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In Search of Perfect Client Service Why lawyers don't seem to get it

Lawyers Can’t Help Themselves: Client Gouging is just a way of life

Posted in Client Service, Commentary, Hourly Rates and Alternatives

In reading my morning mail, this post caught my eye: Don’t Lose Your Shirt When Raising Fees.  So I read the post, written by the CFO of a firm named Rivkin Radler.  It contains 5 suggestions on how to raise your rates and feel good about it.  To me, it reflected all that is wrong about the way lawyers view their clients.

Let’s start with this:

Don’t let fear keep you from raising rates! Chances are, if you are making excuses to avoid a rate hike, those excuses are a cover for speculations based on fear.

WRONG!  All the data and reporting available show clients are incredibly concerned about their legal spend, are moving more work inside where the cost structure is materially lower that what is paid to firms.  Fear of how clients respond to rate increases should keep you awake at night, especially if you can’t demonstrate that you have reduced your internal cost structure with the zeal of a private equity investor.

Then there is this gem:

Keep in mind that smaller increases — 3 to 5 percent per year — are generally better, and are met with less resistance when they are implemented consistently (i.e., the same time each year).

I just did a quick Google search–the cost of living increase for 2014 was just less than 3%.  But the author suggests 3-5% as if lawyers have a right to not only COL increases, but also “more.”  Lawyers need to understand that clients see this as implicit greed.

There are other statements made in the post which I think a fundamental lack of appreciation for the changed dynamic between law firms and clients, but these points suffice to show how much I disagree with the author.  There is no business I know of that has an unfettered right to increase its price annually.  Many are required to reduce their price to reflect the benefits of increased efficiency.  When lawyers defend a system that suggests they are entitled to a greater more of their client’s wallet just because 365 days have passed (not to mention the hidden fee increase built into associate advancement), I just have to express my disagreement. It laziness, greed and imperiousness.  Valorem takes a somewhat different approach.