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It has been less than a year since the legal industries pundits were claiming that hourly rates for lawyers would not decline despite the recession and that the traditional billable hour fee structure was not going to change. See our January 28, 2009 “Quality vs. Quantity – the billable hour mousetrap” blog article.

What a difference a few months makes. The ABA Journal and the Legal Business Development blog are reporting a startling development – large law firms offering loss leader pricing for services. Examples are offers of handling discovery for free, offers to cut hourly rates in half for the first phase of litigation, and doing motion work for 30% of usual rates.

I agree with one of the participant’s in the Legal Business Development blog’s survey about these practices –

[In one recent competition] another law firm bid a price which quite frankly we
thought was not sustainable. And there are really only two or three answers as
to why they did that. One is a loss leader. The second is sheer stupidity. And
the third is a willingness to take an extraordinary risk.

Large law firms are struggling with the entire concept of adapting their fees in an environment where clients have gained the upper hand in determining whether their legal budgets go. They aren’t used to operating without significant streams of revenue.

The good news for legal freelancers is that you are perfectly positioned to help out these law firms. Your rates were always lower than employees because of reduced overhead, and you never insisted on wearing $700 suits and driving Ferraris. You simply wanted to practice your profession on your own terms at a rate commensurate with your expertise.

Here is your sales pitch. First, you offer high quality services at a price that they can mark up and still be a reasonable rate for their clients. Second, unlike emerging legal process outsourcing (LPO) companies in India or other places around the globe, you are local and they can personally meet with you and assess your competence. Any client should be a little queasy about their law firm outsourcing important legal work outside of the United States to persons unknown.

Third, whereas legal temp agencies may be able to provide a homogenous labor force for low-level work, such as massive document review, they cannot provide the same high-level work that requires individual strengths and areas of expertise.

Fourth, you are not gunning for a full-time, overhead-intensive, employment with their firm or anywhere else. You are there to assist them in making money more efficiently. No long-term obligations or commitments.

Fifth, for those law firms that are still hung up on “pedigree,” you may want to explain that legal freelancing has been embraced as a career choice by attorneys from major law schools and from AmLaw100 firms. Then invite them to evaluate your work product.