Lawyers Should Share Their Billable Hour Rates With Other Attorneys
Attorneys may find they are not charging enough for their legal services.
A while ago, I wrote an article about how employees should not be scared to share their salary information with other people who work in the same workplace. Indeed, employers have considerable power to deny workers just compensation when employees do not know how much everyone makes, so spreading this information can have positive benefits. In a similar vein, lawyers should not be afraid to share their billable hour rate with other lawyers, since attorneys may find they are not charging enough for their legal services.
The amount an attorney charges for legal work varies greatly and can depend on a number of factors such as the experience of the attorney, the size of the firm, and other considerations. Depending on the circumstances, the amount charged by lawyers for the same work can be extremely different. I was once sitting in court for a routine matter. Any lawyer could have handled it, since we basically only needed to sit around for hours and speak to the judge for two minutes at the end of the conference.
During the court appearance, I discovered that my adversary was charging his client at least three times more than I was charging mine for the same appearance. Granted, my adversary worked for a Biglaw shop and probably handled a wide assortment of cases for the client, including this one-off court appearance. However, the experience really opened my eyes to how varied fee arrangements can be with clients.
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It is very difficult for lawyers to make rate determinations in a vacuum. Lawyers can consult online guides about how much money a lawyer charges in a given area, but such guides might be outdated, or they might not accurately reflect the amount of money charged by similarly situated lawyers.
Without accurate information, lawyers starting out might charge the lowest rate they think is reasonable to clients and then slowly raise this rate until they face resistance by clients. However, this is a slow process that can take considerable time, and it is difficult to renegotiate fee arrangements for clients who may have gotten in at the beginning of this cycle. It would be better for lawyers to know which rates are average in a given area so they can charge that sum with confidence and not face blowback from clients.
The only time in my practice when lawyers ask other attorneys for their billable hour rate on a regular basis is if one attorney is referring a client’s work to another lawyer. I always felt uncomfortable answering questions about billable hour rates charged to specific clients since this is almost certainly confidential information.
However, getting on the same page about billable hour rates can be helpful. An attorney may not want to even talk to a client if the lawyer knows that the client is unlikely to agree to that lawyer’s billable hour rate. When asked about my billable hour rate in this context, I usually reply with the range of rates my firm charges in general so that I do not divulge client-specific information, which I feel strikes the balance between providing helpful information and protecting client confidences.
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Even if lawyers share their billable hour information, other attorneys should still take these details with a grain of salt. Some lawyers might want to inflate the amount they actually charge in order to look better in front of colleagues. Moreover, some lawyers might not be charging reasonable rates because they themselves do not have accurate information and are either billing clients too little or too much.
However, most lawyers would be better off learning what other attorneys in their area are charging. This can help lawyers determine which rates they themselves should charge and ensure that lawyers are not being taken advantage of because they lack information.
Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.
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