Greedy Tip of the Week: Up Your Hourly
When was the last time you raised your hourly rates?
If it's been more than a year, you might want to consider evaluating the local legal market, and then raising your rates. Just like in any other industry, as you gain experience and your skills improve, you can command higher pay.
For current clients, you'll need to send out a notice of a rate increase, and unless your retainer agreement allows for rate increases upon reasonable notice, you may need to get permission from your clients, or have them sign an amendment.
Rate Hiking All the Way to the Bank
Generally, as attorneys gain more and more experience, their rate increases. Clients are aware of this fact (or at least should be). And if it's in your retainer agreement, a client won't be too surprised when you send the notice explaining that you're raising your hourly rates per your agreement. Though be smart, and know which clients you might risk losing by even broaching the subject of raising rates, and (playing the devil's advocate here) whether losing those clients would actually even matter.
However, some clients may be upset, or may even try to oppose the rate hike, especially a substantial one. If you meet with opposition, you can certainly back down and make it seem like you're doing the client a favor by continuing to work for your old, now below market, rate, or even try to negotiate a compromise rate somewhere between the new and old.
Take Baby Steps
If it's been several years since your last rate increase, you may want to make a big jump, but clients are more likely to have an adverse reaction to big increases. Consider breaking it up into smaller increases that span a period of a few years. After all, it'll be easier for a client to stomach an hourly rate increase between $10 to $30.
And if you're thinking $10 is a pitiful sum, consider this: For every $10 you increase your rate, you're adding about $20K to your annual revenue (assuming you can hit 2,000 billables per year). Steady small increases of $10 to $20 per year, or every other year, aren't likely to ruffle too many client feathers, and over a period of years, those small increases really add up.
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