Post #925


Are Your Rates in Keeping with INDUSTRY Standards?

In the typical corporate legal department, matters exceeding $1 million in outside legal spend account for about 61% of the total sent to outside law firms in any given year. A new Wolters Kluwer report showed notable differences in rates paid by different clients – based on that client’s INDUSTRY:

Financial Institutions       $ 620 / hour
Industrials                            566 / hour
Consumer Service               523 / hour 
Health Care                           519 / hour            
Tech and Telecom                513 / hour
Consumer Goods                 430 / hour
Insurance                              229 / hour

That said, I’m always curious as to how much attention is paid to client fee sensitivity.  For example, here are a 
FEW QUESTIONS to ponder when next contemplating fees with your clients:

- What is the business purpose of the engagement? (if the objective is to correct or remediate a problem, the client may be more price sensitive than if the desired outcome is the realization of a gain)

- Where does this engagement fall within the corporate hierarchy? (engagements that have board of directors or c-suite visibility are less price sensitivity)

- How important is it for your client to realize a successful result? (results that have small impact on a client’s profitability tend to be more price sensitive)

- Who’s paying the bill? (matters where the client’s cost is shared by another company or insurance, or are subject to court or agency review tend to be more price sensitive)

- How difficult is it for your client to find a competing firm with the expertise to do this work? (the more SPECIALIZED the matter, the less fee sensitive)

- How well does your client know what other law firms charge for the services being sought? (clients without a point of reference tend to be less fee sensitive)

- How much importance does the client place on having a high name recognition firm and are you such a firm? (price sensitive clients tend not to care about prestige)

- Was the client the first to initiate the conversation about fees? (if the client initiates fee conversations or offers a fee agreement, it is a sure sign of high price sensitivity)
 
TAKEAWAY: I found these differences in rates paid between Industries quite interesting.  Do you know what they are within your firm?

 

 
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