We are often asked how attorneys should price their projects on LAWCLERK™. While there is no answer to fit all circumstances, our suggestion is that attorneys price their projects at 35-40% of the estimated billable cost of the project. The traditional rule of thumb is that a full-time associate’s collected billings should be allocated 1/3 for profit, 1/3 for overhead, and 1/3 for the associate’s compensation. In reality, the profit component is rarely achieved as any loss of productivity by the associate or uncollected billings is a dollar for dollar reduction in the owner profit because compensation and overhead are fixed costs. By pricing your project between 35-40% of the estimated billable time, you can attract top talent with subject matter expertise, avoid fixed overhead, and achieve a greater profit margin than the traditional model.
Here are a couple of actual examples of how attorneys have priced projects when they billed the Lawclerk’s time at an hourly rate to their client:
- Project – Motion in Limine
- Flat fee price paid by the attorney: $500.00
- Hours worked by the Lawclerk: 7.9 hours
- Rate attorney billed the client for the Lawclerk’s services: $185/hr
- Profit for the attorney: 7.9 X $185 = $1,461.50 – 500.00 = $961.50 profit
- Project – First Request for the Production of Documents
- Flat fee price paid by the attorney: $400.00
- Hours worked by the Lawclerk: 6.25 hours
- Rate attorney billed the client for the Lawclerk’s services: $185/hr
- Profit for the attorney: 7.9 X $185 = $1,156.25 – 400.00 = $756.25 profit
But, you should not feel confined to the billable hour. Clients often prefer flat fee billing, which is made easier by LAWCLERK™, because with LAWCLERK™, you know exactly what you are paying the Lawclerk to complete the project for you. For example, if you need a subpoena duces tecum completed, you can advise your client that you will complete the subpoena for $300.00 and then post the project at a flat fee price of $100.00, thereby making a profit of $200.00.
While we provide these recommendations for how to price a project on LAWCLERK™, we encourage you to find the methodology that best suits you, your clients, and your practice.
