Process Improvement Tips | Essential steps to ensure your annual legal fee increases are thoughtful, fair and easy to implement.
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If you’re not increasing your legal fees regularly, you’re taking a pay cut. Here are five essential steps to ensure your annual legal fee increases are thoughtful, fair and easy to implement.

Running a small law firm means juggling countless priorities: client matters, staff
management, business development … the list goes on. Thinking about your rates is just
one more thing on your list, and when you’re busy, it’s easy to put off the uncomfortable
stuff.

Five Essential Steps for Raising Your Rates

No one likes having the fees conversation with clients. But if you’re not increasing
your rates regularly, you’re not just losing revenue, you’re undermining your firm’s
financial health.

Costs go up every year. Salaries, software, rent — it all adds up. Without a process for
regular fee increases, you’re effectively giving yourself a pay cut. The good news? Fee
increases don’t have to be painful. With a strategic approach, clear communication and
a focus on value, you can adjust your rates confidently and keep your firm on solid
footing.

1. Make Annual Legal Fee Increases Part of Your Process

Your firm should be doing an after-action review at the end of every year as part of your
annual planning process (see “Do You Dread the Annual Planning Process? 5 Ways to Make It Easier.”) Include an evaluation of your hourly rates and flat fees in that after-action review.

Do your current rates still make sense?
When did you last increase them?
Is it time for an adjustment?

Inflation, market trends, and increased operational costs should all factor into your decision.

Pro tip: When you align your fee review with your annual business planning cycle, you can ensure your pricing reflects your goals and operating realities.

2. Calculate Fee Increases Strategically

A common mistake people make is choosing an arbitrary number. Instead, approach fee
increases methodically.

Analyze your costs. Start with your firm’s overhead. Look at inflation rates. If
your costs rise 3%-5% annually, your fees should too.
Benchmark against peers. Look at market rates in your practice area and
region. Tools like Clio or LawPay can provide valuable insights into competitive
pricing. (See “Small Firm Hourly Rates by State and Practice Area.”)
Test incremental increases. Modest, regular increases (e.g., 3%-8%) are easier
for clients to accept than large, infrequent jumps. Your fees are your decision.
You can always adjust them if you determine that your new fees aren’t working.

Regular, strategic increases keep pace with your firm’s growth and ensure the
sustainability of your business.

3. Communicate Fee Changes Clearly and Confidently

Many lawyers worry about pricing out their clients or getting push-back on fee
increases. Stay out of the pocketbooks of your clients. Instead, provide transparent
information about your fees and keep your communications oriented around value. Draft
a clear, professional communication that:

Announces the increase and why it’s necessary (e.g., “to reflect increased
operational costs and maintain exceptional service”).
Provides advance notice — ideally 60 to 90 days.
Reinforces the value clients receive by highlighting outcomes and expertise.

Example:

“To continue delivering the high-quality service you expect, we will be increasing our
fees by 5% effective [date]. This modest change reflects rising costs and ensures we
can continue investing in tools and talent to serve you better.”

If you are very concerned about client reactions, you may want to consider applying
your new rates only to new clients or new matters for existing clients. Again, your rates
are your decision, and you can make them work for you and your clients.

4. Reinforce Value with Every Interaction

Clients are human beings looking for solutions to human problems. What they buy is the
transformation — the value — you’re providing, not the time it takes you to do it. Clients
are more likely to accept fee increases when they feel they’re getting exceptional value,
so ensure that you are consistently:

Delivering clear, timely communication on matters.
Highlighting the outcomes you’re delivering.
Emphasizing the impact of your work on solving their problems.
Providing transparency in billing. Your bill should never come as a surprise!

When clients trust you and understand the value you deliver, fee adjustments become a
natural part of the relationship, not a source of tension.

Pro tip:Transparency starts long before billing. If a matter is going to exceed your
original estimate, let your clients know as soon as you become aware of the increase.
Explain why the work will cost more, communicate the additional value you’re delivering,
and let them decide how they want to proceed.

5. Start Now and Make Annual Legal Fee Increases a Normal Part of Your Business

The most important step? Just start. If you haven’t increased rates in years, begin with a
modest adjustment. Then make increases every year or, if you’re way behind, every six
months until your rates reflect your true value. Small, consistent changes are easier to
manage for you and your clients.

By creating a structured process, calculating increases thoughtfully, and communicating
clearly, you’ll remain financially strong without alienating your clients. You’re not running
a charity. Regular fee increases will allow you to continue serving your clients, investing
in your firm, and building a profitable practice you love.

Ready to Take Action?

Block off time in your calendar for a fee review. Look at your numbers, look at your market, and make a strategic decision about raising your rates. Your firm — and your future self — will thank you.

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More Process Improvement Tips for Your Law Practice

Karen Dunn Skinner and David Skinner help lawyers and legal professionals build more efficient, productive and profitable practices. They’re the co-founders of Gimbal Lean Practice Management Advisors and lawyers with over 20 years of experience each in Canada and Europe. Together, they’re the exclusive Global Advisors on Legal Process Improvement to the International Institute of Legal Project Management. They write and speak regularly, facilitate legal process improvement projects across North America, and have taught Gimbal’s LeanLegal^® approach to thousands of legal professionals.