According to a 2015 study published by The Managing Partner Forum, standard hourly rates for surveyed attorneys have continued to rise in recent years – even in light of difficult economic conditions – from an average of just over $375 at the beginning of 2008 to right around $450 at the beginning of 2014.
From a law firm perspective, it seems difficult to argue with that kind of success. Until you look deeper into the numbers.
While hourly rates were rising at a steady clip during the Great Recession years, the result was a rather dramatic fall in the percentage of client bills that actually got paid. That same Managing Partner Forum study showed a fall in collections realization from right around 92 percent in 2008 to about 83 percent at the start of 2014.
The greater irony? It appears that law firms themselves realize the futility of the old raise-the-rates ways, taking a self-inflicted hit in billing realization. The study found the percentage of actual work performed that makes it to the client invoice has also taken a fall: From just at 93 percent at the beginning of 2008 to about 87 percent (and still falling) at the start of 2014.
Seems there has to be a better way.
Read the complete white paper and infographic
A Smarter Route to Law Firm Profitability
New Client-Value Metrics White Paper
The Rise of Relationship Law?
With the balance of power between law firms and clients taking a Tower of Pisa-like shift toward the client side, one possibility may well be for law firms to spend less time peering at themselves through the mirror of traditional profitability metrics and more time studying their business model through client eyes.
According to BTI Consulting Group, legal clients today are increasingly investing in firms that they feel are investing in them. Their “BTI World-Class Client Feedback 2014 Webinar” shows that the firms clients rate as providing “superior client service” tend to have 33.1% higher client retention rates, even while earning double the fees from each single client.
Even more promising from the law firm side? Those same “superior client service” firms also earned 33% higher profits.
How can you get on the path to joining that elite group of law firms providing superior service? Your firm’s new beginning may well start with that old saying: That which gets measured is what gets improved.
But how do you measure the value you provide your clients? It starts with a little reading.
Download the Client-Value Metrics white paper which is free with registration.
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