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God is in the Details – from Legal Fees to Reporting Hours‎

lawyer legal feesUnfortunately for many lawyers practicing in Israel, pricing hours is not a trivial manner. Whether a young lawyer or a veteran -many lawyers are baffled how to best set a tariff

What is the desirable rate? Why not lower the tariff to position ourselves more attractively in the competitive market? On the other hand, to communicate higher value, perhaps we should raise the price.

Don’t compete on price

Often – especially in times of crisis – lawyers give in to temptation, lowering their fees in an attempt to recruit new customers. Despite the Israeli reality of heavy competition, be chary of being drawn down this slippery slope by differentiating your service with a lower rate

Of course stay attuned to the market – sometimes price adjustments are necessary. But uniqueness based on a low tariff – can actually be counter-productive in the long run, especially in a profession whose key resources are time and expertise

In the immediate term, lowering your rate may accelerate the customer recruitment. However, such customers will lead to more of the same – lots of work with marginal profit. It’s tough to grow your firm like that

Not only will your business fail to grow; soon enough a competitor will emerge offering even lower tariffs. You valued your firm on price, so expect your clients to value price, leaving you in their droves for the lower-priced service. Needless to say this becomes a ‘vicious circle’, to keep in this game you will need to further erode margins

In Israel’s competitive legal jungle you need to create a different type of reliability, building relationships with clients that can sustain for years. Relationships that will not shatter over a slight change in price over at the competitor’s shop

How to win this critical loyalty? Quality of the service, unique personal skills and superb legal abilities. Get that right, and you’ll stay in the market for many years

Should you actually raise the tariff

Here’s a simple example – take a young lawyer charging $500 for every case. At this price the lawyer recruits 10 cases per month, bringing him a profit of $5,000 . Conversely, if the fees go up to $600, he may harvest a smaller number of cases, so the total income can fall below the $5000. But is this decline in income necessarily negative? … a question

Although in the $600 scenario the lawyer’s income declined, his free time increased. This extra time can be invested in new customer recruitment and marketing, leading to future revenues. We can also consider that the $600 rate represents better quality work than the $500 rate. Do we have a winning formula? … another question

Do not forget the offering here is legal service – perceived as prestigious due to the knowledge, professionalism and expertise required. Find the added value you provide for clients, the value that distinguishes you over other attorneys, especially over attorneys with similar legal capabilities. Quick response intervals, a charming telephone manner, expertise in a specific field. The more clearly differentiated, the higher your fees can rocket relative to competitors

Carefully craft your client’s Hours Report

law firms legal feesAfter determining the appropriate tariff and providing the service, the final interaction with the client is payment, when he reviews your report summarizing the work and listing the hours accrued

Most lawyers are careless about the Hours Report, regarding it as a formality. However, as your fees rise, the client will naturally examine this report meticulously, suspiciously. To be truly and comprehensively professional, we suggest this documents demands close attention

Put yourself in your client’s shoes; would you be satisfied with an overcomplicated task description? Or rather something short, laconic and simplistic? It’s a fine balance to strike; clearly these are quite negative extremes

Make sure you are punctilious on several key points

A) Avoid reporting multiple tasks within the same period of time. Try splitting into small, reasonable segments to make the activities easily readable, appearing sensible and organized

B) Ensure data is entered immediately after performing a task, to avoid accidents of memory. You can also deploy specialized software that rigidly tracks time and task descriptions

C) Speak the language of the client. For a customer who is knowledgeable of legal lingo, report professionally. For a non-technical client, ensure all communication clear and straight-to-the-point

There are no magic formulae here. Still, a sensible adequate pricing strategy, and well-considered client conduct is decisive, both for your long horizon, and for the immediate present, with all its financial pressures. Keep these principles in mind and adapt wisely to the reality that presents

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