Are you still time recording?
- If you answered Yes, well done! The next question is: what do you do with that data?
- If you answered No with perhaps the caveat that either “I know I should” or “I don’t need to: my work is all fixed/agreed fee”, the next question is: how can you know it is worth your while?
Setting your Hourly Rate
How do you fix it? Why do you fix it?
From a client perspective, reliance on an Hourly Rate can be off-putting, like a taxi meter ticking through a traffic jam.
Measuring your Hourly Rate
You have just sent out a quote for a conveyance. Even filling out the Law Society pro forma took you the best part of half an hour! Is your quote an accurate reflection of your time or is it a reflection of the Value to your client?
Say you set your hourly rate at £100 and have quoted a Professional Fee of £500. On top of that, you have VAT of another £100. Then you have the Outlays and SDLT. All in, your quote might come to £2000?
Your client doesn’t care about the breakdown – they care about how much it is going to cost them and will see you as charging them £2000.
|What the client sees:||“That cost me two grand!”|
|What you want to see:||10 x £100 = £1000 + VAT|
|What you actually see:||£500 (ex VAT)|
The rationale behind Home Charter quotes is to give clients that transparency. If the Value is £500, but the cost is perceived as £2000, the result may be distrust and confusion. If what you want to see and what you actually see don’t match, you may want to revisit your Value?
As an aside, imagine you have £1 of your pocket money left and want a big bag of Tayto. Would you go for option A or option B?
|B||85p (+ VAT)|
If you opted for A, enjoy your crisps! If you went with option B, you’ll find yourself 2p short. Consumers want certainty. Despite this, lawyers seem to be tied to billing on an option B basis. Clients won’t care to know the VAT element: “how much is this going to cost me?”
Reviewing your Hourly Rate
Don’t think of your Hourly Rate as what you must charge. It is a notional concept to allow you to assess whether a particular piece of work is worth your while. Many solicitors favour the loss-leader approach. That is all well and good until that loss-leader becomes your going rate. Some use the rule of thirds; others have moved to quarters.
Go with what works for you. Be transparent. Reflect your Value.