As of today, the hourly rate is still the most common way attorneys bill clients for legal services provided. This is especially true among solos and smaller firms. Exceptions exist among certain practice areas such as bankruptcy and criminal defense, but the predominant billing method among law firms continues to be the billable hour. There are other ways of billing clients, such as contingent fees, flat fees, or alternative fee arrangements (AFAs). AFAs have gained popularity over the last ten years, especially among corporate practices, but the data and technology to accurately estimate project requirements and the time to complete haven’t enabled these to go main stream just yet. Supplementing hourly rates with retainer fees is also still a common practice, primarily as a method to ensure that the attorney does not lose the payment in the event the client chooses to stop working with him or her.
When you are first starting out, you need to determine an appropriate hourly rate for your services. As your career progresses, you need to continually re-assess if your rate is appropriate for the work you do and the amount of experience you possess. Hourly rates vary widely in the United States, but most rates are anywhere from $50 per hour to $1,000 per hour.
Finding Your Right Rate
There are many factors that can play into your final rate, such as your specialty area and where you are located. Remember, you are performing a service for your clients. Do not charge more than they can afford to pay, but do not undervalue yourself in an effort to get more work. Find an hourly rate that allows you to make a profit while remaining fair and competitive.
Rural vs. Urban
For an attorney, one of the greatest factors at play in determining his or her hourly rate is his or her location. Lawyers in metropolitan areas make more money than those working in more rural areas. Small town attorneys generally charge between $100 and $200 per hour, while attorneys in cities charge in the $200 to $400 range. Attorneys working in New York City are the highest-paid in the nation, with an average hourly rate of $756 per hour.
In general, boutiques tend to charge more than general practice attorneys. Certain specialty areas also command higher hourly rates than others.
Attorneys working in areas such as antitrust, intellectual property, and securities tend to charge higher hourly rates than those working in workers’ compensation, collections, and insurance defense.
If you are a partner at your law firm, the firm’s size can also play a role in determining your hourly rate. Partners at firms with 1,000 or more attorneys earn an average of $727 per hour, while partners at firms of fifty or fewer attorneys earn an average of $343 per hour.
Work with a Virtual Paralegal
Figuring out an appropriate hourly rate for your services is only one part of determining an overall budget for your law firm. If you have recently started your own firm or are considering taking this step in the near future, remember to include a paralegal’s pay and resources in your budget. Working with a paralegal can help your firm be successful in the long run because he or she can take on some of the more time-consuming tasks that come up at your firm or even help you expand your practice capability by bringing years’ of experience to your firm. Consider having access to a team of senior paralegals across a range of practice areas from Virtual Paralegal Services to cover all of your paralegal needs.