February 22, 2006
Law Firm Rate Increase Letters
Sometimes, the less said the better! Consider this real-life example letter announcing a rate increase:
“…The firm has decided to match recent associate pay raises made by the top [city name omitted] firms… We will absorb some of the compensation increases in the form of lower profit margin on all associates… we are not increasing budgeted billable hours. Instead we are raising hourly rates by $10 per hour for associates with 1-4 years experience and by $15 for more than 4 years experience.“
“We believe the rate schedule remains well BELOW all of our first-tier competitor firms in ……..” The letter continues on and on and on.
The letter should have reported the moderate increase and left out most of the explanation. As it is, the letter is like giving instructions for building a watch when asked, “What time is it?”
The majority of a firm's clients will accept moderate or reasonable increases without the need for additional explanation. “We share your pain explanations” like those above can be held in reserve for client situations that require more justification.
I should add that originating or billing attorneys should know those clients who will have heightened sensitivity to an increase. Those clients deserve a call or visit before the letter ever goes in the mail.
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