
$0 - $20,000 |
0 |
|
$20,001 - $25,000 |
50 |
|
$25,001 - $30,000 |
80 |
|
$30,001 - $35,000 |
110 |
|
$35,001 - $40,000 |
120 |
|
$40,001 - $45,000 |
140 |
|
$45,001 - $50,000 |
155 |
|
$50,001 - $55,000 |
170 |
|
$55,001 - $60,000 |
185 |
|
$60,001 - $75,000 |
200 |
|
$75,001 - up |
250 |
As you can see, under this fee schedule, middle class clients would still pay a fair rate. Of course, whether you adopt a sliding scale, income-based billing rate depends on the needs of your firm and its potential clients. You'll want to run some calculations before switching over, making sure that you can balance lower rates while keeping your business afloat. However, if you can make it work, you could open yourself up to a whole new legal market, while helping to close the so-called justice gap.
Related Resources:
- Put Lawyers Where They're Needed (The New York Times)
- Attention New Attorneys: Target the Underserved Middle Class (FindLaw's Strategist)
- Post-Bar Associates and the Ethics of Billing (FindLaw's Strategist)
- Beating Billing Blunders: Time Tracking Tips to Help You Get Paid (FindLaw's Strategist)