Recently a 17 attorney firm experiencing decreasing partner earnings asked us the following question.

"Since 2008 we have been holding our own and doing okay. We have not laid off any attorneys but the partners are making less money than they made three or four years ago. Billable hours and production seems to be down? Do we have a work ethic or motivation problem? What can we do to get the attorneys producing more billable hours?"

Many law firms are facing challenges bringing in enough business to feed the lawyers sitting in the office. They are realizing that they hired lawyers to bill hours and do lawyer work and did not consider the future need for these lawyers to also be marketers.

Start by creating the culture and environment. Marketing and client service needs to be incorporated into the culture of the firm. All attorneys should have a role in marketing. All partners must walk the talk and consistently build and reinforce the marketing goals of the firm. Marketing goals and action plans should be formulated for all attorneys and they should be held accountable.

Question I am the managing owner of a four attorney estate planning firm in Phoenix. We also have two paralegals, a receptionist, and an office manager. We have always billed our clients by the hour but have been considering switching to a flat rate billing arrangement. I would appreciate your thoughts and suggestions.

Answer: I am currently working with quite a few estate planning/elder law firms. The majority of these firms are still using "time bill" billing arrangements. (8 out of 10 firms) A few firms are using flat fee arrangements for estate planning and asset protection matters and "time bill" arrangements for estate administration and other matters.

Few firms that are using flat fee arrangements are realizing effective billing rates even close to their standard "time bill" rates. In some cases I have found effective rates per hour $100 per hour less than their standard "time bill" rates. In some cases the problem is not working effectively or efficiently. In other cases the flat fee price has not been properly set or limits placed on the work that will be done for the flat fee - for example - number or document rewrites, etc.

I believe that more than ever clients are wanting the budgetary certainty that flat fees provide. I think that a flat fee pricing strategy is a good strategy but the scope of work and proper price point must be properly established. A couple of suggestions:

Are you looking for a quick and dirty checklist to use to review the profitability of your practice. Click below for a copy of our Law Practice Profitability Checkup.

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