Determining an Hourly Rate?

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Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 11:43 am

I am targeting a midsize city with a low-average cost of living. I just graduated (regional school/TTT, top 10%, with honors, law review), and I think I am about to receive an associate offer from a well-respected solo in my desired area of practice (he has been calling references, requesting writing sample after interview, etc.). I have no aspirations of becoming a cabillionaire, but I would like to be able to pay my student loans, mortgage, day care/private school for small child, etc. I estimate that at very bottom, I would need to bring home about $2500/mo after taxes, though of course I'd like to make more.

I would be a 1099 employee and receive 50% of what I bill that actually comes in. I have done lots of info interviews with lawyers similar to this one, and this fee arrangement is pretty standard for a new associate in this city in this practice area. The solo/partner would, in turn, bring in the business, pay for my CLEs and bar fees, provide an office and paralegal, etc. No benefits, but my spouse is gainfully employed and provides us with benefits, so it's not a major concern. The person who was there before me was making a respectable living, but was a few years out from law school, so not directly comparable. The solo is obviously profitable and about 20-25 years ahead of me in practice, so he has lots of experience to draw on.

What I'm struggling to figure out is what I could realistically bill out at hourly, and how many hours per week I could bill, and what percent of my billed hours would actually be collectible (in other words, what would clients be willing to pay and would it be enough to support my standard of living?). The area of practice is primarily divorce/custody/probate stuff, and there is a substantial retainer (that is technically supposed to be refilled when depleted), but that only goes so far, of course. The solo/partner charges about $250-300 hour, which my research indicates is pretty standard for a divorce/probate attorney of his level of experience in this city, just to give you a baseline. My research is just drawing a blank on what a brand-new associate should be charging.

The solo indicates that he is turning away business, which is why he has decided to take on an associate, so I know there will be enough work (and there was enough work for my predecessor). I just have no idea what it's realistic to charge, and I have no idea how to figure that out. I know this is TLS, where everybody is all "go Biglaw or go home," but I thought I'd see if anybody had any advice on how to figure out what a good rate is. And please don't go quoting ABA MRPC crap to me. I know what the factors are. I'm just clueless as to what they're worth in terms of $$.

Edit: I'm not trying to ask anyone to set my rate. I'm sure if there's an offer, the solo will help me do that anyway. I'm just wondering about how much I can expect to bring in if this pans out. And if I'm not offered this position, I'm expecting that I'll be offered something very comparable...so just trying to get a sense for whether I can make a living this way.

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 1:22 pm

Nobody? Okay, well, let me ask a threshold question for people who have worked and billed before. As a first-year attorney, if I work a 40 hour week, about how many hours will be billable?

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 1:49 pm

Isn't your rate normally set by the partner?
For your first month, expect 33% unbillable inefficiency. Later this will go down to 15% or so.

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 1:52 pm

Billing is somewhat of an art and it takes time to be efficient at it. Once you are efficient, you can base it on deducting a hour for lunch and up to an hour for time you cannot bill for office chit chat, checking your sports page and administrative matters. The rest you should be able to bill. In my firm the associates generally bill about 140-145 hours a month. Hope that helps.

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 1:57 pm

40 hrs a week would be pretty sweet lifestyle huh? After you receive an offer you should ask the partner what he thinks you should charge the first year, second year, etc and how much to expect to bill, vacation etc. Ask him what percent of their client accounts go unpaid or what the expectation is with respect to continuing to work on matters where the client has stopped paying their bills.

With his experience he should have a good idea what the market will bear. 50% sharing is a pretty good deal if you aren't getting further deductions for office overhead. But I would imagine the 50% sharing comes on receipts that come in AFTER deducting your share of utilities, rent, support salaries, etc. You should ask to find out. You don't want to be surprised. Try to come up with a best case and worst case scenario for the first few years. Good luck.

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 2:26 pm

This is the OP.

No, the partner would be providing the utilities, rent, CLEs, etc. PLUS 50% of my collected billing. The partner has only had one associate before, and has himself been an attorney for 25 years, so is unsure what the market can bear for a new associate with little experience. He said we'll discuss it when the time comes, so I want to come to the table with a realistic figure. Billables and collectibles are two different animals, I realize (which may be even more of the case in this line of work than in Biglaw, because we're talking individual clients going through hard times rather than corporations).

A 40 hour workweek is definitely a great lifestyle, which I need, because I would like to stay married and for my kids to know who I am. The partner works approximately a 40 hour week himself except weeks he's in trial (and 97% of divorces settle, very few wills are contested, etc.) and seems to be making it okay. This isn't Biglaw. That has its advantages, the obvious tradeoff being not making bank, which I'm okay with. I just need to, as I noted above, make enough to cover my mortgage, childcare, and student loans, so at least $2500/mo take home.

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 2:47 pm

Ok - Regarding the detailed questions I posted above you should probably ask the same questions to other solo practices/small offices in the market in the practice area. Or perhaps see if your law school can give you the names of alumni who are in similar fields. Doing some market research will definitely let you come to the conversation with the partner with more preparation. You probably don't want to be charging too much or too little anyway to get enough clients. Is it possible for you both to share some clients so that you can work with him and get some mentoring/supervision? That would probably be beneficial for you from a training perspective. Or is he expecting you to have your own list of entirely separate clients? Just some ideas - I am going to a big firm so won't be having these conversations myself.

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 3:54 pm

OP here. Yes, we would be sharing clients, and he would always be available to help me figure stuff out if I didn't know what to do. You're right about the market research, but I'm just not sure how to go about it. You're right though that I don't want to charge too much or too little. Too much and I risk losing clients. Too little and people think something's wrong. When legal services come at a low/discounted rate, there's usually a reason...or at least that's the perception of the public from what I can tell. There's a real sense that you get what you pay for.

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 4:05 pm

I think you'll find most people on this board are not doing or looking to do solo practice places although they love offering advice. A few other thoughts I had are that you can always play it safe by charging a relatively high rate but discounting it as appropriate for individual clients by writing off some of your hours or reducing the rate which they may appreciate. Or can look into charging flat fees not hourly for certain packages of work. When you get there you can always do some pro bono representation of indigent clients who need divorce help or whatever.

Sounds like a good set-up as long as the sole practitioner is competent and you work well together. Down the road a lot, but you can take over the business when he retires? Not too bad.

Try asking alums of your law school with their own small practices for advice. Your career services center should be able to connect you. I agree that you should charge as high a rate as the market will bear. There is no magic bullet for figuring out what the market would bear. Just ask some lawyers.

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Campagnolo
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Re: Determining an Hourly Rate?

Postby Campagnolo » Fri Jul 06, 2012 4:13 pm

Just for perspective, I work at a respected family law firm in Portland, and the senior partners bill for $375/hour. There are step-down gradations for everyone else at the firm depending on experience, but the newest associate, hired literally a couple of months ago, is $175/hour. He'll stay there for probably a year, then move to $200, then $250, then $300.

I hope that helps.

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Re: Determining an Hourly Rate?

Postby Anonymous User » Fri Jul 06, 2012 4:16 pm

OP again. I know most people here aren't doing solo/small firm work, as I said in my first post...but I was hoping to get some good advice, and I have. This solo has a really good reputation in the legal community and with local judges, nothing shady going on at all, has a substantial and successful practice, and seems like a genuinely nice person as a bonus. Several lawyers in town do uncontested no-fault divorces for a flat fee, so that's a possibility.

Campagnolo, that is helpful, even though I'm not located in Portland of course. I have a friend who is located in a similar city within the state who has paralegal training, and they are billing her out as a paralegal at $100-115/hr until she gets her law license. I am beginning to feel like $150-175 might be an appropriate rate, but I need to do more market research to be sure.

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Campagnolo
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Re: Determining an Hourly Rate?

Postby Campagnolo » Fri Jul 06, 2012 4:23 pm

You can always call different family law firms and ask what their rates are. Most receptionists will share that information. Just tell them you are calling around and getting rates. No need to tell them why or to lie and say you're a prospective client. It's generally not considered secret information.

The other thing you can do, if you have the time or inclination, is go down to the courthouse and look at divorce files. After the judgment there is almost always a motion to recover attorney fees. Included as an exhibit is usually a copy of a billing transcript.




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