January 2, 2007
Increasing a Law Firm's Effective Rate
When it comes to pricing, the firm’s focus should be on more than its published rate list. Look for measures to increase the effective rate being realized by the firm.
Law firms do not do business with every client on a single hourly rate schedule. Those exceptions are often the key to a low effective rate. On the other hand, firms with a standard rate schedule may be overlooking the opportunity to price higher value services at a higher rate. In addition to periodic review of the firm’s standard hourly rate schedule, the firm should be engaged in the following steps to increase effective billing rates and improve partner income.
- Increase existing low negotiated rates to their higher competitive level
- Set higher rates for selected areas of specialization and expertise
- Identify new specialty areas and train or acquire expertise, thereby increasing value and the potential for increased billing rates. Market for better clients—those willing and able to pay more
- Develop and enforce case acceptance standards that emphasize the value of matters undertaken
- Improve (and market) the quality of service, presentation of work product, technology, efficiency and responsiveness
- Take advantage of opportunities for alternative billing (value based) pricing
- Invest in a better business system for pricing flexibility, easier price changes, improved anniversary date tracking, etc.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
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Filed under Law Firm Bus Model by Tom Collins
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