How Low Can (or Should) You Go: Part II

Following yesterday’s post exploring the viability of the $99/hour lawyer as a business model, discussion (if you can call an exchange of 140 character blurbs and bursts real discussion) ensued on Twitter. I wanted to use this post to summarize my view of the argument and also clarify the context of my post.

Defending People Mark Bennett criticized the $99/hour concept even for new lawyers (which is how I’d intended it), noting that his advice to new lawyers is that should try to be the type of lawyer they’d like to be 20 years down the line.  Once a cheap date, always a cheap date; hard to shake a reputation as a low priced lawyer, Mark argues.

Mark makes a good point – and one that I’ve noticed by real world analogy.  Recently, I’ve observed that once cheap stores like Target or Forever 21 (I’ve got teen daughters, OK?) where you can get tank top for four bucks or ten dollar jeans are introducing more expensive, faux high scale products to their low end line.  Although the products are still less costly than designer brands, it bugs me to pay more than $25 for anything at one of these stores because I assume that the quality is poor, and I expect the prices to be cheap.  I can see how the same thing can happen to lawyers who position themselves as cut rate $99/hour alternatives.

It wasn’t my intention to advocate this approach in my post, though I certainly see how it can be construed that way.  I floated the $99/hour option in a particular context; as an alternative to many of the “legal networks” arriving on the scene which encourage lawyers to bid for cases, or agree to take cases at severely capped fees in exchange for the “exposure” provided by a national network.  In this context, getting paid for all work done, even if it’s only $99/hour is preferable to doing a bankruptcy for $500 or drafting $100 wills.  In short, the $99/hour rate may be the lesser of two evils.

But as a stand alone business model, can $99/hour work?  In my post, I suggested that $99/hour could provide a living wage if overhead is low enough.  But as @jordanrushie aptly points out, you’d have to run a volume practice to make ends meet or else do lousy work on these cases because you wouldn’t have sufficient overhead to support yourself.  And as I’ve posted before, once you fall into the cycle of volume practice, it’s tough to escape.

Still, as the rise in the number of pro se clients and those seeking DIY options, there’s certainly a demand for $99/hour lawyers.  For those who want or need to capture that demographic, is there a way to do it without locking yourself into a bargain basement reputation? After all, there are some lawyers who can’t afford to be highly selective in case selection or wait for good, well-paying cases to come through the door.  Here are some quick ideas (tank ’em if you want as I haven’t thought them all through yet)

1. Limit the $99/hour option – You could tell clients that access to justice is important, so you handle a certain percentage of matters at $99/hour rates based on individual circumstances. Even if the only cases that came your way were $99/hour specials, at least no one else would know.

2. Offer some cut rate services – Offer $99/hour consultations or “clinics” as an add on or entre to your practice.

In addition, if you do offer cut rates, you have to be a stickler for keeping overhead to a bare minimum and for collection.  Unless clients are willing to pay a retainer for those $99/fees on the spot, you won’t be able to make it work, since you’ll be stuck spending time trying to get paid. However, there is a value to $99/hour up front rather than billing $500/hour and chasing down collection.

3. Create a low end subsidiary – To return to the department store analogy, it works the other way too.  Mossimo a top designer has a Target line, Norma Kamali has a WalMart line.  The populist offerings don’t diminish the brand because they’re marketed separately, they allow for revenue from volume sales and make quality design accessible to Joe and Jane Average.  If you believe that access to justice is important or see a business opportunity for affordable service, then create a stand alone subsidiary or service to market to those segments (Family law attorney Lee Rosen offers several different levels of service at one site).

A final note about premium rates. Of course, we’d all love to have unlimited clients paying $400 or $600 or $900 an hour.  Nonetheless, it goes without saying that when you charge premium rates, you need to provide premium service.  I had a recent, personal experience with a law firm that charged rates that were on the higher end of the scale for that market.  That might have been OK (there were convenience reasons for using that particular firm) except for the fact that the work was riddled with mistakes. I’d have tolerated the errors from a low end firm, but not from one billing at the higher price.  Moreover, even though I’m not one to care about how an office looks, paying the higher fee made it matter more. And so the lack of coffee in the office and the bland, uncomfortable furnishings were an annoyance at the higher price. Bottom line:  while it’s nice to get top dollar, if you don’t offer exceptional value in exchange for exceptional rates, you’ll gain a reputation as a dis-honest, do-nothing lawyer which if just as bad as being a bargain basement one.