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By Jared Correia, Red Cave Consulting
Law firms don’t do price rises nearly enough. Law firm pricing barely keeps up with inflation, as it is. And with the current rate of inflation, law firm pricing is likely being lapped. That means that, even if your gross law firm revenue is rising year over year, the purchasing power you accrue from that revenue is declining.
In case you’re having trouble reading between the lines here, it probably makes sense to at least consider a law firm price rise right now, or following Labor Day, or at the start of the new year.
Now, if you’re like most law firm owners, you probably haven’t raised your rates for quite some time. And let’s be clear: The goal is not to make up for lost time, but just to execute a successful price rise for perhaps the first time ever. So what you’re not looking to do is to double your rates or to try to sell a massive increase into your client base. Aim lower, and there may still be a significant benefit to your practice. Even if you execute on a 5% price rise, assuming the same level of work for the next 12 months of your practice (and you’re likely to take on more work, year over year), that will mean a 5% gross revenue increase, without you having done anything more than readjusting your pricing model. This is perhaps the quickest and easiest of the quick and easy wins you can acquire in a law practice.
Even if you grandfather in your existing clients and make the change prospective, you’ll still make more money moving forward. In a wholly transactional practice, where there aren’t a lot of retroactive billings, this is even easier.
And if you need any inspiration for what you’re about to do, go buy a bottle of milk or a gallon of gas. There’s not a better time to generate more revenue than right now, especially becaise your rate increase will look extremely reasonable by comparison.•
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If you need to get a fresh pair of eyes on your pricing model, we can help.
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