Price Yourself Out of the Market
What do I charge for my services?
That’s the question many lawyers ask, especially those who run a solo practice.
You could argue it’s a non-issue, that the market sets the rates, it’s out of your hands, etc. That’s true, to a certain extent. The market (and the law) does set boundaries. If you want to keep your license to practice, you can’t set your rates unreasonably high. If you want to stay in business, you can’t set them too low.
But ignore all that for now.
Here’s why you should price yourself out of the market.
Don’t Strangle Yourself
The question, “What do I charge?” is a sleeper question, the kind of question that, if you give a bad answer, sneaks up on you and strangles you in the night.
Don’t get strangled by giving a bad answer like one of these:
- My hourly rate is $150 because I’m a greenhorn new lawyer
- My contingency fee is 30% because that’s standard practice
- My flat fee is $500 because that’s what it’s always been
It’s not the rates themselves that make these bad answers. There’s nothing wrong with $150 per hour for a new lawyer handling civil litigation, or 30% contingency on a personal injury case, or a $500 flat fee to handle a Chapter 7 bankruptcy.
It’s the straightjacket, lock-step approach to why you set your rates the way you do that’ll strangle you.
Because if you don’t think for yourself, and clearly articulate your reasoning in how you price yourself, one day soon you’ll find yourself clamoring for the no. 1 spot on Google search results because you think you have no other option.
Know the ‘Why’ Behind What You Charge
Those who clamor for the no. 1 spot on Google tend to spend a lot of money on the effort. Then they despair when it doesn’t happen, or when they fall off the page, and local competitors move up in the rankings.
Sometimes it’s just an ego thing. They want to grow and grow and be the biggest player in town. That’s fine. I’m not laboring under the illusion that search results and online visibility don’t matter, especially for so-called “high volume” practices like bankruptcy or Social Security disability.
But keep your flat fee at $500 because you want to grow and grow and get every case possible, not because you’re afraid that you’ll scare away potential clients.
Otherwise, if you’re not trying to be the biggest player in town, who cares if you scare away some potential clients by raising your flat fee to $750 or $1,000 or even higher? Who says you have to run a high-volume practice at all?
If You’ve Got the ‘Why,’ Here’s the ‘How’
Now here’s where it gets interesting.
Let’s say you’re prepared to price yourself out of the market. Not literally, mind you, but high enough that you’re sending a distinct message about your services as a lawyer.
Here’s what you can do:
- Run a test case. If you’ve long been undercutting the competition, or simply running even, and you’re afraid what pricing yourself higher will do to business, try it on one case and see what happens. It’s just an experiment. It won’t kill your practice.
- Do it from Day One. If you’re planning on starting your own solo practice, decide to price yourself out of the market from the start. This works well if you already have some experience (a former public defender, for example) because you know what you’re doing and can confidently quote a higher rate.
Pricing yourself like this will automatically weed out some types of potential clients (like those who would likely skip out on a lawyer’s bill, anyway, no matter its size) and tends to attract meatier cases.
Either way, your focus is no longer being no. 1 on Google. Instead, your focus is on finding good cases, representing decent clients who see the value in your work, and then delivering on that value by having the time and financial resources to give each case what it deserves.
Warning: This Isn’t For Everyone
I’ll end with some thoughts as to what type of lawyer can use this approach. Again, it’s not for everyone, and again, you can’t be unreasonable with your fees. There are limits to how much you can charge.
But pricing yourself out of the market, so to speak, is great for the following type of lawyer:
- You’re at the top of your game (or intend to be). Great lawyers know that true mastery is never really won. And the true master knows that there’s always more to learn. So to be at the top of your game, whether a greenhorn or not, means you price yourself, not everyone else. It’s how you value the kind of service you know you can provide.
- You care about your clients more than anything else. Pricing yourself as I describe isn’t about money or getting rich. It’s about having the time and resources to do a bang-up job on every case for every client. There’s a difference in any given month between 20 misdemeanor DWI cases at $500 per case and two felony DWI cases at $5,000 per case. Both approaches have you taking in $10,000 that month. But only one has you spending a lot more time on client service (and a lot less time running to the courtroom).
- You do not possess a “lack” mentality. If you think there are only so many cases, but so little time, and so much competition in the form of other lawyers ready to snap up all the business, this isn’t for you. You’re too afraid to look like you don’t have all the answers and to say “I don’t know” when you really should. Unfortunately, it seems to me, in conversations I’ve had, that many lawyers possess the lack mentality, the kind where lawyers are all a dime-a-dozen, and the future of law is in doubt, and “how are my kids gonna eat,” and it’s all just doom and gloom so let’s head to the safe room now while there’s still time.
There’s nothing wrong with being a businessperson who happens to be a lawyer. If you want to run a business, and the actual law practice is somewhat secondary, that’s fine.
But if you’re at the top of your game, you care more about your clients than the money, and you’re not afraid to compete on a higher level, pricing yourself “out of the market” might be one sane approach to the practice of law as we head into the future.