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Ed Poll
  Week of March 4, 2008

How Reasonable Are You?

This is the time of year when lawyers and law firms often review their billing rates and revise them upward. Of course that's trickier to do than ever this year, with recession talk on everyone's mind. If a rate increase is warranted, you shouldn't be afraid to implement it, but you should analyze very carefully how much you want to increase—and why.
Ultimately, all pricing is arbitrary and depends on the seller's understanding of costs, desired profits, and customers. The decision ultimately is the seller's choice. When setting their billing rates, lawyers have only one formal requirement. According to Rule of Professional Conduct 1.5, "a lawyer shall not make an agreement for, charge, or collect an unreasonable fee." The Code defines "reasonableness" by such factors as:

  • The time and labor required
  • The novelty and difficulty of the questions involved
  • The skill requisite to perform the legal service properly
  • The customary local fee for similar services
  • The amount involved and the results obtained
  • The time limitations imposed by the matter
  • The experience, reputation and ability of the lawyer

So, are lawyers who charge $1,000 an hour "reasonable"? How about $100 an hour? Ultimately, the rate that most lawyers charge is based on their "gut feeling" after evaluating such factors as their years of experience (more years out of law school means a higher billing rate), their practice area (mergers and acquisitions work, for example, is valued higher than family law), their geography (New York lawyers charge more than those in Des Moines), the number of lawyers in both the geographic and practice areas near them (the more lawyers there are, the higher the price competition), and type of billing method (hourly rate, flat fee, contingency fee, and so on).
There is no perfect time to raise fees, just make sure you have appropriate responses to support your case. Those clients who do not want to pay the higher fee will seek other counsel. Those who believe your service to be of value will accept the higher fees and remain with you.

Ed Poll

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Ed Poll
Ed Poll

Personal Commentary
Spring must be close at hand. The sun is shining, the weather folks are telling us that the temperatures will rise this week, and I'm off to cycling camp for the week. This is cycling's equivalent to baseball's fantasy spring training in Florida. This will be the fourth year I've allowed myself to take this adventure. It's always filled with excitement, nervous anticipation, and the joy of getting away for a respite. I find my reactions quite interesting, almost the same as when I used to start a jury trial in years past. It's the desire to do well, to compete at a high level and to be among the best. Our society drills the competitive spirit into us so deeply that it's hard to ignore it, even when in a recreational moment. In a recent interview, Tiger Woods said that the competitive spirit was drilled into him by both his father and his mother. When asked if he would ever allow his months old daughter beat him in golf, he quickly replied "NO!" Thus, it is.
Though I will never have Lance Armstrong's cycling success, and I may not even fulfill my Walter Mitty dream of riding coast to coast, I am still riding on the road with cyclists of all ages who love the sport and do as much as they can within the constraints of their time, their physical abilities, and the psychological permission they give themselves to enjoy their adventure. I'm off, and I'll report back to you soon.
Best wishes,
Ed Poll

Ed Poll
Ed Poll

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Ed Poll
Ed Poll

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