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New Practices

How Do You Set Your Hourly Rates?

By Ruth Carter

You’re a new lawyer, launching a new law firm. How do you decide what your hourly rate will be? The ethics rules say that your rate must be “reasonable.” That doesn’t give you much to go on. You know your rate should be a fair price for the quality of your work, and that it should be competitive with other attorneys in the same type of practice in your community. But can you find out what they charge? Unlike other service industries, law firms rarely publicize their rates and most lawyers will dodge the question if you ask them directly.

One way to approach this question is to ask those who have owned their own firms for a few years what they wished they’d charged when they first opened their doors. You could also ask what they think is a fair price for someone of your education and experience.

You should also check with your state bar association to see if it has compiled data on attorney billing rates based on years of practice and practice area. The State Bar of Arizona, for example, puts out such a report every three years. It is a fantastic resource for billing information.

Get Your Clients’ Opinions

If you are particularly daring, you might borrow a page from Alex Bajwa’s playbook. For the entire month of May in 2011, he let his clients name their own price. Yep, that’s right: After he performed the agreed work for them, he allowed the clients to decide what they would pay. Bajwa asked his clients to consider three factors in setting the price:

  • The value of the services
  • The client’s satisfaction with the level of service and representation of the firm
  • What the client could afford to pay

Bajwa said from the outset that he would accept whatever price his client picked, even if that number was zero. The experience provided him with valuable feedback about how clients perceived his firm and the value of his services. It was a wonderful way to publicize his firm and it gave him the data he needed to revise his fee schedule.

If you are not that bold, you might want to create a simple survey describing your services and asking what would be a fair price. You could send this to your clients, people who fit the profile of your ideal clients, and lawyers who work in the same practice area. This will give you some insight into the perceived value of your services.

I sent out such a survey recently because I want to offer some of my services on a flat-fee basis. The results revealed where my prospective clients see value in purchasing legal services. It also suggested that clients may need more education regarding the amount of work required to create customized documents, such as operating agreements for businesses.

Clients are happy to pay more and refer more business to you when they understand that you provide personalized care and service.

Ruth Carter is a lawyer, writer and speaker. She is Of Counsel with Venjuris, focusing her practice on intellectual property, social media, First Amendment and flash mob law. Named an ABA Journal 2012 Legal Rebel, Ruth is author of the ABA book “The Legal Side of Blogging for Lawyers,” as well as “Flash Mob Law: The Legal Side of Planning and Participating in Pillow Fights, No Pants Rides, and Other Shenanigans.” In “Nothing But the Ruth,” she writes about the lessons she’s learning while building her practice. She blogs at Follow her on Twitter @rbcarter.

Illustration ©ImageZoo.

Categories: Daily Dispatch, How to Start a Law Firm, Law Firm Billing, Small Law Firm
Originally published February 15, 2012
Last updated May 11, 2020
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Ruth Carter Ruth Carter

Ruth Carter — lawyer, writer and professional speaker — is Of Counsel with Venjuris, focusing on intellectual property, business, internet and flash mob law. Named an ABA Journal Legal Rebel, Ruth is the author of “The Legal Side of Blogging for Lawyers,” as well as “Flash Mob Law: The Legal Side of Planning and Participating in Pillow Fights, No Pants Rides, and Other Shenanigans.” Ruth blogs at and

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