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Clients are wondering. How much? When will I know? Some wonder how they will find out. A few top legal decision makers express amusement about exactly how and when firms initiate direct contact when sharing rate increases — setting the rate increase dance in motion.

Corporate legal budgets are largely already set for 2022. Clients built in a rate increase — but it always seems to fall short of the actual rate increases.

How and when you present the rate increase has as much to do with your client’s reaction as the increase itself. Corporate counsel shared some of the best and worst ways law firms talk about rate increases.

Among the many, here are the 6 most offensive:

“The rate increase finally surfaced in my April invoice for work performed in January.”

“I learned (the rate increases) by reviewing my invoice line by line — not a good use of my time.”  

“I received a snail mail letter addressed to me as “to our valued client” in January.”

“My partner asked how I thought our litigation was going — I told him I thought it was going well — and then told me “That’s good because rates are going up.” I am not sure if he was joking but I thought he was actually asking for some kind of feedback.”

“I called and asked my partner in November — he told me he would let me know in January, but he didn’t. I had to call him again, and again.”

“An email from the law firm’s Finance Director. I save it so I would always have the name handy.”

On the other side of the coin — clients tell us about the most palatable approaches:

Rates are going up. Let’s review the matters and see if we want to change staffing or revisit our patterns of communication and streamline both.”

“As rates are going up should we think about using a fixed fee — for at least a portion of the work?”

“I know it seems high but we will gain a lot in productivity because (associate 1 and partner A ) are more experienced with you and the matter — we should make this back.”

“The rates are going up, but I was able to keep the same discount we agreed upon.”

“The firm is raising rates, but I was able to stay under the standard increase. Here is the impact on the current matters over the next 12 months — let’s talk about options to bring this down.”

Virtually every firm clients work with is raising rates. Your increase is judged on:

    1. How you deliver the message
    2. How other firms deliver the message
    3. How much your rate will increase

You can control 2 of these variables. It is easy to forget rate increases are part of the client experience — it may even turn into a branding event.

Passive contact — email, third party, or snail mail — has the unintended effect of diluting the perceived commitment to the relationship. Clients expect the increase, so how you handle it becomes more important. Almost as important as how you handle the push back — which may not come for a few months.

We discussed handling rate increases in detail here.

Best in the market ahead.

The Mad Clientist

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