How Much Should Legal Fees Be?

Lawyers, do you think clients would use a service that describes itself as follows:

We are an independent, unbiased resource designed to deliver legal fee and price transparency and the expert information legal clients need. Our team of expert lawyers has helped us comb through a mountain of flat fee and billable time data to ensure you have the information you need when it’s time to hire a lawyer.

Well, that service doesn’t exist for legal clients just yet (as far as I know), but it does for people with car trouble.  It is called RepairPal, and it gives people pricing advice (including printed estimates) for various auto service repairs.  Here’s how it works:

RepairPal takes the mystery out of car repairs with a simple tool that will tell you the average price you should be paying for a repair in your zip code.  You just pop in a few details about your repair and car, and it will do the rest.  It breaks down the estimated repair cost in a few ways, showing you the range to expect depending on whether you go through a dealer or independent repair shop, the cost of labor and parts, plus the parts usually needed and how much they cost.  The result?  You can feel better about making an informed repair decision, and you don’t have to scramble to get your friend the “car expert” on the phone to ask a dozen questions.

Imagine a world where your clients’ expectations of the cost of your services is driven less by the facts of their case and more by an “estimate” they got from the internet.  A brave new world is coming.  Are you ready for it?

2 Responses to How Much Should Legal Fees Be?
  1. Russwood1
    July 14, 2010 | 3:18 pm

    This brave new world you describe will look nothing like RepairPal if it comes at all. When pressed, I think you’ll find most buyers of legal services will concede that we’re not like mechanics. There are differences in what each lawyer brings to the table, and often those differences have different market values. It’s crass, but true that certain buyers of legal services are willing to pay more for certain kinds of services.

    But, the interesting question your post implicitly raises is how we would determine the cost of our services. Since going solo roughly one year ago (after 15 years in very large firms), I was surprised how much people harp on the issue without suggesting how to go about calculating those costs. Then, they completely ignore the question of how to determine the appropriate premium to build in to your fees on top of your cost. (What merchant do you know that does business at cost?)

    And unfortunately the only real formulas for addressing the cost question are those being applied by Big Law (e.g., various factors of hourly billing rates, salary, and rate of collections). I’m not a proponent of that approach, but I’m just saying we should be intellectually honest with ourselves. Many bloggers in this arena are too glib about the issue and don’t offer much of an alternative.

  2. Jeffreyvail
    August 13, 2010 | 7:10 pm

    Hi Matt,

    I talked to the VP of today at a “Law 2.0” roundtable. His company doesn’t (yet) provide this service, but in the course of the discussion it became clear to both of us that it could. Basically, in the course of helping law firms with document assembly & process automation, they take all of a client-firm’s billing records for the past few years, automatically strip all identifier from the records, and then use a program to analyze them by task description. The process allows them to create a scatter-plot of how many hours and billable amount it takes that firm to perform either a specific task or a silo of tasks (e.g. series A financing). They now have this data from several firms–we discussed how they’ve inadvertently created an ancillary product: a subscription based access to these scatter plots. At a minimum this is already possible…

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