Ah, the holidays, full of festivities, lots of cheer, good will . . . and a letter from your attorneys advising you of their New Year rate increases . . . or in many cases, higher rates in the new year’s bills without any announcement (take a look at your retainer agreement — it’s in there).
Susan Hackett, CEO and CLO of Legal Executive Leadership, LLC and former senior vice president and general counsel of Association of Corporate Counsel, recently published her annual “rant” on law firm rate increases in Corporate Counsel, titled Ending the Holiday Tradition of Outside Counsel Rate-Increase Letters. In her article, Ms. Hackett adeptly addresses the inadvisability of these letters and poses this inquiry to both sides:
Here’s my question for both general counsel and law firm managing partners: how’s this annual process of arguing over rate increases going for ya?
Firm Leaders: are you feeling pretty good about the odds that your most valued assets—your clients and your top relationship partners—are going to find this an overall productive and happy set of conversations that will leave everyone feeling better about the firm?
In-House Counsel: even if you “win” and your firms agree that you won’t be billed at higher rates (or maybe even that you’ll even receive lower rates), would you care to bet on whether the all-in cost of services provided by your firms this year will go up or down?
In response to her own questions, Ms. Hackett implores both law firms and clients to understand that “[t]here are better ways to handle this issue. What both sides want is for firms to profit well from delivering what clients value most: predictable, controlled costs, better staffing options, and measurable results that matter.” To make her case, she gives the firms “5 Reasons Your Law Firm Must Not Mail that Rate-Increase Letter,” and the clients “A Word to Clients About their Role in Perpetrating this Annual Nonsense.”
Ms. Hackett ultimately concludes that there is a “better path to firm profitability and client satisfaction” and advises the firms to consult with their clients and work together to become more efficient and thus more profitable rather than relying on raising rates to increase profits. After all:
The value of what a law firm offers is not just the sum of the hours they spent doing it—it must be based on its value to the client, rather than just its value to the individual lawyers who did the work.
Ms. Hackett’s advise is wise indeed and should be heeded by all law firms and clients, large and small.
You’ve got options. The Center for Legal Practice Reform can help you navigate the attorney/client relationship and level the playing field. Call LPR today for a free consultation – (301) 351-7970.