Wednesday, August 22, 2007

Attorney Billable Hour Rate Hits $1,000

In an article today entitled "Lawyers Gear Up Grand New Fees," The Wall Street Journal reports that the hourly rate for some leading New York lawyers is crossing the $1,000 per hour threshold. This is yet another example of how the legal industry is a "treadmill paved with gold," a phrase made popular by Aric Press, Editorial Director of ALM.

While high billing rates are lucrative for the attorneys and law firms who can command these lofty fees, it also sets the stage for further negative backlash against high legal costs by increasingly cost-conscious corporate clients. A top national legal expert with a proven track record who's leading a "bet the company" type of case may deliver great value at $1,000 per hour when s/he ultimately saves the client millions with a favorable outcome. In other cases, attorneys will find clients facing a psychological pricing barrier at $1,000 per hour or more.

Marketers face the pricing question when determining the right price for a product to sell properly. What is the difference between $99.95 and $100, other than a nickel? The answer is in the mind of the buyer. $99.95 looks like a great value, while $100 may appear to be expensive. The marketers rule of thumb is that if the market is price sensitive, the lower price is the better approach. Higher prices work where the market is price-insensitive.

Pricing is a fascinating subject with many possible solutions. Outside of the New York price leaders, Managing Partners are advised to carefully evaluate less obvious pricing and bundling options that contribute to firm profitability. Alternatives include cross-selling, up-selling, increased client retention, service bundles and higher "switching costs."

These and other ideas are outlined in more detail in my new legal marketing book, Courting Your Clients: The Essential Guide to Legal Marketing. See www.courtingyourclients.com for details.

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