Rate Adjustments: How to be Generous When it Comes to Rate Increases and Money Conversations

This time of year, law firms are often determining rate increases for the upcoming year (if any), and their lawyers are considering ways to communicate these changes to clients.

Some lawyers prefer to let the engagement letter do the talking. Because engagement letters often include language indicating that rates will increase from time to time, the lawyer may assume the client understands that annual rate increases are par for the course. Similarly, lawyers might send a generic form letter to clients notifying them of said rate increases. Not only do both of these methods feel impersonal to clients, but they also cause unnecessary stress and anxiety—for clients and lawyers.

Although there can be a temptation to avoid these conversations, discussing pricing can prevent miscommunications and can be a relationship builder when handled well. Additionally, when lawyers lean into uncomfortable conversations about money with transparency and authenticity, they create an opportunity to increase client loyalty and enhance the client experience.

How to Have Generous Conversations About Pricing

There are ways to make money conversations— especially those about rate increases—less anxiety-inducing and impersonal while also bolstering the client relationship.

1. Make rate increases a dialogue.

Written communications like a generic form letter or email limits one’s ability to effectively control the message because it utilizes only one component of communication—the technical component. We’ve all heard the statement, “there is no tone in email,” and that’s definitely applicable in communications involving pricing. By intentionally incorporating the vocal components into pricing conversations, lawyers can convey empathy and sincerity through tone, volume and rate of speech as they deliver  the message creating a different experience than had the client simply received a letter.

Lawyers often avoid discussions about rate increases because they fear the discomfort of a negative response. But instead of avoiding the conversation, lawyers should prepare to have a constructive dialogue and think through potential scenarios in advance. Additionally, how a lawyer handles a client’s reaction matters. When a client is displeased with a rate increase, lawyers often rush to offer a discount. While this might alleviate the temporary discomfort, it doesn’t necessarily solve the underlying concern of the client. We encourage lawyers to get curious and to ask questions like:

  • What is most concerning to you?
  • How can we solve this together?
  • Is it our increase or are you concerned about how we’re scoping our current services?
  • Is there someone on your accounting team I can connect with to discuss alternative pricing options?

By taking the time to understand the client’s key goals and the underlying pricing concerns, a lawyer can devise the right solution to address the client’s interests.

2. Know what is essential to the client.

There are other cost-related issues clients care about beyond pricing, like changes in scope of work once the work is underway, adding new members to a client team (especially when they have hourly rates), and invoicing preferences. We encourage lawyers to ask their clients about all pricing and invoicing preferences at the outset of a new relationship, when new work comes in, and periodically throughout the relationship to ensure that any changes in preferences are heard and applied.

3. Have the confidence to engage with clients about money.

Sophisticated buyers of legal services, whether in-house counsel or on the business side, consistently talk about money and budgets and are quite comfortable doing so. When lawyers proactively engage in conversations about money and approach them with the same comfort and openness, they show the client that they are more than a sound legal advisor but also a good business partner.