Bill4Time

Legal Time Billing Software

billing increments

7 Tactful Strategies for Justifying an Attorney Rate Increase to Clients

By Leave a Comment

rate increase graph feature image

Raising your rates can feel like walking a tightrope. On one hand, you want to be fairly compensated for your work. On the other, you don’t want clients to balk at the idea of paying more.

So, how do you handle this? It starts with communication and a strategy that shows your value clearly. Let’s look at a some averages on hourly rates to see if a rate increase is appropriate along with a few ways you can approach this conversation.

What Do Top Lawyers Bill per Hour?

When it comes to billing rates, Washington, D.C., leads the pack. According to a recent law firm billing rates survey by the National Association of Legal Fee Analysis, D.C. is home to the highest litigation billing rates in the country. A quarter of litigators in the nation’s capital report billing between $951 and $1,300 per hour, with a small but notable number charging even more. The survey, which included responses from over 2,000 attorneys in D.C., showed that 97 attorneys charge more than $1,300 per hour.

In comparison, what is the hourly rate for a lawyer in California, another big legal market? San Francisco, which ranked second, had only 13% of attorneys in that top tier of billing rates. The difference between the two cities highlights D.C.’s dominance in litigation, driven by the high concentration of major law firms and increasing associate salaries. Billing rates in D.C. are expected to continue rising, with firms in both the U.S. and U.K. anticipating increases in the next year.

While these elite rates are impressive, attorneys outside major markets should assess their own circumstances carefully. When asking, “What is a reasonable fee for me to charge?” you’ll need to consider regional factors, such as client demand, practice area, competition, and the average rate for your area.

What Is the Average Lawyer Cost per Hour?

According to that same survey by the National Association of Legal Fee Analysis, the national average for attorney billing rates in 2023 ranged from $300 to $500 per hour for many common legal services, such as general civil litigation and family law. However, in more specialized fields like intellectual property, corporate law, or complex litigation, rates can be significantly higher, often exceeding $800 per hour. Attorneys in smaller markets or less populated areas, like the Midwest or Southeast, tend to charge lower rates, usually between $200 and $400 per hour.

Another method you can use to determine an appropriate hourly rate is by using legal practice management software like Bill4Time. Bill4Time’s detailed reporting features can give you insight into your billing practices, profitability, and time spent on cases. By analyzing time-tracking reports and revenue data, you can assess if your current rates cover costs and reflect the value they’re providing. For instance, you can review time spent on cases versus amounts billed, factoring in write-downs or discounts, to determine if your rates need to be adjusted.

Once you’ve determined an hourly rate, and it happens to be higher than what you’re charging, it’s now time to consider how you will inform your clients of the rate increase.

How Do I Inform Clients of an Attorney Rate Increase?

Overall, clients are more likely to accept an hourly rate increase if they feel the increase is justified and communicated with care. Here are some effective strategies for approaching the conversation:

  1. Advance Notice: Give clients ample time to adjust. Inform them well before the increase takes effect, ideally at least 30 to 60 days in advance, so they have time to process the change, ask questions, and budget accordingly.
  2. Explain the Reason: Be transparent about why rates are going up. Whether it’s due to rising operational costs, increased demand, or the growing complexity of legal matters, clients appreciate understanding the reasoning behind the decision.
  3. Highlight the Value: Emphasize the benefits and value the client will continue to receive. If you’ve achieved significant results for the client or your services have evolved, this is a good opportunity to remind them of the quality and expertise they’re paying for.
  4. Personalize the Message: Avoid sending a generic notice. Personalized emails or letters, or even a direct conversation, show that you value the relationship. Mention specific cases or outcomes you’ve worked on together to make the client feel recognized.
  5. Offer Options: If appropriate, consider offering phased increases or alternative payment plans, especially for long-term or high-value clients. This can soften the impact of the rate change.
  6. Communicate with Confidence: Avoid apologizing for the increase. Instead, present it confidently, focusing on the value and service you provide, and assure clients that they are still receiving top-notch legal representation.
  7. Address Concerns Directly: Be prepared to handle any concerns or pushback. Offer to discuss the increase and explain why it’s necessary, and reinforce the positive aspects of continuing the relationship.

These tactics help to maintain trust while communicating important changes clearly and professionally.

Attorney Rate Increase Letter Sample

Below is a personalized sample letter that ensures your clients understand the reasoning behind the change while emphasizing the value they continue to receive. Take this template as a starting point and adjust it according to your firm’s needs:

Dear [Client’s Name],

I hope you’re doing well. It’s been a privilege working with you on [specific matter or case type], and I truly value the trust you’ve placed in us to handle your legal needs.

As things have progressed, and as the demands of [specific case type or area of law] continue to grow, we’ve taken steps to stay ahead of the curve. To keep providing the level of service and attention to detail you’ve come to expect, we’re updating our rates. Starting on [effective date, at least 30-60 days in advance], our hourly rate will increase from [current rate] to [new rate]. This update allows us to continue dedicating the resources necessary to meet the evolving complexities of your legal matters.

I’ve always appreciated how smoothly we’ve worked together, especially on [briefly mention a positive outcome or collaboration]. Those results are a direct reflection of our shared commitment to achieving the best possible outcomes, and we’re excited to continue that momentum.

If you have any questions about the new rates or would like to explore other options such as [payment plans, phased increases, etc.], please don’t hesitate to reach out. I truly value our partnership, and I look forward to continuing to provide the support you need.

Best regards,

[Your Name, Firm, and Contact Information]

Make Rate Adjustments Easier with Bill4Time

Figuring out when to raise your rates can feel uncertain, but it helps to have clear data. Bill4Time’s reporting features allow you to review your billable hours, case details, and revenue trends to see if your current rates reflect the work you’re putting in. It’s a practical way to decide if an increase makes sense based on what’s actually happening in your practice.

Wondering if Bill4Time is the right fit for your practice? Sign up for a demo or free trial and see how it simplifies billing, rate decisions, and so much more.Try Bill4Time for free.

What Is the Standard Billing Increment?

By Leave a Comment

Most lawyers use 6-minute increments for billing. Why? It’s simple and fair. You don’t lose time or overcharge. Whether you use manual methods or legal time tracking software, tracking billable hours vs. actual hours ensures you charge clients fairly and manage your time effectively.

With a clear outline of the time spent on cases and firm-related activities, you can bill accurately, understand where your time goes, and improve overall productivity. Keep reading to learn more about billable hours, standard billing increments, and how to streamline your firm’s time tracking processes for more efficiency and precision.

What Does It Mean to Bill in 6-Minute Increments?

What Does It Mean to Bill in 6-Minute Increments?

Billing in 6-minute increments means dividing an hour into ten equal parts, making it easier to track and bill time accurately for shorter tasks. This practice started around the 1920s and became common in the legal industry.

Billing in smaller increments, like billing by the minute, can be time-consuming and hard to track. Larger increments, such as 20 or 30 minutes, make it difficult to bill for quick tasks, like answering a client’s email, and could lead to overcharging.

Six-minute increments offer a good balance. They allow you to bill for short tasks and measure time more precisely. For instance, a client call lasting 17 minutes translates to 0.3 hours. This method helps you keep accurate records and ensures fair billing. 

Wondering, “How do I calculate billable hours using this method?” By dividing each hour into ten 6-minute parts, you can track time spent on tasks more precisely. You can see how this works with a billable hours calculator in 6-minute increments. The best option, though, is time tracking software, which automates the calculation for you, ensuring accuracy and saving you time.

Click here to schedule a free demo of time tracking software to see how it works for yourself.

What Does Billing in 15-Minute Increments Mean?

For some law firms, billing in 15-minute increments is a more effective way to track time. This number is still easy to calculate based on an hour, as each task is 0.25 of an hour.

Though 15-minute increments are seen as a compromise between the complexity of 6-minute increments and the ambiguity of 30-minute or 60-minute increments, there are benefits and drawbacks. While there’s a lower administrative burden and more simplicity in tracking time by the quarter-hour, which comes naturally to most people, it lacks the transparency of 6-minute increments. It’s also easier to round up and pad bills unintentionally.

Choosing between them comes down to your typical legal tasks and client expectations. Some clients may prefer a more detailed breakdown of the time spent on their projects, which you can provide with 6-minute increments. However, if you have legal tasks that involve longer periods of case-related work, the simplicity of 15-minute increments may be more effective.

Understanding billing increments helps with better practice management, but how many hours should you aim for annually? Let’s take a look.

How Many Billable Hours Should I Work?

How Many Billable Hours Should I Work?

How many billable hours you should work depends on balancing firm objectives, client needs, and your own mental health and well-being. Firms typically target between 1,700 and 2,300 billable hours annually, but this range can vary.

Larger firms in cities like New York, Atlanta, and Miami often require over 2,000 billable hours. Smaller firms, public interest law firms, and those outside urban areas may require fewer billable hours, focusing on employee development, client relationships, and other firm-enhancing activities. These firms might set their targets at 1,500 or 1,600 billable hours per year. Government and public interest firms usually don’t have billable hour requirements as they don’t bill their hours to clients.

How Hard Is It To Hit 2,000 Billable Hours?

Meeting the goal of 2,000 billable hours each year isn’t easy. Many firms set this target, but it requires careful planning and consistent effort. Some ways lawyers get closer to this goal include:

Daily Commitment

First, think about the daily commitment. To hit 2,000 hours a year, you must bill around 8 hours each workday. That doesn’t just mean working 8 hours; you need to bill for 8 hours. Many tasks, like administrative work or internal meetings, can’t be billed. So, you’ll often find yourself working longer days to make up for non-billable time.

Efficient Time Management

Time management plays a big role. You have to be organized and disciplined. Use time tracking software to monitor your hours closely. Break your day into chunks and set specific goals for each period. For instance, you might block off two hours in the morning for drafting a brief and another two hours in the afternoon for client meetings.

Managing Interruptions

Managing interruptions is crucial. Unexpected calls, emails, or meetings can eat into your billable hours. Set boundaries and stick to them. If you have an assistant, let them know when you need uninterrupted time. You can also use email autoresponders to manage client expectations about response times.

Work-Life Balance

Balancing work and personal life becomes challenging. Long hours can lead to burnout. Make sure to take breaks and find time for activities outside of work. Guarding your time in this way will help you stay fresh and focused when you’re at your desk.

Tracking Progress

Regularly tracking your progress is essential. Weekly or monthly reviews can help you see if you’re on track. If you find you’re falling behind, you can adjust your schedule and workload to catch up before you get too far away from your goals.

Regardless of your target, choosing the appropriate billing increment can have a huge impact on your realization rate and productivity. For example, billing in smaller increments can lead to a higher realization rate because it allows for more accurate time tracking and billing, reducing the likelihood of underbilling while improving client satisfaction.

How Do You Capture All Billable Time?

The best way to capture all billable time is by using dedicated time tracking software like Bill4Time. Relying on manual methods, like jotting down hours on paper or using spreadsheets, often leads to missed minutes and billing mistakes. Bill4Time ensures you track every minute accurately, preventing any lost billable hours.

With an intuitive interface and a mobile app, Bill4Time lets you log your hours from the office, court, or anywhere in between. It also includes calendaring, document management, and billing features, so you can run your whole practice from one platform.

For a reliable way to capture all billable time, consider trying Bill4Time. Sign up for a free trial or free demo and explore how Bill4Time can enhance your firm’s efficiency and accuracy.