A few weeks ago, I published an article detailing some situations in which it might make sense for a lawyer to charge different rates to different clients. So long as the rate charged by a lawyer is reasonable, lawyers have flexibility to charge varying rates based on the type of work they handle, their own experience, and other factors. One interesting practice of some lawyers is to charge clients more those lawyers are busier than if they have less work to perform. Similar to pricing policies with rideshare companies, some lawyers may fluctuate their fees based on the surge in demand for their services across the day.
I first saw this phenomenon when I was an associate at a midsized law firm. One of the partners asked me to sit in on a meeting with a new client, which was a real treat since I’d never had that experience before, and I wanted to know what it was like to communicate with clients during onboarding. We discussed the matter at hand with the client, and eventually, the topic of fees came up. The partner said that he would charge the new client significantly more than we typically charged other clients.
I asked the partner why, and he explained that the firm was busy and that this emboldened the partner to charge more money. If the client walked, the firm would not really struggle since we were already busy with work that would keep us occupied for the foreseeable future. The firm had also just been assigned dozens of files from one of our longtime clients, so it would be difficult for us to handle the work for the new client in any event. As a result of demand for our legal services, the partner decided it would be appropriate to charge the new client more than was typical at that shop.
Of course, the opposite is also true. Lawyers sometimes struggle to have a steady stream of work since many matters can resolve at once and business development efforts can be unfruitful over a given period. As a result, even the best lawyers might find themselves looking for work once in a while. One of the easiest ways to increase the likelihood of snagging additional client work is to lower prices. Many small and medium-sized clients want to protect their bottom lines from ballooning legal costs, and they are more likely to go with a lawyer they know they can trust who is also offering a reasonable rate.
One time, I was an associate at a Biglaw shop, and our team was facing a work shortage due to some major cases settling. The partners, seemingly looking for work that would keep us busy, accepted work with lower hourly rates than would typically be charged to clients. The Biglaw firm only assigned the most-junior associates to work on the file since the rates promised to the client were near the typical rates of junior associates, which created a bunch of problems with the files. However, the partners definitely incorporated the demand for our legal services into the prices they charged clients during that time.
There are other ways that lawyers sometimes fluctuate their prices in order to accomplish goals in their legal practices. For instance, if a lawyer thinks that a client might be difficult to handle, they might charge a higher rate. If the client walks away, no love is lost, but if the client agrees to pay the rate, this can accommodate some of the difficulties of working on the matter. In addition, if a lawyer hates to work on a particular type of matter, they might charge a higher rate to make up for the unpleasantness associated with the work. If the client walks away, at least the lawyer does not need to deal with the matter, but if the client agrees, then the increased pay can make up for any unpleasantness.
All told, pricing within the legal industry can be just as dynamic as prices for other goods and services. The demand for legal services in a given period can have a substantial impact on the legal fees charged by lawyers, and attorneys can use their rates to accomplish other goals in their practices.
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 [email protected].