5 Tips to Increase Billing Rates at Your Law Firm

While billable hours are still the primary way to generate revenue at most law firms, billing rates can also be a source of income.

But if you’ve been in practice for a while, or if your firm has been around for a while, it’s likely that your hourly rates haven’t changed much—or at all.

In some cases, lawyers may not even know how to increase their billing rates without drastically changing their existing business model.

However, there are steps any lawyer can take to increase their standard rate without having to make drastic changes to how they operate on a day-to-day basis.

Here are five things you should consider doing if you want to increase your billing rates:

law firm billing

1. Firm-wide communication

When you are trying to increase billing rates, it’s important to think about how clients perceive your firm.

You want them to feel like they’re getting the best representation possible, and that also means providing them with clear communication about how their case is progressing.

When you communicate regularly with a client about the status of their case, you are showing them that you care about their concerns and are interested in their satisfaction with your performance on an individual basis.

By increasing this level of transparency between attorney and client, you can help build trust within your practice while at the same time putting forth an image of professionalism and expertise.

2. Monitor client and job profitability on a weekly basis

You should be monitoring client and job profitability on a weekly basis.

This will help you identify trends, like which clients are the most profitable, or how certain billing rates affect profitability.

It will also give you an idea of what to charge for your services so that you can increase your billable hours and your profits.

There are many ways to measure the profitability of your law firm, but here are some metrics you should look at:

  • Revenue per hour worked – this is typically calculated by dividing annual revenue by total hours billed in a year (including vacation days)
  • Hourly billing rate – this is simply calculated by dividing total annual revenues by total number of hours billed (including vacation days)
  • Average margin per hour – this is calculated by dividing gross margins (total revenue minus expenses) by total number of hours billed (including vacation days).

3. Regularly review and update your standard billing rates

  • Review your billing rates monthly. Even if you don’t raise your rates, the market may be going up and you need to keep up with it.
  • Make sure your hourly rate is in line with other firms in your area. If it isn’t, consider raising it so that clients see you as a premium service provider.
  • Use a billing rate calculator or time tracker app to figure out what your average billable hours are per day and week, as well as how much money you need to make each month (or year) to break even financially. This will help ensure that you’re consistently working at least 40 hours per week on behalf of clients, which will increase their perception of value when they hire you again in the future.

4. Automate your time tracking process

time tracking process-dashboard

Time tracking is a labor-intensive process that can take a lot of time away from actual billable tasks and the client.

To help alleviate this problem, many law firms have implemented software applications to automate their time tracking process.

Automating your time tracking will save you time, increase accuracy and reduce human error, thus increasing rates at your law firm.

Here are some ways to automate your billing process:

  • Track all hours in one consistent place – Instead of keeping track of every minute worked in separate places or spreadsheets (or worse yet – relying on lawyers’ memories), integrate all hours into one platform where they can be tracked accurately and efficiently.
  • Integrate with other systems – Integrate your timekeeping system with other systems that already track data such as marketing automation platforms so clients can see how much work was done on each case while they were waiting for documentation or having their requests fulfilled by others working within your team’s processes.”

5. Review billing records and metrics every month

Review billing records and metrics every month:

Make sure you are meeting your goals.

If not, review your billing rates and adjust as necessary. Make sure you are billing the right amount of time for each task.

Billing rate increases are possible, but it takes work and commitment.

You may be wondering how much it will cost you to increase your billing rates.

The truth is, the answer depends on a lot of factors—including how much work you want to put into increasing billing rates, what type of legal services you provide, and whether or not your current rate is competitive for your geographic region.

In general, though, it’s safe to say that if you want higher billing rates in 3-5 years from now (or sooner), then there will inevitably have to be an investment up front.

This investment might take the form of time spent researching costs associated with similar businesses in your area and developing projections based on those findings; hiring advisors who can help guide pricing strategies; creating marketing materials tailored toward specific client demographics; attending networking events held by groups related to the practice area(s) you specialize in (if applicable); investing in tools that streamline tasks such as invoicing or scheduling meetings with prospective clients; etcetera ad infinitum!

You needn’t do everything at once—but remember: When it comes to increasing billing rates at your law firm, there are no shortcuts!

Conclusion

Billing rate increases are possible, but it takes work and commitment.

The key is to start with a plan and follow through on that plan for at least six months before seriously considering any rate increase.

 

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